Excise (Class of persons - health care practitioners) Determination 2006 (No. 4)

Administered by Department of the Treasury

Legislation au F2006L02179 Not in force Legislative Instrument

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Explanatory Statement

 

Excise Act 1901

Excise (Class of persons—health care practitioners) Determination 2006 (No. 4)

 

General outline

  1.                This Explanatory Statement is provided in accordance with section 26 of the Legislative Instruments Act 2003.
  2.                Excise (Class of persons—health care practitioners) Determination 2006 (No. 4) is required due to amendments to the Excise legislation effected by Excise Laws Amendment (Fuel Tax Reform and Other Measures) Act 2006, Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Act 2006 and Excise Amendment Regulations 2006 (No. 3).
  3.                The amendments are the result of the Review of the Schedule to the Excise Tariff Act 1921 (the Review) initiated by Treasury on 2 June 2005 with the release of an industry discussion paper and a targeted consultation process. The principal objects of the Review were to streamline the Schedule to the Excise Tariff Act 1921 (the Excise tariff) and make it more user-friendly, make excise law clearer and less complex, and improve the integrity of the excise system.
  4.                Up to 30 June 2006 undenatured or denatured spirit has been delivered duty-free with or without a permit under Divisions 2 to 4 of Part VI, and Part VIII of the Excise Regulations 1925 and Parts IV to IV of the Spirits Regulations 1926. These provisions are outdated and unnecessarily complex.
  5.                In addition, administrative practice has developed to allow certain categories of persons having a professional use for undenatured spirit and representing a low compliance risk to access limited quantities of duty-free spirit for those purposes without a permit. This administrative arrangement has reduced the burden on both clients and the Tax Office by doing away with the need for a large number of concessional spirits permits where there is no significant risk to the revenue. Section 77FE formalises this administrative practice and enables its scope to be extended to broader classes of clients where there is no significant risk to the revenue.
  6.                Under section 77FE, the CEO (Commissioner of Taxation) may determine, by legislative instrument, a class of persons for the purposes of subitem 3.6 of the Excise tariff and nominate a maximum quantity of spirit for persons of that class. A member of a determined class of persons may access spirit for an industrial, manufacturing, scientific, medical, veterinary or educational purpose free of duty under subitem 3.6 without requiring a permit issued by the Tax Office.
  7.                The expression ‘an industrial, manufacturing, scientific, medical, veterinary or educational purpose’ brings together the categories of use for which concessional spirit has been accessed up to 30 June 2006 under the relevant regulations.
  8.                In the Commissioner’s view, such use:
  • would ordinarily be in the course or furtherance of carrying on an enterprise (within the meaning of that expression in the A New Tax System (Australian Business Number) Act 1999); and
  • excludes the on-supply of the spirit (which is not ‘use’) or use for an excisable purpose (i.e. in an alcoholic beverage or as fuel).

9.                  In determining a class of persons, the CEO will be satisfied that:

  • persons in that class have a legitimate use for duty-free spirit for an industrial, manufacturing, scientific, medical, veterinary or educational purpose;
  • up to the specified quantity limit, access to spirit duty-free by those persons without a permit presents no significant risk to the revenue; and
  • the persons can verify by documentary evidence presented to a supplier of spirit that they are members of the class.

10.              Paragraphs 1.36, 2.56 and 2.62 of the Explanatory Memorandum to the amending Bills provide commentary on the intended operation of section 77FE. 

11.              The instrument determines that health care practitioners are a class of persons and provides for a maximum quantity of spirit that may be delivered to members of this class. 

12.              The instrument is made under section 77FE of the Excise Act 1901.

Date of effect

13.              The instrument commences on 1 July 2006.

Purpose and operation of the instrument

14.              Health care practitioners may access spirit under subitem 3.6 of the Excise tariff for an industrial, manufacturing, scientific, medical, veterinary or educational purpose.

15.              Health care practitioners are defined in the instrument as:

  • a doctor, dentist, pharmacist, registered nurse or other health care practitioner registered under the law of a State or Territory; or
  • an acupuncturist, herbalist, homeopath or naturopath certified as exempt from the operation of Part 3-3 of the Therapeutic Goods Act 1989 (refer to subsection 34(2) of that Act).

16.              The supplier of spirit to a person under the determination must be satisfied of the bona fides of the recipient.

