Excise (Volume – residual oil) Determination 2012 (No. 1)
Explanatory Statement
General Outline of Instrument
- This Explanatory Statement is provided in accordance with section 26 of the Legislative Instruments Act 2003.
- Under section 65 of the Excise Act 1901 (Excise Act) the CEO may make rules for working out the volume or weight of excisable goods.
- This instrument is made under section 65 of the Excise Act. It provides rules for working out the volume of excisable residual oil, classified to sub-item 10.28 of the Schedule to the Excise Tariff Act 1921, which is being delivered for home consumption, and for the purposes of working out the amount of excise duty payable on such fuel.
Date of effect
4. The determination will have effect from 10 December 2012.
Effect of this instrument:
5. This determination specifies the methods available for determining the volume of excisable residual oil produced and consumed within an excise licensed establishment, by a licensed manufacturer, in the course of refining petroleum condensate or stabilised crude petroleum oil.
6. Where a licensed manufacturer consumes residual oil during its own refining operations, the residual oil 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 remnants of the distillation process into consumption. It is appropriate to use alternative methods for the measuring of volume in such circumstances.
7. In these circumstances, the volume of excisable goods may be worked out by using a formula that calculates output on the basis of historical output from similar feedstock or other methods providing comparable degrees of accuracy may be used. The volume determined has to be corrected to 15 degrees Celsius using the American Society for Testing and Materials (ASTM) Petroleum Measurement Tables Volume Correction Factors, Volume VIII.
8. While consultation showed that methods such as a properly calibrated flow meters and other measuring devices were not typically used in this situation and hence the need for the Determination, their use would clearly provide acceptable levels of accuracy.
Impact of the instrument
9. Compliance cost impact: An assessment of the compliance cost impact indicates that the impact will be minimal for both implementation and on-going compliance costs. The instrument is routine in nature.
Consultation
10. Consultations on the determination was undertaken by direct contact with affected entities. No comments were received that indicated the proposals in the draft determination should not proceed.
11. Consultation was undertaken with the Revenue Analysis Branch (RAB) and no monetary, financial or revenue impacts resulting from or associated with this determination were identified.
12. The Treasury have been consulted and do not have any issue with the determination.
James O’Halloran
Deputy Commissioner of Taxation
4 December 2012
Related Rulings/Determinations:
PS LA 2010/03
FTD 2010/1
Previous Rulings/Determinations:
Subject references:
Excise
Excisable goods
Excise Duty
Legislative references:
Excise Act 1901 section 65
Excise Tariff Act 1921 The Schedule
Legislative Instruments Act 2003 section 26
Income Tax Assessment Act 1936 section 18
Case references:
Other references:
American Society for Testing and Materials (ASTM) Petroleum Measurement Tables Volume Correction Factors, Volume VIII (the time of publication this reference is available from www.astm.org)
Statement of Compatibility with Human Rights
This Statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Excise (Volume – residual oil) Determination 2012 (No. 1)
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
This legislative instrument specifies methods for measuring excisable residual fuel oil which is produced and consumed within an excise licensed establishment, by a licensed manufacturer, in the course of refining petroleum condensate or stabilised crude petroleum oil.
Human rights implications
This legislative instrument does not engage any of the applicable rights or freedoms.
Conclusion
This legislative instrument is compatible with human rights as it does not raise any human rights issues.
James O’Halloran
Deputy Commissioner of Taxation
4 December 2012
Overview
The Excise (Volume – residual oil) Determination 2012 (No. 1) was enacted under section 65 of the Excise Act 1901 to provide rules for determining the volume of residual oil, which is classified under sub-item 10.28 of the Schedule to the Excise Tariff Act 1921, for the purpose of calculating the excise duty payable on such fuel. The determination addresses the problem of accurately measuring the volume of residual oil that is produced and consumed within an excise licensed establishment during the refining of petroleum condensate or stabilised crude petroleum oil. The instrument was made by the CEO under the Excise Act and aims to facilitate the accurate calculation of excise duty on residual oil by allowing for alternative measurement methods when direct measurement is not feasible. The determination came into effect on 10 December 2012 and consultation with affected entities, including the Revenue Analysis Branch and the Treasury, indicated no objections to the proposed methods.
Scope and Application
The Excise (Volume – residual oil) Determination 2012 (No. 1) applies to licensed manufacturers who produce and consume residual oil within an excise licensed establishment, specifically in the course of refining petroleum condensate or stabilised crude petroleum oil. This Determination is made under section 65 of the Excise Act 1901 and is intended to provide rules for calculating the volume of excisable residual oil to determine the amount of excise duty payable. The Determination has a national jurisdictional reach as it is a Commonwealth instrument. It does not apply to entities or individuals outside the scope of excisable goods defined under the Excise Act and the Excise Tariff Act 1921. The Determination specifies methods for measuring residual oil that are practical given the nature of its consumption and production, and allows for the use of alternative methods such as formulas based on historical output or other methods that provide comparable accuracy. These measurements must be corrected to 15 degrees Celsius using the ASTM Petroleum Measurement Tables Volume Correction Factors, Volume VIII. The Determination extends the Excise Act by providing specific rules for calculating the volume of excisable residual oil. There are no exclusions or exemptions outlined within the Determination itself, though compliance with other relevant excise regulations would still apply.
Key Provisions
The Excise (Volume – residual oil) Determination 2012 (No. 1) (the Determination) is a legislative instrument made under section 65 of the Excise Act 1901. It provides specific rules for determining the volume of excisable residual oil, classified under sub-item 10.28 of the Schedule to the Excise Tariff Act 1921, which is delivered for home consumption. This instrument helps in calculating the excise duty payable on such fuel. The Determination applies from 10 December 2012 and specifies methods for measuring the volume of residual oil in situations where it is not stored in calibrated tanks or placed into containers that facilitate measurement of volume. Instead, the Determination allows for the use of formulas based on historical output from similar feedstock or other methods providing comparable accuracy. It also requires that the volume be corrected to 15 degrees Celsius using the American Society for Testing and Materials (ASTM) Petroleum Measurement Tables Volume Correction Factors, Volume VIII.
The Determination imposes specific obligations on parties subject to the Excise Act 1901, particularly licensed manufacturers who produce and consume residual oil during their refining operations. These parties are required to use the methods specified in the Determination to measure the volume of residual oil. This includes using formulas based on historical output data or other acceptable methods that provide comparable accuracy. Furthermore, any volume determined must be corrected to 15 degrees Celsius using the prescribed ASTM correction factors. Failure to adhere to these requirements could lead to non-compliance with the Excise Act.
The Determination does not explicitly detail specific offences, penalties, or civil/criminal consequences for breach within the text provided. However, non-compliance with the Excise Act 1901 generally can result in penalties. Under the Excise Act, the penalties for non-compliance can include substantial fines and, in some cases, imprisonment. The severity of the penalty often depends on the nature and extent of the non-compliance, and whether it is deemed to be intentional or reckless. For example, knowingly making a false statement or supplying false information to the Commissioner of Taxation could lead to fines of up to 2,000 penalty units or imprisonment for up to five years, or both, as per the general penalty provisions in the Excise Act. The precise penalties applicable to specific breaches under this Determination would need to be referred to the relevant sections of the Excise Act.