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2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
EXCISE TARIFF AMENDMENT (CONDENSATE) BILL 2008
EXCISE LEGISLATION AMENDMENT (CONDENSATE) BILL 2008
REVISED EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Treasurer, the Hon Wayne Swan MP)
THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE
HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED
Table of contents
Glossary .................................................................................................. 5
General outline and financial impact ....................................................... 7
Chapter 1 Crude Oil Excise: Condensate..................................... 9
Index ..................................................................................................... 23
Glossary
The following abbreviations and acronyms are used throughout this
revised explanatory memorandum.
Abbreviation Definition
Commissioner Commissioner for Taxation
Excise Legislation Bill Excise Legislation Amendment (Condensate)
Bill 2008
Excise Tariff Bill Excise Tariff Amendment (Condensate)
Bill 2008
VOLWARE volume weighted average realised price for
condensate
5
General outline and financial impact
Excise Tariff Amendment (Condensate) Bill 2008 and the
Excise Legislation Amendment (Condensate) Bill 2008
The Excise Tariff Amendment (Condensate) Bill 2008 amends the Excise
Tariff Act 1921 to apply the Crude Oil Excise regime to condensate
produced in the North West Shelf project area and onshore Australia.
This has the effect of removing the current exemption of condensate from
the Crude Excise Oil regime.
The Excise Legislation Amendment (Condensate) Bill 2008 amends the
Excise Act 1901, the Petroleum Excise (Prices) Act 1987, and the
Petroleum Revenue Act 1985 to facilitate this policy change.
Date of effect: These amendments apply to condensate which is produced
after midnight (by legal time in the Australian Capital Territory) on
13 May 2008.
Proposal announced: This measure was announced in the Treasurer's
Press Release No. 045 of 13 May 2008.
Financial impact: This measure has an ongoing net revenue gain, which
is estimated at around $2.5 billion over the period 2007-08 to 2011-12, as
set out in the table below.
2007-08 2008-09 2009-10 2010-11 2011-12
$93.8m $564m $635.4m $625.7m $625.7m
Compliance cost impact: Low.
7
1 Chapter 1
Crude Oil Excise: Condensate
Outline of chapter
.1 The Excise Tariff Amendment (Condensate) Bill 2008 (Excise Tariff
Bill) amends the Excise Tariff Act 1921 to apply the Crude Oil Excise
regime to condensate produced in the North West Shelf project area and
onshore Australia. This has the effect of removing the current exemption
of condensate from the Crude Oil Excise regime.
.2 The Excise Legislation Amendment (Condensate) Bill 2008 (Excise
Legislation Bill) amends the Excise Act 1901, the Petroleum Excise
(Prices) Act 1987, and the Petroleum Revenue Act 1985 to facilitate this
policy change.
.3 All the references to legislative provisions in this chapter are
references to the Excise Tariff Act 1921 unless otherwise stated.
Context of amendments
.4 The Crude Oil Excise is set as a percentage of the value of stabilised
crude petroleum oil produced from prescribed petroleum fields located in
the North West Shelf project area (situated off the coast of Western
Australia) and onshore Australia. The first 4,767.3 megalitres (or 30
million barrels) of stabilised crude petroleum oil produced from a
petroleum field is exempt from Crude Oil Excise.
.5 Once the producing field exceeds this threshold, the Crude Oil Excise
rates apply to each annual production tranche. The rates applied to each
annual production tranche depend on whether the petroleum field was
discovered before, or on or after 18 September 1975. The top Crude Oil
Excise rate (which applies once production reaches around 3.8 million
barrels in a year) is 55 per cent in the case of petroleum discoveries prior
to 18 September 1975 (called `old oil'), and is 30 per cent (once
production reaches around 5 million barrels in a year) in the case of
petroleum discoveries on or after 18 September 1975 (called `new oil').
The top Crude Oil Excise rate (which applies once production reaches
around 3.8 million barrels in a year) is also 55 per cent in the case of those
petroleum discoveries made prior to 18 September 1975 but that remained
undeveloped as at 23 October 1984 (called `intermediate oil').
9
.6 Production of condensate has been exempt from the Crude Oil Excise
since 1977. The measure being implemented by these two Bills removes
this exemption and introduces a new Crude Oil Excise regime which is
applied to the production of condensate from petroleum fields located in
the North West Shelf project area and onshore Australia. This measure
increases the return to the Australian community for allowing private
interests to extract non-renewable energy resources located in the North
West Shelf project area and onshore Australia. Petroleum projects located
offshore other than in the North West Shelf project area are not affected
by the policy change because they are subject to the petroleum resources
rent tax.
