Excise By-Law (Amendment) 2008 (No. 1)

Explanatory Statement

Excise Act 1901

Excise By-Law (Amendment) 2008 (No. 1)

General Outline

1. This Explanatory Statement is provided in accordance with section 26 of the Legislative Instruments Act 2003.
2. The Government announced in its May 2008 Budget to remove the exemption of condensate from crude oil excise, effective on and from midnight (by legal time in the Australian Capital Territory) on 13 May 2008.  To give effect to the policy change, the Excise Legislation Amendment (Condensate) Act 2008 and the Excise Tariff Amendment (Condensate) Act 2008 amended the Excise Act 1901, Excise Tariff Act 1921, Petroleum Excise (Prices) Act 1987 and the Petroleum Revenue Act 1985.  
3. In particular, item 21 of the Schedule to the Excise Tariff Act 1921 was amended to impose duties of excise for the production of condensate which are equivalent to the duties of excise on new oil and to include exempt offshore condensate which is condensate included in exempt offshore oil and condensate produced from a prescribed exempt offshore field.
4. Excise By-Law No. 114 (By-Law No.114) prescribes exempt offshore fields for the purposes of paragraph (a) of the definition of “exempt offshore field” in subsection 3(1) of the Excise Tariff Act 1921.
5. The exempt offshore fields currently prescribed by By-Law No. 114 are crude oil fields. This by-law requires an amendment to prescribe a particular offshore gas field from which condensate is derived as an exempt offshore field.
6. The amendment to By-Law No. 114 is made under section 165 of the Excise Act 1901 (under subsection 33(3) of the Acts Interpretation Act 1901 the power to make an instrument can be construed as a power to amend an instrument).

Date of effect

7.      This instrument is to commence on and from 2 October 2008. This ensures that the exemption from excise provided by the by-law for the first 4767.3 megalitres of stabilised crude oil and/or condensate produced from the field commences on the same date as production.

Note: Subparagraph 168(b)(i) of the Excise Act 1901 provides that a By-Law will take effect, or be deemed to have taken affect from a date specified by the By-Law.

Effect of the instrument:

8. This instrument provides one of the mechanisms required to give effect to the Government’s Budget announcement to remove the exemption of condensate from crude oil excise by making the necessary amendment to the By-law No. 114 prescribing exempt offshore fields.

Impact of the instrument

9. This instrument provides for an exemption from a duty of excise for the first 4767.3 megalitres of exempt offshore condensate; that is condensate included in exempt offshore oil and condensate produced from a particular exempt offshore field. It follows that once production from a particular field has surpassed this threshold, the condensate from that field becomes subject to a duty of excise in accordance with the Excise Tariff Act 1921.

Consultation

10. Section 18 of the Legislative Instruments Act 2003 specifically provides for circumstances where consultation may not be necessary or appropriate.  One of those circumstances is where the instrument gives effect, in terms announced in the Budget, to a decision to repeal, impose or adjust a tax, fee or charge. This instrument falls into that category, and therefore consultation on the development of it has not been undertaken.

Timothy Dyce

Related Rulings/Determinations:

Subject references:

Condensate

Excise

Excise Tariff

Excise By-Law

Exempt offshore oil

Exempt offshore field

Exempt offshore oil and condensate

New oil

Legislative references:

Acts Interpretation Act 1901 subsection 33(3)

Excise Act 1901 section 165

Excise Tariff Act 1921 subsection 3(1)

Excise Tariff Act 1921, the Schedule, item 21

Legislative Instruments Act 2003 section 18

Legislative Instruments Act 2003 section 26

Excise By-law No. 114

Other references:

Budget Papers Treasury, May 2008