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

Administered by Department of the Treasury

Legislation au F2006L02181 Not in force Legislative Instrument

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Explanatory Statement

 

Excise Act 1901

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

 

General outline

  1.                This Explanatory Statement is provided in accordance with section 26 of the Legislative Instruments Act 2003.
  2.                Excise (Class of persons—veterinary practitioners) Determination 2006 (No. 5) 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 These provisions are outdated and unnecessarily complex.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 veterinary 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.              Veterinary practitioners may access spirit under subitem 3.6 of the Excise tariff for an industrial, manufacturing, scientific, medical, veterinary or educational purpose.

15.              Veterinary practitioners are defined in the instrument as persons registered as veterinary practitioners under the law of a State or Territory, that is, under the statutory board that regulates veterinary practice.

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 veterinary practitioner may provide:

  • a copy of his or her certificate of registration; or
  • his or her registration number.

18.              Veterinary 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 veterinary 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, veterinary practitioners could access duty-free spirit up to 60 litres a year for use in their practice. 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 June 2006]

 

 

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—health care practitioners) Determination 2006 (No. 4)

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

 

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—veterinary practitioners) Determination 2006 (No. 5) was enacted to address the need for streamlining and simplifying the Excise system, as well as to improve its integrity. This legislative instrument was introduced in response to amendments made by the 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). The determination was developed as part of a broader review of the Schedule to the Excise Tariff Act 1921, which aimed to make the excise law clearer, less complex, and more user-friendly. This legislation allows veterinary practitioners to access duty-free spirit for industrial, manufacturing, scientific, medical, or educational purposes without the need for a permit, provided they meet specific criteria and do not exceed the nominated quantity limit. The Excise (Class of persons—veterinary practitioners) Determination 2006 (No. 5) was made under section 77FE of the Excise Act 1901 by the Commissioner of Taxation, and it came into effect on 1 July 2006. The policy objective of this instrument is to formalise existing administrative practices that allowed certain categories of professionals to access limited quantities of duty-free spirit without a permit, thereby reducing the compliance burden on both clients and the Tax Office. The determination recognises that veterinary practitioners have a legitimate use for duty-free spirit for specified purposes and that access to such spirit without a permit up to a specified quantity limit does not present a significant risk to the revenue. Veterinary practitioners can present their certificate of registration or registration number as evidence of their eligibility to access duty-free spirit. However, those using more than 200 litres of alcohol a year must apply for approval under subitem 3.7 of the Excise tariff. This determination simplifies administration for the Tax Office and lessens the compliance burden for veterinary practitioners.

Scope and Application

The Excise (Class of persons—veterinary practitioners) Determination 2006 (No. 5) applies to veterinary practitioners who are registered under the laws of a State or Territory. This legislation, which commences on 1 July 2006, is designed to formalise the administrative practice that has allowed certain categories of professionals, including veterinary practitioners, to access limited quantities of duty-free spirit for specific purposes without a permit. The aim is to streamline the Excise Act 1901, making it clearer and less complex, and to improve the integrity of the excise system. Under this determination, veterinary practitioners can access spirit for an industrial, manufacturing, scientific, medical, veterinary, or educational purpose without incurring duty and without a permit, provided they use it for legitimate purposes and do not supply it on or use it for an excisable purpose. The supplier of spirit must be satisfied of the veterinary practitioner's bona fides, which can be verified by providing a copy of their registration certificate or their registration number. However, veterinary practitioners who use more than 200 litres of alcohol a year must apply for approval under subitem 3.7 of the Excise tariff, following guidelines set out in the Excise concessional spirit approvals guidelines 2006 (No. 1). The determination does not permit the aggregation of maximum quantities across different classes of persons, and the Commissioner of Taxation retains the authority to ensure that duty-free spirit is used for the declared purposes.

Key Provisions

The Excise (Class of persons—veterinary practitioners) Determination 2006 (No. 5) (the Determination) establishes a new class of persons who can access undenatured or denatured spirit duty-free for specified purposes. Section 77FE of the Excise Act 1901 allows the Commissioner of Taxation to determine by legislative instrument a class of persons and the maximum quantity of spirit that can be accessed duty-free without a permit. Under the Determination, veterinary practitioners are identified as a class of persons who can access spirit for industrial, manufacturing, scientific, medical, veterinary, or educational purposes. The Determination specifies that veterinary practitioners are defined as those registered under state or territory law as veterinary practitioners. Suppliers of spirit must be satisfied of the bona fides of the recipients, and recipients can verify their eligibility by providing a copy of their registration certificate or their registration number. The Determination imposes specific obligations on both veterinary practitioners and spirit suppliers. Veterinary practitioners must ensure they are registered under state or territory law and can present documentary evidence of their registration when accessing spirit. Suppliers must verify the eligibility of recipients before supplying spirit. Additionally, veterinary practitioners using more than 200 litres of alcohol per year must apply for approval under subitem 3.7 of the Excise tariff, following the guidelines outlined in the Excise concessional spirit approvals guidelines 2006 (No. 1). The Determination also provides a mechanism for the Tax Office to ensure that duty-free spirit is used for the specified purposes. Practitioners may be required to account for their use of spirit, and failure to satisfy the Tax Office may result in a liability to pay an amount equal to the duty that would have been payable if the Determination had not been made. Breaches of the conditions set out in the Determination can lead to significant penalties and consequences. If a veterinary practitioner fails to account for their use of spirit to the satisfaction of the Tax Office, they may be issued a written demand, resulting in a liability to pay an amount equal to the duty that would have been payable if the Determination had not been made. Furthermore, any misuse of spirit, such as using it for an excisable purpose or on-supply, can result in further penalties under the Excise Act 1901. The specific penalties for such breaches are not detailed in the Determination but can include fines and other civil or criminal penalties as outlined in the Excise Act and related regulations. The Determination, therefore, aims to balance facilitating legitimate access to duty-free spirit for low-risk users while ensuring compliance and preventing misuse.

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