Summary of new law
.7 The Excise Tariff Bill amends the Excise Tariff Act 1901 to remove
the exemption of production of condensate from the Crude Oil Excise. It
also introduces a new Crude Oil Excise regime for production of
condensate which is equivalent to the regime applied to stabilised crude
petroleum oil produced from petroleum fields discovered on or after
18 September 1975. As a result, the Crude Oil Excise rates applied to
production of condensate are:
2 zero for annual production of 500 megalitres (around
3.1 million barrels) or less;
3 ten per cent for annual production between 501 (around
3.1 million barrels) and 600 megalitres (around 3.8 million
barrels);
4 fifteen per cent for annual production between 601 (around
3.8 million barrels) and 700 megalitres (around 4.4 million
barrels);
5 twenty per cent for annual production between 701 (around
4.4 million barrels) and 800 megalitres (around 5 million
barrels); and
6 thirty per cent for annual production over 800 megalitres
(around 5 million barrels).
.1 The Excise Tariff Bill also makes amendments to ensure that
production of condensate prior to the application of the Excise Tariff Bill
(which is after midnight (by legal time in the Australian Capital Territory)
on 13 May 2008) contributes to meeting the 4,767.3 megalitres
(30 million barrels) threshold before the Crude Oil Excise becomes
payable.
.2 The Excise Legislation Bill amends the Excise Act 1901, the
Petroleum Excise (Prices) Act 1987, and the Petroleum Revenue Act 1985.
These Acts are required to be read with the Excise Tariff Act 1921. The
amendments made to the Petroleum Excise (Prices) Act 1987 ensure the
method for determining the price of condensate for calculating the Crude
Oil Excise payable in relation to the production of condensate is the same
as the method for determining the price of stabilised crude petroleum oil.
The amendments to the Excise Act 1901 and the Petroleum Revenue
Act 1985 ensure consistency of the treatment of condensate with stabilised
crude petroleum oil for the purposes of the Crude Oil Excise.
Comparison of key features of new law and current law
New law Current law
A Crude Oil Excise regime is applied Condensate is exempt from the Crude
to the production of condensate from Oil Excise regime.
petroleum fields located in the North
West Shelf project area (located off
the coast of Western Australia) and
onshore Australia. The Crude Oil
Excise rates applied to condensate are
the same rates as are applied to
petroleum fields discovered after
18 September 1975 (which do not
depend on when the field is
developed). Production of
condensate prior to midnight on
13 May 2008 contributes towards
meeting the 4,767.3 megalitres
(30 million barrels) threshold before
the Crude Oil Excise becomes
payable.
Detailed explanation of new law
Threshold for exempt condensate
.1 The Excise Tariff Bill repeals the current definition of `exempt
offshore oil' and inserts a new definition of `exempt offshore oil and
condensate'. The effect of the amendment is that in the case where a
petroleum field located offshore produces stabilised crude petroleum oil
11
and condensate, both products contribute towards meeting the first
4,767.3 megalitres of cumulative production for that field. In the case
where a petroleum field located offshore produces either stabilised crude
petroleum oil or condensate (but not both), the product produced by the
field contributes towards meeting the first 4,767.3 megalitres of
cumulative production for that field. [Schedule 1, items 3 and 4, subsection 3(1)
of the Excise Tariff Act 1921]
.2 The other feature included in the current definition of `exempt
offshore oil' is that if stabilised crude petroleum oil is produced from a
petroleum field located offshore before 1 July 1987, this stabilised crude
petroleum oil cannot be exempt offshore oil for the purposes of the Excise
Tariff Act 1921. This feature has been extended to condensate in the
definition of `exempt offshore oil and condensate'. [Schedule 1, item 4,
subsection 3(1) of the Excise Tariff Act 1921]
.3 The Excise Tariff Bill repeals the current definition of `pre-threshold
onshore oil' and inserts a new definition of `pre-threshold onshore oil and
condensate'. The effect of the amendment is that in the case where a
petroleum field located onshore produces stabilised crude petroleum oil
and condensate, both products contribute towards meeting the first 4,767.3
megalitres of cumulative production for that field. In the case where a
petroleum field located onshore produces either stabilised crude petroleum
oil or condensate (but not both), the product produced by the field
contributes towards meeting the first 4,767.3 megalitres of cumulative
production threshold for that field. [Schedule 1, items 11 and 12, subsection 3(1)
