EXPLANATORY STATEMENT
Select Legislative Instrument 2008 No. 240
Issued by authority of the Assistant Treasurer
Excise Act 1901
Excise Amendment Regulations 2008 (No. 1)
The Excise Act 1901 (the Act) sets out the administrative framework for the imposition of excise duty on alcohol, tobacco, petroleum products manufactured in Australia and crude oil and condensate (a light crude oil extracted from natural gas) produced in Australia.
Section 164 of the Act provides that the Governor‑General may make regulations not inconsistent with the Act prescribing all matters which by the Act are required or permitted to be prescribed, or as may be necessary or convenient to be prescribed, for giving effect to the Act or for the conduct of any business relating to the Excise. The Excise Regulations 1925 (the Principal Regulations) are made under the Act.
The Principal Regulations deal with administrative issues relating to the imposition of excise, such as remissions, rebates and refunds of excise duty.
Condensate has, until recently, been exempt from the Crude Oil Excise. However, the Excise Tariff Act 1921 was recently amended by the Excise Tariff Amendment (Condensate) Act 2008 to apply the Crude Oil Excise regime to condensate produced in the North West Shelf project area and onshore Australia. The Excise Legislation Amendment (Condensate) Act 2008 makes consequential amendments to the Act, the Petroleum Excise Prices Act 1987 and the Petroleum Revenue Act 1985 to facilitate this measure.
This measure applies excise to condensate produced after midnight (by legal time in the Australian Capital Territory) on 13 May 2008.
Consequential amendments to the Principal Regulations and to the Petroleum Excise (Prices) Regulations 1988 (which are the subject of a separate Minute) are needed to prescribe the production areas producing condensate that are subject to the Crude Oil Excise, and to ensure that condensate is treated the same way as stabilised crude petroleum oil for the purposes of the Act and the Petroleum Excise Prices Act 1987.
The Regulations amend the Principal Regulations to ensure they apply to payments of excise on condensate. In particular, the Regulations insert the word ‘condensate’ into the Principal Regulations where there is a reference to stabilised crude petroleum oil, or would insert a reference to the relevant section of the Excise Tariff Act 1921 which imposes excise on condensate, or inserts a formula to work out the dutiable quantity for the purposes of paragraph 50(1)(sa) in respect of condensate.
This ensures that remissions, rebates and refunds of excise duty relating to condensate operate in the same way as those applying to stabilised crude petroleum oil.
The Regulations also make a number of other minor changes, including amending the Principal Regulations to replace references to ‘relevant’ oil with references to ‘old’ oil. This would be consistent with the terminology currently used in the Excise Tariff Act 1921.
The Regulations also omit paragraph 50(1)(n) and subregulation 52B(1) as these provisions are now redundant. The proposed Regulations would also amend paragraph 50(4AA)(a) to correct a drafting error.
The Act specifies no conditions that need to be satisfied before the power to make the proposed Regulations may be exercised.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commenced at midnight (by legal time in the Australian Capital Territory) on 13 May 2008, to coincide with the commencement of the application of the Act to production of condensate. Section 164A of the Act specifically allows regulations made for the purposes of the Act in relation to condensate to take effect from a date before the regulations are registered under the Legislative Instruments Act 2003.
These Regulations are technical amendments to the Principal Regulations implementing the Government’s decision to include production of condensate in the Crude Oil Excise. Given that there are no differences in the treatment of condensate relative to stabilised crude petroleum oil in respect of the amendments to the Principle Regulations, there has been no need to consult the upstream petroleum industry.
Overview
The Excise Amendment Regulations 2008 (No. 1) were enacted to address the legislative gap that arose from the recent amendments to the Excise Tariff Act 1921 and the Excise Tariff Amendment (Condensate) Act 2008. These amendments sought to include condensate produced in Australia under the scope of the Crude Oil Excise, previously exempt from such duties. The Excise Amendment Regulations were necessary to ensure that the administrative framework under the Excise Act 1901, and the Excise Regulations 1925, would be updated to reflect these changes, thereby facilitating the imposition of excise duty on condensate. The regulations were issued by authority of the Assistant Treasurer and are intended to implement the policy objective of treating condensate in the same manner as stabilised crude petroleum oil for excise purposes. These regulations commenced on 13 May 2008, aligning with the application of the amended excise duties to condensate production.
Scope and Application
The Excise Act 1901 provides the legislative framework for the imposition of excise duty on various goods, including alcohol, tobacco, petroleum products manufactured in Australia, and crude oil and condensate produced in Australia. The Act applies to entities producing or manufacturing these goods within Australia, ensuring they adhere to the prescribed excise duties. The geographic reach of the Act is nationwide, applying to all states and territories within Australia. The Act’s application extends to both the Commonwealth and the states, with specific regulations governing the imposition, remission, rebates, and refunds of excise duties. The Excise Amendment Regulations 2008 (No. 1) were made to include condensate within the scope of the Crude Oil Excise, thereby applying excise to condensate produced after 13 May 2008. These Regulations amend the Excise Regulations 1925 to ensure consistency in the treatment of condensate with stabilised crude petroleum oil, thus incorporating the recent amendments made to the Excise Tariff Act 1921. The Regulations also make minor technical adjustments to ensure that the administrative processes for excise duties are streamlined and consistent.
Key Provisions
The main operative sections of the Excise Amendment Regulations 2008 (No. 1) are designed to incorporate condensate into the existing Crude Oil Excise regime, ensuring that condensate produced in Australia is subject to excise duty in the same manner as stabilised crude petroleum oil. Section 50(1)(sa) of the Principal Regulations has been amended to include references to condensate, ensuring that remissions, rebates and refunds of excise duty operate in a similar fashion for both stabilised crude petroleum oil and condensate. The regulations also make minor changes to terminology and correct a drafting error in paragraph 50(4AA)(a).
These regulations impose several obligations on parties involved in the production and taxation of condensate. The producers of condensate are required to comply with the same excise duty provisions as those applicable to stabilised crude petroleum oil. This includes accurately reporting the quantity of condensate produced and paying the appropriate excise duty as prescribed under the Excise Tariff Act 1921. The Department of Finance and Deregulation, or the relevant authority, is tasked with ensuring that the amended regulations are correctly applied and enforced. Additionally, the regulations mandate the removal of outdated references to 'relevant' oil and the deletion of redundant provisions such as paragraph 50(1)(n) and subregulation 52B(1).
Breach of the provisions set out in these regulations could lead to civil or criminal consequences, although the specific penalties are not detailed within the explanatory statement. Typically, failure to comply with excise regulations could result in penalties that include fines or imprisonment, depending on the severity and intent of the breach. Given the technical nature of these amendments and the focus on ensuring consistency in the treatment of condensate and stabilised crude petroleum oil, it is likely that penalties would align with those stipulated in the Excise Act 1901 and other related legislation, where non-compliance could attract significant fines or other enforcement actions.