17.              For the purposes of presenting evidence of eligibility to a supplier of spirit, a health care practitioner may provide:

  • a copy of his or her registration certificate;
  • his or her registration number with the relevant statutory board; or
  • a certificate showing exemption from the operation of Part 3-3 of the Therapeutic Goods Act 1989. Certificates are issued by practitioner associations. If a practitioner’s association does not issue certificates, a practitioner may apply for a specific approval (see following paragraph).

18.              Health care practitioners using spirit containing more than 200 litres of alcohol a year are required to apply for approval to receive the spirit under subitem 3.7 of the Excise tariff. Guidelines for the granting of an approval are contained in the legislative instrument Excise concessional spirit approvals guidelines 2006 (No. 1).

19.              It may be possible for a health care practitioner to qualify as a member of more than one class of persons determined by the CEO under section 77FE. In such a case, without a permit the person may access only up to the maximum quantity of spirit nominated for one of those classes of persons. The maximum quantity for a class of persons cannot be aggregated with the maximum quantity for another class of persons.

20.              Section 77FH provides a mechanism for the Tax Office to ensure that duty-free spirit accessed under the determination is used for a proper purpose. Persons receiving spirit under subitem 3.6 may be required to account for their use of the spirit, showing that it has been used for an industrial, manufacturing, scientific, medical, veterinary or educational purpose. If the person fails to account to the satisfaction of the Tax Office, a written demand may be made giving rise to a liability to pay an amount equal to the duty that would have been payable if the determination had not been made. A demand is a reviewable decision.

Impact of the instrument

21.              Up to 30 June 2006 under the administrative arrangement referred to in paragraph 5 above, health care practitioners except pharmacists could access duty-free spirit up to 60 litres a year for use in their practice; pharmacists could access up to 120 litres a year. The instrument provides a legislative basis for this treatment and increases the permitted quantity of spirit.

22.              The instrument simplifies administration for the Tax Office and lessens the compliance burden for this group of clients.

Consultation

23.              On 1 June 2006 the Tax Office initiated a 2-week public consultation process on the legislative instruments arising from the Review, with the Assistant Treasurer approving the consultation prior to the related legislation being passed by Parliament.

24.              The instruments and explanatory statements were published on the ATO website www.ato.gov.au in the form of drafts for consultation. The instrument, together with this explanatory statement, was included in that process.

25.              Selected parties in the alcohol industry were contacted and invited to comment on the content, form and language of the determination and explanatory statement.

 

Commissioner of Taxation

[30 June2006]

 

 

Previous draft:

1 June 2006

 

Related Rulings/Determinations:

Excise (Class of persons—educational institutions) Determination 2006 (No. 1)

Excise (Class of persons—government institutions) Determination 2006 (No. 2)

Excise (Class of persons—medical institutions) Determination 2006 (No. 3)

Excise (Class of persons—veterinary practitioners) Determination 2006 (No. 5)

Excise concessional spirit approvals guidelines 2006 (No. 1)

 

Subject references:

Excise

Excise Tariff

concessional spirit

concessional spirit specific approvals

 

 

Legislative references:

A New Tax System (Australian Business Number) Act 1999

Excise Act 1901 section 77FF

Excise Act 1901 section 77FH

Excise Laws Amendment (Fuel Tax Reform and Other Measures) Act 2006

Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Act 2006

Excise Regulations 1925  Divisions 2 to 4 of Part VI, Part VIII

Excise Amendment Regulations 2006 (No. 3 )

Spirits Regulations 1926, Parts IV to IV

Therapeutic Goods Act 1989  subsection 34(2)

Therapeutic Goods Act 1989  Part 3-3

 

 

Other references:

Review of the Schedule to the Excise Tariff Act: industry discussion paper, Treasury, 2 June 2005

Explanatory Memorandum to the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006, Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006

 

 

ATO references

NO:

 

ISSN:

 

 

 

Overview

The Excise (Class of persons—health care practitioners) Determination 2006 (No. 4) was enacted to formalise the administrative practice allowing certain categories of health care practitioners to access limited quantities of duty-free spirit for professional use without a permit. This determination was introduced in response to amendments to the Excise legislation made by the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Act 2006, the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Act 2006, and the Excise Amendment Regulations 2006 (No. 3). The amendments followed the Review of the Schedule to the Excise Tariff Act 1921 initiated by Treasury in June 2005, with the aim of streamlining the Excise tariff, making excise law clearer and less complex, and improving the integrity of the excise system. This determination allows health care practitioners, such as doctors, dentists, pharmacists, and other registered or certified health care professionals, to access duty-free spirit for industrial, manufacturing, scientific, medical, veterinary, or educational purposes, provided they do not exceed the specified quantity limits and can verify their eligibility with documentary evidence. The instrument simplifies administration for the Tax Office and reduces compliance burdens for these clients, while ensuring that duty-free spirit is used for the intended purposes.

