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Alternative Fuel Excise

 

The following four bills have passed through both Houses of Federal Parliament and await Royal assent.

The four Bills contained in the package are the Taxation of Alternative Fuels Legislation Amendment Bill 2011, the Excise Tariff Amendment (Taxation of Alternative Fuels) Bill 2011, the Customs Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 and the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011.

These Bills bring certain alternative fuels used for transport purposes into the fuel taxation regime and make them subject to excise duty or excise-equivalent customs duty. The fuels affected are liquefied petroleum gas (LPG), liquefied natural gas (LNG) and compressed natural gas (CNG). The rates for these fuels are based on the energy content of the specific fuels and discounted by 50 per cent to reflect the potential benefits of these alternative fuels. The changes are phased in over a transition period to allow affected parties time to adjust to the changes. They will commence on 1 December 2011.

These excise tax reforms were originally announced by the previous government in the 2003-04 Federal Budget.

LPG

In recognition of the lower energy content of LPG compared to petrol or diesel, excise and excise-equivalent customs duty is imposed on LPG at a lower rate. Consequently, the full rate of taxation on LPG is 25 cpl.

These amendments impose excise and excise-equivalent customs on LPG at a final rate of 12.5 cpl, reflecting the 50 per cent discount for the alternative fuels. The Government will undertake a review of the taxation arrangements for LPG in 2015.

LNG

Excise and excise-equivalent customs duty is imposed on LNG that is used in an internal combustion engine for transport use. The appropriate unit of measurement for LNG and CNG is cents per kilogram, rather than cpl as with the other alternative fuels. The final rate of 26.13 cents per kilogram that applies from 1 July 2015 reflects the energy content of LNG, with a discount of 50 per cent because it is an alternative fuel.

CNG

Excise is imposed on CNG at a final rate of 26.13 cents per kilogram. This reflects that the appropriate unit of measurement for natural gas, including LNG and CNG, is cents per kilogram, rather than cpl that is used for the other alternative fuels. The final rate of 26.13 cents per kilogram reflects the energy content of CNG, with a discount of 50 per cent because it is an alternative fuel.

 Excise on CNG does not apply:

• Where CNG is used or intended for use for something other than as a fuel for a vehicle;

•To the extent the process of manufacture is not part of the activities of the enterprise, for example, excise is not imposed where natural gas is compressed in home refuelling systems for non-business purposes; or

• Where CNG is used in a forklift off-road or other vehicles prescribed by regulation.

 

The effective excise will be phased in for alternative fuels  between1 December 2011 and 30 June 2015.

 

  

FUEL TYPE

1 December 2011

1 July 2012

1 July 2013

1 July 2014

1 July 2015

CNG
(Cents per Kg)

5.22

10.45

15.67

20.9

26.13  

LPG
(cents per L)

2.5

5.0

7.5

10.0

12.5

LNG
(Cents per Kg)

5.22

10.45

15.67

20.9

26.13  

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