EXPLANATORY STATEMENT
EXCISE ACT 1901
EXCISE REGULATIONS (AMENDMENT)
STATUTORY RULES 1989 NO. 61
ISSUED BY THE AUTHORITY OF THE MINISTER OF STATE FOR SCIENCE, CUSTOMS AND SMALL BUSINESS
Section 164 of the Excise Act 1901 (the Act) provides in part that “The Governor-General may make Regulations not inconsistent with this Act prescribing all matters which by this Act are required or permitted to be prescribed or as may be necessary or convenient to be prescribed for giving effect to this Act...”
With the move to a free market for sales of indigenous crude oil on 1 January 1988, and the subsequent changes to the Excise regime applying to crude oil, an examination of all legislative provisions relating to crude oil has been undertaken. As a result of this review, it has been determined that two new refund circumstances are required and, as a corollary to one of the new circumstances, a new time period is required within which applications for that refund must be made.
Regulation 50 of the Excise Regulations (the Regulations) prescribes the circumstances in which a refund of Excise duty may be paid.
These Statutory Rules insert two new refund circumstances in the Excise Regulations.
Details of the Regulations are as follows:
Regulation 1: paragraph (1)(b) of the Statutory Rules amends subregulation 50(1) of the Excise Regulations by inserting two new refund circumstances at paragraphs 50(1)(s) and 50(1)(t).
New circumstance 50(1)(s) is necessary to cover the situation where either a meter and/or accounting error in the measurement of volumes of stabilised crude petroleum oil and liquefied petroleum gas is discovered after Excise duty has been paid.
Such errors can occur from time to time in the Bass Strait project largely because of the size and complexity of that project. A complicating factor is that an error in the measurement of one platform’s production (there are currently 13 production platforms) will, because of the interdependence of all production streams in the overall computerised mass balance/back allocation program for production and sales, vary all production area volumes (some up, some down).
The variation of all production area volumes makes it impossible, when an error is first discovered, to determine whether the overall Excise duty liability will increase or decrease. This can only be determined after the production data has been verified and the mass balance/back allocation computer program has been rerun for the total period the error was applicable. Even though detailed checking and review procedures are in place, a volumetric error in the system may not be detected for some months, or even several years, after the initial Excise duty is paid.
While the producers lodge an application immediately it is discovered that an error has resulted in an overpayment of duty, this may well be in respect of a period exceeding twelve months. The Statutory Rules allow a producer’s Excise duty liability to be adjusted regardless of the period in which the error occurred. This is directly linked to the royalties the Commonwealth and Victorian State Governments collect from the Bass Strait operation. These royalties are based on the value of the crude oil sales next of Excise. As it is the policy of both the Commonwealth and the State of Victoria to adjust royalties at any time where an error is discovered, it is appropriate for Excise to similarly be adjusted.
New circumstance 50(1)(t) is necessary as a result of the introduction of the free market arrangements for crude oil sales on 1 January 1988. As a result of this, the price upon which the Excise duty liability calculation is based is determined by the Minister for Primary Industries and Energy (or his delegate) under the Petroleum Excise (Prices) Act 1987. There is provision made for subsequently amending determinations; briefly, the regime provides that under subsection 7(3) of the Petroleum Excise (Prices) Act 1987, the Minister (or his delegate) determines the final VOLWARE price for a particular month. Subsections 7(9) and 7(10) then contain provisions which allow the Minister (or his delegate) to amend a previous determination of a final VOLWARE price up to three years after the original determination was calculated. This amended determination may therefore result in a refund circumstance in respect of Excise duty paid up to three years from the date of the original calculation of the final VOLWARE price.
The Statutory Rules provide that where such a redetermination occurs, refunds for the entire period covered by the redetermination should also be permitted.
Regulation 2: amends regulation 53 of the Regulations (which prescribes the period within which refund applications must be made) by inserting a new subregulation 53(4) which provides that a refund of Excise duty shall not be allowed under new paragraph 50(1)(t) (see discussion above) unless an application is delivered to a Collector not later than 12 months after the day on which the relevant determination of the final VOLWARE price is amended.
R. 59/89)