Scope and Application

The Excise (Class of persons—health care practitioners) Determination 2006 (No. 4) applies to health care practitioners, defined as doctors, dentists, pharmacists, registered nurses, or other health care practitioners registered under state or territory laws, as well as acupuncturists, herbalists, homeopaths, and naturopaths certified as exempt from Part 3-3 of the Therapeutic Goods Act 1989. This determination allows these practitioners to access limited quantities of duty-free spirit for industrial, manufacturing, scientific, medical, veterinary, or educational purposes without requiring a permit from the Tax Office, provided they do not exceed the specified maximum quantity limit. The maximum quantity for duty-free spirit access is set at 60 litres per year for practitioners other than pharmacists, and 120 litres per year for pharmacists. This legislative instrument is made under section 77FE of the Excise Act 1901 and is effective from 1 July 2006. It aims to formalise existing administrative practice and streamline the process for these practitioners to access duty-free spirit, reducing administrative burdens for both the Tax Office and the practitioners. Practitioners must present documentary evidence of their eligibility to suppliers of spirit, and those using more than 200 litres of alcohol per year must apply for specific approval under subitem 3.7 of the Excise tariff. This determination complements other legislative instruments arising from the Review of the Schedule to the Excise Tariff Act 1921, including the Excise concessional spirit approvals guidelines 2006 (No. 1).

Key Provisions

The Excise (Class of persons—health care practitioners) Determination 2006 (No. 4) introduces specific provisions under section 77FE of the Excise Act 1901, permitting health care practitioners to access undenatured or denatured spirit for industrial, manufacturing, scientific, medical, veterinary, or educational purposes without incurring excise duty. The determination sets out a maximum quantity limit for these purposes and defines who qualifies as a health care practitioner for the purposes of this exemption. Specifically, section 77FE allows the CEO (Commissioner of Taxation) to determine a class of persons eligible for duty-free access to spirit, provided that the use is legitimate and does not pose a significant risk to revenue. Health care practitioners include doctors, dentists, pharmacists, registered nurses, and other registered health care practitioners under state or territory laws, as well as certain certified practitioners such as acupuncturists, herbalists, homeopaths, and naturopaths. Under this determination, health care practitioners must present documentary evidence of their eligibility to the spirit supplier. This can include a copy of their registration certificate, their registration number with the relevant statutory board, or a certificate of exemption from the Therapeutic Goods Act 1989. Practitioners using more than 200 litres of alcohol annually must apply for approval under subitem 3.7 of the Excise tariff. The guidelines for such approvals are outlined in the Excise concessional spirit approvals guidelines 2006 (No. 1). The determination also specifies that if a practitioner qualifies for more than one class of persons, they can only access the maximum quantity permitted for one class without a permit. The maximum quantities cannot be aggregated across different classes. The Excise (Class of persons—health care practitioners) Determination 2006 (No. 4) imposes obligations on health care practitioners to ensure they use the duty-free spirit for the specified purposes. It requires suppliers of spirit to verify the bona fides of recipients and mandates that practitioners account for their use of spirit, demonstrating it is for an industrial, manufacturing, scientific, medical, veterinary, or educational purpose. Failure to account satisfactorily to the Tax Office may result in a written demand to pay an amount equal to the duty that would have been payable if the determination had not been made. This demand is a reviewable decision under section 77FH of the Excise Act 1901. Offences and penalties for breaching the provisions of the Excise (Class of persons—health care practitioners) Determination 2006 (No. 4) are primarily related to the misuse of duty-free spirit. If a health care practitioner fails to account for their use of spirit as required, they may face a demand to pay an amount equal to the duty that would have been payable. This demand is a civil liability and constitutes a reviewable decision. There are no criminal penalties specified for breach of this determination, but the financial consequences can be significant if the practitioner fails to demonstrate proper use of the spirit. The determination streamlines compliance and administrative processes for both health care practitioners and the Tax Office, reducing the need for numerous permits and simplifying the verification process.

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