of the Excise Tariff Act 1921]
.4 The other element included in the current definition of `pre-threshold
onshore oil' is that only production after 30 June 1987 of stabilised crude
petroleum oil for a petroleum field located onshore is included as `pre-
threshold onshore oil'. This aspect is extended to condensate in the
definition of `pre-threshold onshore oil and condensate'. [Schedule 1, item
12, subsection 3(1) of the Excise Tariff Act 1921]
.5 Production of condensate from petroleum fields located onshore and
offshore prior to the application time, which is after midnight (by legal
time in the Australian Capital Territory) on 13 May 2008, as well as after
the application time, contributes to meeting the 4,767.3 megalitres
cumulative production threshold. Because the definitions of `exempt
offshore oil' and `pre-threshold onshore oil' have been replaced with the
definitions `exempt offshore oil and condensate' and `pre-threshold
onshore oil and condensate' respectively, this condition also applies to
stabilised crude petroleum oil (as is currently the case). [Schedule 1, item 31
sections 3 to 6 of the Excise Tariff Act 1921]
Volume weighted average realised price for condensate
.6 The volume weighted average realised price (known as the
VOLWARE price) is the price determined each month for stabilised crude
petroleum oil which has been entered for home consumption, where these
products are produced from prescribed production areas. The price is
determined by dividing the sum of all transaction prices received for sales
of excisable stabilised crude petroleum oil by the total quantity of the
respective products for that month. In determining the VOLWARE price,
the prevailing exchange rates and interest rates are relevant to the
calculation as these affect the price actually realised by the producer on a
free-on-board contract basis. The same approach will be used to
determine the VOLWARE price for condensate.
.7 In this context, the Excise Tariff Bill makes a number of amendments
to sections 6AB and 6AC of the Excise Tariff Act 1921. These sections
apply the interim and final VOLWARE price for stabilised crude
petroleum oil produced from a prescribed production area in working out
the excise duty on old, intermediate and new oil. The VOLWARE prices
are set under the Petroleum Excise (Prices) Act 1987.
.8 These amendments insert into sections 6AB and 6AC of the Excise
Tariff Act 1921 references to condensate, and to section 6CA, which is
inserted into the Excise Tariff Act 1921 by the Excise Tariff Bill. This has
the effect of applying the interim and final VOLWARE price to be set for
condensate produced from a prescribed condensate production area in
working out the excise duty on the condensate. [Schedule 1, items 25 and 27,
sections 6AB, 6AC and 6CA of the Excise Tariff Act 1921]
.9 The Excise Legislation Bill also makes a number of amendments to
the Petroleum Excise (Prices) Act 1987. This Act deals with setting the
VOLWARE prices including, inter alia, obtaining relevant information
from oil producers.
.10 The Excise Legislation Bill inserts into the Petroleum Excise (Prices)
Act 1987 a new definition of `excisable condensate', which means
condensate which is subject to excise duty. This definition mirrors the
current definition of `excisable crude petroleum oil'. [Schedule 1, item 5,
subsection 4(1) of the Petroleum Excise (Prices) Act 1987]
.11 Further, the Excise Legislation Bill inserts Part IA into the Petroleum
Excise (Prices) Act 1987. The new Part extends that Act to enable interim
and final VOLWARE prices to be set for condensate. It does so by
treating references in that Act and the Petroleum Excise (Prices)
Regulations 1988 to `excisable crude petroleum oil' as references to
excisable condensate, and references to `stabilised crude petroleum oil',
`crude petroleum oil' and `oil' as references to condensate. These
13
amendments do not affect how the rest of the Act applies to excisable
crude petroleum oil itself. [Schedule 1, item 7, subsection 5(1) and
subsections 5A(1) to (3) of the Petroleum Excise (Prices) Act 1987]
.12 The new Part includes subsection 5A(4), which ensures that the Part
does not affect the operation of references in the Excise Act 1901 and the
Excise Tariff Act 1921 to oil, crude petroleum oil, excisable crude
petroleum oil or stabilised crude petroleum oil. But for subsection 5A(4),
the use of those terms in those Acts might have been affected, because
section 3 of the Petroleum Excise (Prices) Act 1987 provides that those
Acts are incorporated and read as one with the Petroleum Excise (Prices)
Act 1987, and section 2 of the Excise Tariff Act 1921 provides that Acts
that include the Petroleum Excise (Prices) Act 1987 are to be read as one
with the Excise Tariff Act 1921.
