Minister's Road User Charge Determination 2016 (No. 1)

Administered by Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts

Legislation au F2016L00556 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

 

Issued by the authority of the Minister for Infrastructure and Regional Development

 

Fuel Tax Act 2006

 

Minister’s Road User Charge Determination 2016 (No.1)

 

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 part 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.

 

Division 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(7)(b) of the Act provides that the Minister for Infrastructure and Regional Development (the Transport Minister) may determine the amount of the Road User Charge.

 

Subsection 43-10(9)(a)(i) and (ii) of the Act require that the Transport Minister must ensure that any proposed increase in the rate of the Road User Charge (and any data relied upon to determine an increase) be made publicly available at least 60 days prior to the making of a legislative instrument by the Transport Minister. 

 

In accordance with subsections 43-10(9)(a) and (b) of the Act, the Transport Minister wrote to the National Transport Commission (NTC) on 7 January 2015 requesting they calculate the rate of the Road User Charge that was needed to ensure full cost recovery and no more.  In addition, the Transport Minister requested that the NTC publish the data relied upon to determine the annual adjustment factor and undertake a public consultation process.

 

The NTC undertook a public consultation process from 16 February 2015 to 17 April 2015, publishing a report showing the calculations underpinning the proposed 0.6 per cent increase in the Road User Charge to 26.3 cents per litre.  During the 60 day consultation process, the NTC received multiple submissions from key industry stakeholders. 

 

Subsequently, on 6 November 2015, Transport Ministers approved a reduced Road User Charge of 25.9 cents per litre to apply from 1 July 2016, rather than the proposed increase by NTC.  This was agreed as part of a freeze revenues pathway to hold heavy vehicle charges revenue constant at 2015-16 levels for the time being while also implementing the new structure of heavy vehicle charges from the 2014 Heavy Vehicle Charges Determination RIS. 

 

In addition, the then Treasurer made changes to the Fuel Tax Act 2006 in 2015 so that the Road User Charge is specified to three decimal places ($0.259 per litre) as opposed to four decimal places ($0.2592 per litre).  

 

The new Road User Charge will ensure ongoing cost recovery of the heavy vehicles’ share of government road construction and maintenance expenditure.

 

The Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

 

     Authority:  Subsection 43-10(7)(b) 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

 

Minister’s Road User Charge Determination 2016 (No. 1)

 

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(7)(b) of the Fuel Tax Act 2006 provides that the Minister for Infrastructure and Regional Development (the Transport Minister) may determine the amount of the Road User Charge.

 

In accordance with section 43-10(7)(b) of the Fuel Tax Act 2006, this Disallowable Instrument determines the rate 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.  Charges are based on heavy vehicle-related road expenditure by all jurisdictions over the previous seven years.

 

The Charges are reviewed on a regular basis through a Heavy Vehicle Charges Determination Regulatory Impact Statement process by the National Transport Commission, the most recent being undertaken in 2014.

 

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 Act 2006 was enacted to establish a mechanism for collecting the Road User Charge from heavy vehicles used for business purposes on public roads, which helps recover the costs of road construction and maintenance attributable to these vehicles. The Act was introduced to address the need for a fair and efficient system of recovering costs from heavy vehicles, ensuring that the burden on road infrastructure is borne by those who use it most. The policy objective of the Act is to provide a transparent and accountable method of cost recovery that is consistent with the contributions of heavy vehicles to road wear and tear. The Minister for Infrastructure and Regional Development, under the authority granted by the Act, has determined the rate of the Road User Charge, which is applied by reducing the fuel tax credit provided to eligible businesses and non-profit bodies. The legislative process includes public consultation and review to ensure the rates are set appropriately and transparently.

Scope and Application

The Fuel Tax Act 2006 governs the collection of the Road User Charge, which is intended to recover the part of road construction and maintenance costs attributable to heavy vehicles with a gross vehicle mass of more than 4.5 tonnes used for business purposes on public roads. 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 in registered vehicles. The credit is calculated as the amount of the effective fuel tax minus the Road User Charge. The Transport Minister, under the authority of the Act, determines the rate of the Road User Charge, which is specified to three decimal places, and this rate is subject to public consultation and approval by Transport Ministers. The Act covers the Commonwealth jurisdiction and extends its reach through the legislative instrument, the Minister’s Road User Charge Determination 2016 (No. 1), which sets the rate at 25.9 cents per litre effective from 1 July 2016. The instrument ensures compatibility with human rights as it does not engage any of the applicable rights or freedoms.

Key Provisions

The Minister's Road User Charge Determination 2016 (No.1) under the Fuel Tax Act 2006 sets out the rate of the Road User Charge that applies to fuel used in heavy vehicles on public roads for business purposes. This charge, which is based on the gross vehicle mass of more than 4.5 tonnes, is intended to recover the portion of road construction and maintenance costs attributable to heavy vehicles. The Act, specifically in Division 41 and 43, mandates 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 such fuel. The amount of this credit is determined by the effective fuel tax payable on the fuel minus the Road User Charge, as stipulated in subsection 43-10(7)(b) of the Act. The obligations imposed on parties under this Act include the requirement for businesses and non-profit bodies to ensure they use vehicles that qualify for the fuel tax credit and to accurately calculate the fuel tax credit based on the Road User Charge rate. The Transport Minister must also ensure that any proposed increases in the Road User Charge rate and the data relied upon are made publicly available at least 60 days prior to the issuance of the legislative instrument, as per subsections 43-10(9)(a) and (b). Furthermore, the National Transport Commission (NTC) is required to conduct a public consultation process and publish the data used to determine the annual adjustment factor. Failure to comply with the provisions of the Act may result in civil and criminal consequences. For instance, if a business or non-profit body fails to correctly calculate or claim the fuel tax credit, they may be subject to penalties under the relevant tax laws. Additionally, the Act does not explicitly state maximum penalties for breaches of the Road User Charge provisions, but penalties could be imposed under other applicable legislation, such as the Excise Act 1901. It is also important to note that any legislative instrument made under the Act can be subject to disallowance by either house of Parliament.

Legal classification tags

Area of Law
Environmental Law
Taxation Law
Instrument
Regulation
Concepts
Definitions & Interpretation
Reporting & Disclosure Obligations
Cost Recovery
Compliance Obligations

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.