Petroleum Excise (Prices) Amendment Regulations 2004 (No. 1) 2004 No. 69
EXPLANATORY STATEMENT
STATUTORY RULES 2004 No. 69
Issued by authority of the Minister for Revenue and Assistant Treasurer
Petroleum Excise (Prices) Act 1987
Petroleum Excise (Prices) Amendment Regulations 2004 (No. 1)
Section 14 of the Petroleum Excise (Prices) Act 1987 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Petroleum Excise (Prices) Amendment Regulations 2004 (the Regulations) prescribe the addition of the Legendre and Lambert/Hermes oil production areas to the Petroleum Excise (Prices) Regulations 1988 (the Principal Regulations). This enables the determination of volume weighted average realised (VOLWARE) prices, as well as the VOLWARE commencement date after which prices are calculated, for the production areas.
The VOLWARE price is used as the basis for calculating each oil producing region's excise payable under the Excise Tariff Act 1921. The calculation of separate VOLWARE prices for different regions is necessary as the realised prices of crude oil from different regions vary.
An oil producing region is subject to excise once it exceeds the 4,767.3 megalitres excise exempt limit prescribed in the Excise Tariff Act 1921. The listing of an oil producing region in the Schedule to the regulations enables excise to be calculated for and collected from the region.
Oil production in the Legendre oil producing region (situated in the general North West Shelf locality) will likely exceed the 4,767.3 megalitres excise limit sometime during March or April 2004. The Regulations add the Legendre oil producing region to the Schedule to the Principal Regulations, enabling a separate VOLWARE price to be determined for the Legendre region.
The amendment to the Principal Regulations also adds the Lambert/Hermes production area, in the North West Shelf project area oil producing region, to the Schedule for completeness. As the Lambert/Hermes production area is under the North West Shelf region (which is already listed in the Schedule), this does not result in the calculation of a new VOLWARE price.
As the actual date on which cumulative production from each of the production areas will exceed the excise exempt limit will not be known until some time after it occurs, the date on which excise will apply to production in those areas are expressed simply as the date on which the production areas exceed the excise exempt threshold of 4767.3 megalitres. This may mean that the proposed Regulations have effect from a date before they are made. However, subsection 4(1A) of the Act provides that regulations prescribing a production area as an oil producing region may be expressed to have had effect from a day occurring before the making of the regulations.
The Regulations commenced on gazettal.
Overview
The Petroleum Excise (Prices) Amendment Regulations 2004 (No. 1) were introduced to address the need to determine volume weighted average realised (VOLWARE) prices for specific oil production areas, in line with the requirements of the Petroleum Excise (Prices) Act 1987. Enacted by the Parliament of Australia, these regulations amend the Petroleum Excise (Prices) Regulations 1988 to include the Legendre and Lambert/Hermes oil production areas, facilitating the calculation of excise payable on oil production exceeding the 4,767.3 megalitres threshold set by the Excise Tariff Act 1921. This legislative action ensures that excise is accurately calculated and collected based on the realised prices of crude oil from different production regions. The policy objective behind these amendments is to ensure that excise is applied correctly and efficiently across various oil producing regions, thus maintaining the integrity of the excise regime.
Scope and Application
The Petroleum Excise (Prices) Amendment Regulations 2004 (No. 1) amend the Petroleum Excise (Prices) Regulations 1988 by adding the Legendre and Lambert/Hermes oil production areas to the list of oil producing regions. This addition enables the calculation of volume weighted average realised prices for these regions, which in turn are used to determine the excise payable under the Excise Tariff Act 1921. An oil producing region becomes subject to excise once its production exceeds the 4,767.3 megalitres threshold set out in the Excise Tariff Act 1921. The Regulations aim to ensure that excise is appropriately calculated and collected from these regions once the specified threshold is surpassed. Although the exact date when production will exceed the threshold is not yet known, the Regulations are designed to take effect retroactively from the date when the production areas exceed the specified limit, in accordance with the enabling provisions of the Petroleum Excise (Prices) Act 1987. The Regulations apply to the oil industry and entities involved in oil production in the specified regions.
Key Provisions
The Petroleum Excise (Prices) Amendment Regulations 2004 (No. 1) (the Regulations) introduce amendments to the Petroleum Excise (Prices) Regulations 1988 (the Principal Regulations). Section 14 of the Petroleum Excise (Prices) Act 1987 empowers the Governor-General to make these Regulations, which are designed to prescribe specific matters required or permitted by the Act. The primary objective of these Regulations is to include the Legendre and Lambert/Hermes oil production areas in the Principal Regulations, thereby facilitating the determination of volume weighted average realised (VOLWARE) prices for these areas, along with the VOLWARE commencement date for price calculations. This is essential for calculating the excise payable on oil production from these regions, as the VOLWARE price serves as the basis for such calculations under the Excise Tariff Act 1921.
The Regulations impose several obligations on the parties governed by them. Specifically, they require the inclusion of the Legendre and Lambert/Hermes production areas in the Schedule of the Principal Regulations. This inclusion is crucial for determining the VOLWARE prices, which are necessary for calculating the excise payable by oil producers in these regions. Once oil production in a region exceeds the 4,767.3 megalitres excise exempt limit, excise becomes applicable to the production from that region. The Regulations ensure that the necessary provisions are in place to identify when production in these areas exceeds the specified limit and to calculate the applicable excise. This involves setting a VOLWARE commencement date, which is the date when production in the area exceeds the excise threshold, and using this date to calculate the excise.
Under the Petroleum Excise (Prices) Amendment Regulations 2004 (No. 1), breaches of the specified requirements may result in civil or criminal consequences. While the specific penalties are not detailed in the Explanatory Statement, it is important to note that non-compliance with the Regulations could lead to enforcement actions. The Act and associated regulations are designed to ensure that excise is correctly calculated and paid on oil production, and any failure to adhere to the prescribed procedures could result in legal repercussions. The precise penalties for breaches would typically be outlined in the relevant Acts or Regulations, and could include fines or other civil penalties, depending on the nature and severity of the breach.
The Regulations also clarify that the commencement date of excise application to production areas may precede the actual date of the Regulations' gazettal. This is permissible under subsection 4(1A) of the Petroleum Excise (Prices) Act 1987, which allows regulations to be expressed as having effect from a day before their making. This provision ensures that there is no gap in the application of excise once production exceeds the specified limit, even if the exact date of this occurrence is not known at the time the Regulations are drafted. This ensures continuity in the imposition of excise duties and prevents any potential avoidance of tax liabilities due to timing discrepancies.