EXPLANATORY STATEMENT
Issued by the authority of the Minister for Infrastructure, Transport, Regional Development
Fuel Tax Act 2006
Fuel Tax (Road User Charge) Determination 2022
Heavy vehicles with a gross vehicle mass of more than 4.5 tonnes and used on public roads for business purposes are charged to recover that part of the road construction and maintenance costs that are attributable to heavy vehicles (cost recovery). A portion of the costs are recovered by states and territories through heavy vehicle registration charges and a portion by the Commonwealth through the fuel-based Road User Charge.
The Fuel Tax Act 2006 (the Act) establishes a mechanism for the collection of the Road User Charge by reducing the fuel tax credit provided to eligible businesses and non-profit bodies. Divisions 41 and 43 of the Act provide that businesses registered or required to be registered for Goods and Services Tax and non-profit bodies are entitled to a partial fuel tax credit for fuel used on a public road for business purposes in registered vehicles with a gross mass of more than 4.5 tonnes. The fuel tax credit claimable is equal to the amount of the effective fuel tax (excise) that is payable on the fuel minus the Road User Charge.
Subsection 43-10 (8) of the Act provides that the Transport Minister may determine, by legislative instrument, the rates of the Road User Charge. The Fuel Tax (Road User Charge) Determination 2022 (the Determination) sets the new rate of the Road User Charge for taxable fuels for which duty is payable at a rate per litre of fuel at 27.2 cents per litre, and for taxable fuels for which duty is payable at a rate per kilogram of fuel at 36.3 cents per kilogram of fuel. This determination takes effect on 29 September 2022 to coincide with the return of fuel excise to its pre-30 March 2022 rate plus indexation.
The National Transport Commission consulted on the proposed increase to the Road User Charge on behalf of Infrastructure and Transport Ministers from 31 January to 1 April 2022. Stakeholders expressed mixed views about the increased rate. On balance, while acknowledging the merits of assisting heavy vehicle operators recover from the COVID-19 pandemic, the Transport Minister has determined that a small increase to the rate of the Road User Charge is a measured step towards returning to cost recovery. That is, beginning to return to a level of Road User Charge that more truly recovers, as intended, the heavy vehicle share of recent government road expenditure. This is consistent with the majority decision of Infrastructure and Transport Ministers and their convention to take a group decision on changes to heavy vehicle charges.
The Determination revokes all previous Road User Charge determinations. This is consistent with subsection 33(3) of the Acts Interpretation Act 1901, which provides that if an Act confers a power to make any instrument of a legislative or administrative character, the power is construed as including a power exercisable in like manner and subject to the like conditions to repeal, rescind, revoke, amend, or vary any such instrument.
The Determination is a legislative instrument for the purposes of the Legislation Act 2003.
Authority: Subsection 43-10 (8) of the
Fuel Tax Act 2006
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Fuel Tax Act 2006
Fuel Tax (Road User Charge) Determination 2022
This Disallowable 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 Disallowable Legislative Instrument
Subsection 43-10 (8) of the Fuel Tax Act 2006 provides that the Transport Minister may determine, by legislative instrument, the rates of the Road User Charge.
In accordance with section 43-10 (8) of the Fuel Tax Act 2006, this Disallowable Instrument determines the rates of the Road User Charge applied to taxable fuel used on a public road for business purposes in registered vehicles with a gross mass of more than 4.5 tonnes.
Heavy vehicle charges are based on a combination of a fuel-based Road User Charge, collected by the Commonwealth, and registration charges, which are collected by the states and territories.
Human rights implications
This Disallowable Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Disallowable Instrument is compatible with human rights as it does not raise any human rights issues.
Overview
The Fuel Tax (Road User Charge) Determination 2022, issued under the authority of the Minister for Infrastructure, Transport, and Regional Development, amends the rates of the Road User Charge as set out in the Fuel Tax Act 2006. This Act was enacted to establish a mechanism for the collection of the Road User Charge, which is intended to recover the portion of road construction and maintenance costs attributable to heavy vehicles used for business purposes on public roads. The problem or gap this Act addresses is the need for a structured and equitable system to fund infrastructure that supports heavy vehicle usage, which can significantly impact road maintenance and construction. The Transport Minister, under the authority of the Fuel Tax Act 2006, determines these rates through legislative instruments. The Determination sets a new rate for the Road User Charge to reflect the intended level of cost recovery, following a consultation period with stakeholders, and aims to balance the interests of heavy vehicle operators, particularly in the context of economic recovery from the COVID-19 pandemic.
Scope and Application
The Fuel Tax Act 2006 applies to heavy vehicles with a gross vehicle mass exceeding 4.5 tonnes that are used on public roads for business purposes. The Act facilitates the collection of the Road User Charge through a reduction in the fuel tax credit provided to eligible businesses and non-profit bodies, with the charge intended to recover the portion of road construction and maintenance costs attributable to heavy vehicles. This mechanism is designed to ensure that heavy vehicle operators contribute their fair share towards road infrastructure. The Act applies to businesses registered or required to be registered for Goods and Services Tax and non-profit bodies, providing them with a partial fuel tax credit for fuel used on public roads in registered vehicles. The Transport Minister, under subsection 43-10 (8) of the Act, has the authority to determine the rates of the Road User Charge through subordinate instruments, such as the Fuel Tax (Road User Charge) Determination 2022, which sets the charge rates for taxable fuels. The geographic reach of the Act is national, as it is a Commonwealth Act, but it works in conjunction with state and territory registration charges. The Determination revokes all previous Road User Charge determinations, ensuring that only the current rates are applicable. This legislative instrument is compatible with human rights as it does not raise any human rights issues.
Key Provisions
The main operative sections of the Fuel Tax (Road User Charge) Determination 2022 (the Determination) establish the rates for the Road User Charge, which is levied on taxable fuels used on public roads in heavy vehicles with a gross vehicle mass exceeding 4.5 tonnes for business purposes. Section 43-10(8) of the Fuel Tax Act 2006 allows the Transport Minister to determine these rates via legislative instrument. The Determination sets the new Road User Charge rates at 27.2 cents per litre for fuel subject to duty on a volumetric basis and 36.3 cents per kilogram for fuel subject to duty on a mass basis. This Determination replaces all previous rates and takes effect from 29 September 2022.
The obligations and requirements imposed by the Act and the Determination primarily focus on the collection and application of the Road User Charge. Eligible businesses and non-profit bodies registered or required to be registered for Goods and Services Tax are entitled to a partial fuel tax credit under Divisions 41 and 43 of the Act. The amount of this credit is determined by the effective fuel tax payable on the fuel minus the Road User Charge. The Transport Minister's role involves determining the rates of the Road User Charge, which is mandated by section 43-10(8) of the Act. The Determination ensures that these rates are updated to reflect the necessary cost recovery for road construction and maintenance attributable to heavy vehicles.
The Determination does not explicitly outline specific offences, penalties, or consequences for breach within its text. However, it is reasonable to infer that non-compliance with the Act's provisions, including the failure to apply or remit the Road User Charge as determined, could lead to legal repercussions. Typically, breaches of tax legislation in Australia can result in civil or criminal penalties, depending on the nature and severity of the offence. The maximum penalties for tax-related offences can vary, but they may include fines and, in some cases, imprisonment. The exact penalties would be governed by the broader tax legislation and administrative practices.