EXPLANATORY STATEMENT
STATUTORY RULES 1989 NO 352
Issued by the Authority of the Minister of State for Resources.
PETROLEUM EXCISE (PRICES) ACT 1987
PETROLEUM EXCISE (PRICES) REGULATIONS (AMENDMENT)
The proposed Regulations will provide for VOLWARE prices to be calculated at the end of 1989 by removing sub-section 4 (c) from Section 5 of the Regulations. The VOLWARE price as explained in Section 7 (3) of the Act is “...the volume weighted average of realised prices for that month”.
Provision is made in the legislation for the deduction from the ‘relevant delivery price’ of a ‘credit allowance’ to derive the transaction price. The Regulations at Sub-Sections 5(2), 5(3), and 5(4) describe the method for determining the credit allowance. When the number of credit days allowed is in excess of 15, a credit allowance is deducted to determine the transaction price.
Under circumstances at the end of the year there are four situations which could arise but the Regulations only cover three. The Regulations cover the situations where:
• the effective credit day and the due date for payment are in the same year;
• the effective credit day is in one year, the due date for payment is in the immediately succeeding year and the number of credit days allowed under the contract that occur in the first of those years is no more than 15; and
• the effective credit day under the contract is in one year (first year), the due date for payment under the contract is in the immediately succeeding year, the number of credit days allowed under the contract that occur in the first year is more than 15, and one of those years is a leap year.
The situation which is not covered in the Regulations is that of:
• the effective credit day under the contract is in one year (first year), the due date for payment under the contract is in the immediately succeeding year, the number of credit days allowed under the contract that occur in the first year is more than 15, and neither of these years is a leap year.
Overview
The Petroleum Excise (Prices) Regulations (Amendment) 1989 was enacted to address discrepancies in the calculation of VOLWARE prices as outlined in the Petroleum Excise (Prices) Act 1987. This amendment aimed to ensure that the volume weighted average of realised prices for petroleum products is accurately calculated by removing sub-section 4(c) from Section 5 of the Regulations. The objective was to streamline the pricing mechanism, ensuring that the credit allowance is correctly deducted from the relevant delivery price to derive the transaction price, particularly where credit days exceed 15 days. The Regulations now cover three out of four possible scenarios at the end of a year, with provisions for different situations involving credit days and payment dates across consecutive years, including scenarios involving leap years. This amendment was issued by the Minister of State for Resources and is intended to rectify the gap in the existing regulatory framework that did not adequately address all possible transactional situations.
Scope and Application
The Petroleum Excise (Prices) Regulations (Amendment) under the Petroleum Excise (Prices) Act 1987 targets entities engaged in the petroleum industry, specifically those involved in the calculation of excise duty based on the prices of petroleum products. The Act applies to all transactions where petroleum excise is levied, ensuring that prices are accurately assessed to determine the appropriate excise duty. The amendment to the Regulations aims to refine the calculation of VOLWARE prices by removing subsection 4(c) from section 5, thereby adopting the volume weighted average of realised prices for that month as outlined in section 7(3) of the Act. These Regulations operate nationally, governing petroleum excise across Australia. Notably, the Regulations detail the calculation of a credit allowance that is deducted from the relevant delivery price to arrive at the transaction price, a process outlined in subsections 5(2), 5(3), and 5(4). However, the Regulations do not cover every possible scenario at year-end, specifically excluding the situation where the effective credit day and the due date for payment span two non-leap years with more than 15 credit days allowed in the first year. This exclusion implies that additional arrangements or interpretations may be necessary for this particular circumstance.
Key Provisions
The Petroleum Excise (Prices) Regulations (Amendment) Statutory Rules 1989 No 352, issued under the authority of the Minister of State for Resources, primarily amend the method of calculating VOLWARE prices as outlined in Section 5 of the Petroleum Excise (Prices) Regulations. The Amendment removes subsection 4(c) from Section 5, specifying that the VOLWARE price, defined in Section 7(3) of the Act, is to be the volume weighted average of realised prices for a given month. This change ensures that the calculation of VOLWARE prices is updated at the end of each year, providing a more accurate reflection of market conditions.
The Regulations also detail the method for determining the credit allowance that is to be deducted from the 'relevant delivery price' to derive the transaction price. Subsections 5(2), 5(3), and 5(4) of the Regulations describe the calculation of this credit allowance. Specifically, a credit allowance is deducted when the number of credit days allowed is more than 15 days. This allowance is applied to adjust the transaction price, ensuring that it reflects the credit terms agreed upon in the contract. These provisions are designed to provide clarity and consistency in how petroleum excise prices are calculated and adjusted for credit terms.
The Regulations impose specific obligations on the parties involved in petroleum transactions, particularly concerning the calculation of the VOLWARE price and the credit allowance. For instance, parties must ensure that the VOLWARE price is accurately calculated as the volume weighted average of realised prices at the end of each year. Additionally, they must determine the credit allowance correctly based on the number of credit days allowed under the contract and adjust the transaction price accordingly. Compliance with these provisions is essential to avoid discrepancies in the reported prices and to ensure that the excise is correctly calculated and paid.
Breach of the obligations outlined in the Regulations can result in significant consequences. Although the specific penalties for non-compliance are not detailed in the text, it is reasonable to infer that penalties could include financial penalties, fines, or other civil or criminal sanctions as provided for under the broader legislative framework of the Petroleum Excise (Prices) Act 1987. Such penalties serve as a deterrent against non-compliance and ensure that the legislative intent to accurately reflect market prices and credit terms is upheld.