Excise (Volume - recycled waste oil) Determination 2006 (No. 2)

Administered by Department of the Treasury

Legislation au F2006L02173 Not in force Legislative Instrument

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Explanatory Statement

Excise Act 1901

Excise (Volume—recycled waste oil) Determination 2006 (No. 2)

General Outline

This Explanatory Statement is provided in accordance with section 26 of the Legislative Instruments Act 2003.
Excise (Volume—recycled waste oil) Determination 2006 (No. 2) is required by amendments to the Excise legislation effected by Excise Laws Amendment (Fuel Tax Reform and Other Measures) Act 2006 and Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Act 2006.
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.
The Excise Laws Amendment (Fuel Tax Reform and Other Measures) Act 2006 inserts section 65, which allows the CEO (Commissioner of Taxation), by legislative instrument, to determine rules for working out the volume, weight and alcoholic strength of excisable goods. Paragraphs 2.37 to 2.42 of the Explanatory Memorandum to the amending Bills provide commentary on the intended operation of section 65.
The instrument provides rules for working out the volume of recycled waste oil that is an excisable good where a licensed manufacturer recycles waste oil and uses the recycled product.
The instrument is made under section 65 of the Excise Act.

Date of effect

7. The instrument commences on 1 July 2006.

Effect of the instrument:

8. The amount of excise duty payable is determined by multiplying the volume of excisable goods classified to item 10 of the Excise tariff by the rate of duty that applies to those goods.

9. This instrument provides rules to ensure that the correct amount of duty is paid by determining acceptable methods for working out the volume of recycled waste oil produced and then used by a licensed manufacturer.

10. Where a licensed manufacturer recycles waste oil for consumption in carrying on its own enterprise, the recycled product will generally not be stored in calibrated tanks or placed into containers which facilitate the measurement of volume. The product may, for example, be stored for a relatively short period in a holding tank or may be fed directly from the recycling process into consumption. It is appropriate to use alternative methods for the measuring of volume in such circumstances.

11. In these circumstances, the volume of excisable goods may be worked out by using a properly calibrated flow meter or a formula that calculates output on the basis of historical output from similar feedstock. Other methods providing comparable degrees of accuracy may be used also.

12. A formula must be capable of providing an accurate reflection of the volume of output. It should be reassessed for accuracy where there is change in recycling equipment or processes, or in the nature or source of the feedstock waste oil. Historical data will generally be dated within 6 months.

Impact of the instrument

13. The instrument provides greater administrative certainty around the rules for measuring the volume of excisable goods in these circumstances.

Consultation

14. 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.

15. 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.

16. Selected parties in 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 (Volume—excisable beverages) Determination 2006 (No. 1)

Subject references:

Excise

Excisable goods

Excise duty

Beer excise

Legislative references:

Excise Act 1901 section 65

Excise Act 1901 section 77B

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

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

Other references:

House of Representatives, Hansard, 7 November 1988, p 2482

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 (Volume—recycled waste oil) Determination 2006 (No. 2) was enacted in 2006 under the Excise Act 1901, following amendments introduced by the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Act 2006 and the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Act 2006. This determination was developed in response to the need to streamline the excise system and enhance its clarity and integrity, as identified during the Review of the Schedule to the Excise Tariff Act 1921. The determination provides rules for calculating the volume of recycled waste oil that is subject to excise duty when it is recycled and used by a licensed manufacturer, aiming to ensure that the correct amount of duty is paid. This instrument was created under the authority of section 65 of the Excise Act, which allows the Commissioner of Taxation to establish rules for determining the volume, weight, and alcoholic strength of excisable goods. It offers practical methods for measuring the volume of recycled waste oil, such as using calibrated flow meters or formulas based on historical output data, to address the challenges of measuring the volume of such goods, particularly when they are not stored in calibrated tanks or containers. The determination was subject to a two-week public consultation process initiated by the Australian Taxation Office in June 2006, prior to being approved by the Assistant Treasurer and subsequently passed by Parliament.

Scope and Application

The Excise (Volume—recycled waste oil) Determination 2006 (No. 2) applies to licensed manufacturers who recycle waste oil for their own use, ensuring they can accurately measure the volume of the recycled waste oil to determine the applicable excise duty. This legislative instrument is a result of the amendments to the Excise Act 1901 by the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Act 2006 and the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Act 2006, and is designed to streamline and simplify the excise system. It applies nationally across Australia, and the rules are set out to provide clarity and certainty in measuring the volume of recycled waste oil, which may not be stored in calibrated tanks or containers that facilitate easy measurement. The instrument allows for the use of calibrated flow meters or formulas based on historical output data to measure the volume, with the requirement that these methods be reassessed for accuracy when there are changes in equipment, processes, or feedstock. The instrument provides a clear framework for these licensed manufacturers to comply with the excise obligations, ensuring that the correct amount of duty is paid.

Key Provisions

The Excise (Volume—recycled waste oil) Determination 2006 (No. 2) under section 65 of the Excise Act 1901 sets out the rules for determining the volume of recycled waste oil that is subject to excise duty (sections 2-3, 9-10). This determination is crucial for licensed manufacturers who recycle waste oil and use the recycled product within their own operations. The determination allows for the use of calibrated flow meters, formulas based on historical output from similar feedstock, or other methods that provide comparable accuracy in measuring the volume of recycled waste oil (sections 11-12). The obligations imposed on parties by this determination include ensuring that the volume of recycled waste oil is accurately measured using one of the approved methods. This requirement applies specifically to licensed manufacturers who recycle waste oil and use the recycled product within their own enterprise. A formula used for calculating the volume must be reassessed for accuracy if there are changes in recycling equipment, processes, or the nature or source of the feedstock waste oil. Additionally, historical data used in the formula must be dated within the last six months to ensure relevance and accuracy (section 12). Failure to comply with the provisions of this determination may result in civil or criminal consequences. The Excise Act 1901 provides for offences and penalties for non-compliance with excise duty obligations, although the specific penalties are not detailed within this determination. However, it is clear that non-compliance could lead to financial penalties, legal action, and other civil or criminal consequences as stipulated under the broader excise legislation. The accuracy and reliability of the methods used to measure the volume of recycled waste oil are critical to avoid any adverse outcomes (section 12).

Area of Law: Taxation Law
Instrument: Legislative Instrument
Concepts: Definitions & Interpretation; Regulatory Standards; Enforcement Powers

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