Petroleum Excise (Prices) Regulations (Amendment) 1997 No. 166
EXPLANATORY STATEMENT
STATUTORY RULES 1997 No. 166
Issued by the Authority of the Minister for Resources and Energy
Petroleum Excise (Prices) Act 1987
Petroleum Excise (Prices) Regulations (Amendment)
Section 14 of the Petroleum Excise (Prices) Act 1987 (the Act) provides that the GovernorGeneral may make regulations for the purposes of the Act.
Section 4 of the Acts Interpretation Act 1901 allows for the making of regulations after Royal Assent of an Act has been granted but before the Act begins operation. The Petroleum Excise (Prices) Amendment Act 1997 and the Excise Tariff Amendment Act (No. 2) 1997 are due to commence on 1 July 1997.
The purpose of these Regulations is to simplify the calculation of the price base of crude oil excise, following amendments to the Excise Tariff Act 1921 and the Petroleum Excise (Prices) Act 1987. The simplifications remove the need to calculate a 'reference price' for the month ahead and remove the need to calculate prices when production levels are too low to attract an excise liability.
The purpose of the Petroleum Excise (Prices) Act 1987 is to determine, on a monthly basis for each excisable oil producing region, a volume weighted average, realised (that is, a VOLWARE) price for stabilised crude oil. The VOLWARE price is used as the basis for determining excise payable under the Excise Tariff Act 1921. VOLWARE prices are determined for oil producing regions that contain a production area which has exceeded cumulative production of 4767.3 Megalitres (30 million barrels). The amount of excise payable is based on annual production levels, with a zero rated first tranche annual production of 500 Megalitres, and increasing rates of excise at various production levels after this.
The Petroleum Excise (Prices) Amendment Act 1997 (the Amendment Act), as part of a package with the Excise Tariff Amendment Act (No. 2) 1997 , removes the necessity to determine VOLWARE prices for oil producing regions that contain production areas which have an annual production rate consistently lower than 500 Megalitres, and hence attracts no excise liability.
The Amendment Act also removes the requirement to calculate and determine a 'reference price' for each oil producing region for the month ahead. This reference price was used as the first approximation for the value of crude oil produced from each region. The Excise Tariff Amendment Act (No. 2) 1997 changed the collection of excise from three times each month to monthly. This removes the need for a reference price to be determined. Because the change to monthly collection causes the crude oil producers' excise liability to occur after receipt of their payment for sales, there is now no need for credit compensation for interest foregone for payments received within thirty days of sales.
Details of the Regulations are set out below.
Regulation 1 sets a commencement date of 1 July 1997 to coincide with the commencement date of the Amendment Acts.
Regulation 3 omits the definition of the source of oil price information, as this information is no longer required.
Regulation 4 clarifies the definition of 'oil producing region' and 'production area'.
Regulation 5 omits the definition and method of calculation of 'reference price' as this price will not be required under the changes to the excise collection regime introduced in the Amendment Acts.
Regulation 6 clarifies the type of information required to be submitted by excisable crude oil producers for the calculation of excise liability.
Regulation 7 modifies the equation which calculates the amount of compensation for fore-one interest to be applied in calculating the price base for crude oil excise liability.
Overview
The Petroleum Excise (Prices) Regulations (Amendment) 1997 No. 166, issued under the authority of the Minister for Resources and Energy, were designed to address the complexities and inefficiencies in the calculation of excise prices for crude oil, as required by the Petroleum Excise (Prices) Act 1987. This regulatory amendment followed the enactment of the Petroleum Excise (Prices) Amendment Act 1997 and the Excise Tariff Amendment Act (No. 2) 1997, which aimed to streamline the excise calculation process. The primary objective of these regulations was to simplify the calculation of the price base of crude oil excise by eliminating the need to determine a 'reference price' for the month ahead and the need to calculate prices for production levels that do not attract an excise liability. These changes were intended to align with the amendments to the Excise Tariff Act 1921, facilitating a more straightforward and efficient system for excise determination.
Scope and Application
The Petroleum Excise (Prices) Regulations (Amendment) 1997 No. 166 applies to entities involved in the production of excisable crude oil in Australia, specifically within oil producing regions defined under the Petroleum Excise (Prices) Act 1987. This Act establishes the framework for determining a volume weighted average, realised (VOLWARE) price for stabilised crude oil, which serves as the basis for calculating excise payable under the Excise Tariff Act 1921. The Regulations aim to simplify the calculation process by removing certain requirements, such as the need to calculate a reference price for the month ahead and the need to determine VOLWARE prices for oil producing regions with annual production rates consistently below 500 Megalitres, which do not incur an excise liability. The amendments also coincide with changes to the excise collection regime, which shifts from three times monthly to a monthly collection, thus eliminating the need for a reference price and credit compensation for interest foregone for payments received within thirty days of sales. These Regulations, which commenced on 1 July 1997, are intended to streamline the administration of excise for crude oil producers in Australia.
Key Provisions
The Petroleum Excise (Prices) Regulations (Amendment) 1997 No. 166, made under the Petroleum Excise (Prices) Act 1987, are designed to streamline the process of calculating the price base of crude oil excise. This amendment aligns with the Petroleum Excise (Prices) Amendment Act 1997 and the Excise Tariff Amendment Act (No. 2) 1997, which are set to commence on 1 July 1997. These regulations seek to simplify the excise calculation by removing the necessity to determine a 'reference price' for the month ahead and by eliminating the need to calculate prices for oil producing regions with production levels below the threshold that attracts an excise liability. Regulation 1 establishes the commencement date of 1 July 1997, which coincides with the start date of the Amendment Acts, ensuring that the changes are implemented smoothly.
Under the amended regulations, the obligations on entities and individuals involved in the production of excisable crude oil are adjusted to reflect the new calculation methods. Producers are required to submit specific information as outlined in Regulation 6, which clarifies the type of data necessary for calculating excise liability. This includes details about the production and sales of crude oil that are essential for determining the volume weighted average, realised (VOLWARE) price, which forms the basis for excise calculation. The removal of the 'reference price' and the adjustments to the compensation for fore-one interest, as detailed in Regulation 7, mean that producers no longer need to account for certain factors in their calculations, thereby simplifying the process.
The regulations also impose certain obligations on the entities responsible for collecting and administering the excise. They must ensure that the new calculation methods are correctly applied and that the information submitted by producers is accurate and complete. Additionally, the excise authorities must adapt their systems and processes to align with the changes brought about by the Amendment Acts. The regulations mandate that these changes be implemented without delay, ensuring that the collection of excise proceeds as smoothly as possible under the new regime.
Breaches of the provisions within these regulations may result in civil or criminal consequences, although the specific penalties are not detailed in the explanatory statement. However, the general framework of the Petroleum Excise (Prices) Act 1987 suggests that penalties for non-compliance could include fines or other civil sanctions. In more severe cases, where there is evidence of deliberate or negligent breaches, criminal penalties may apply. The maximum penalties are not specified in the explanatory statement, but they would typically be determined in accordance with the relevant provisions of the Act and other applicable laws. The emphasis remains on ensuring that producers and authorities adhere to the new requirements to maintain the integrity of the excise collection process.