.13 Subsection 5A(4) is needed because the Excise Legislation Bill
already makes the necessary amendments of the Excise Act 1901 and the
Excise Tariff Act 1921. For example, the Excise Tariff Bill amends the
definition of an `oil producing region' in the Excise Tariff Act 1921 to
ensure that the term covers production areas which produce condensate
(as well as those that produce stabilised crude petroleum oil). [Schedule 1,
item 6, subsection 3(1) of the Excise Tariff Act 1921]
.14 The Excise Legislation Bill allows regulations made for the purposes
of the Petroleum Excise (Prices) Act 1987 and the Excise Act 1901 in
relation to condensate to take effect from a date before the regulations are
registered under the Legislative Instruments Act 2003. However, the
Excise Legislation Bill will not allow the making of regulations that apply
retrospectively to make a person liable to an offence or civil penalty
[Schedule 1, item 3, section 164 of the Excise Act 1901, and item 6, subsection 4(1B) of
the Petroleum Excise (Prices) Act 1987]. Subsection 12(3) of the Legislative
Instruments Act 2003 allows regulations to apply retrospectively if the
enabling legislation so provides.
.15 The Petroleum Excise (Prices) Regulations 1988 set out the
mechanics and the precise information used to undertake the calculation
of the VOLWARE price for stabilised crude petroleum oil. These
regulations will be amended so the same approach is used to calculate the
VOLWARE price for condensate as is used to calculate the VOLWARE
price for stabilised crude petroleum oil.
.16 The Excise Regulations 1925 deal with administrative issues such as
remissions, rebates and refunds of excise duty. These regulations will
requirement amendment so that they cover payments of excise on
condensate.
.17 The amendments to the Petroleum Excise (Prices) Regulations 1988
and the Excise Regulations 1925 are expected to be tabled in Parliament
during the Winter 2008 sittings.
Duties of excise on condensate
.18 The Excise Tariff Bill inserts section 6CA into the Excise Tariff Act
1921. Section 6CA sets the rates of excise imposed on condensate
produced from a prescribed condensate production area, which could be a
petroleum field located in the North West Shelf project area or onshore
Australia. It follows the same approach as section 6B (which sets the
rates of excise duty on stabilised crude petroleum produced from fields
discovered before 18 September 1975), section 6C (which sets the rates of
excise duty on stabilised crude petroleum produced from fields discovered
on or after 18 September 1975) and section 6D (which sets the rates of
excise duty on stabilised crude petroleum produced from fields discovered
before 18 September 1975 but which remained undeveloped as at
23 October 1984). [Schedule 1, item 27, section 6CA of the Excise Tariff Act 1921]
.19 The rates of excise duty applicable to condensate are the same as the
rates of duty applicable to stabilised crude petroleum oil produced from
fields discovered on or after 18 September 1975. These rates are:
2 zero for annual production of 500 megalitres (around
3.1 million barrels) or less;
3 ten per cent for annual production between 501 (around
3.1 million barrels) and 600 megalitres (around 3.8 million
barrels);
4 fifteen per cent for annual production between 601 (around
3.8 million barrels) and 700 megalitres (around 4.4 million
barrels);
5 twenty per cent for annual production between 701 (around
4.4 million barrels) and 800 megalitres (around 5 million
barrels); and
6 thirty per cent for annual production over 800 megalitres
(around 5 million barrels).
[Schedule 1, item 27, subsections 6CA(5) and (10) of the Excise Tariff Act 1921]
.1 Section 6CA also establishes a framework for calculating the excise
duty payable on production of condensate in a particular month. In
particular, section 6CA provides the mechanism for determining the
amount of duty payable taking account of the volumes of condensate
15
produced from a prescribed condensate production area for a particular
month. It also provides the mechanism for adjusting previous duty paid
once the final VOLWARE price is determined. [Schedule 1, item 27,
subsections 6CA(1) to (4), (6) to (9) and (11) to (14) of the Excise Tariff Act 1921]
.2 The Excise Tariff Bill allows a `condensate production area' to be
prescribed in by-laws. The Excise Tariff Bill also allows these by-laws to
take effect from a date before the by-laws are registered under the
Legislative Instruments Act 2003 [Schedule 1, item 27, subsections 6CA(1) and
(13) of the Excise Tariff Act 1921]. Subsection 12(3) of the Legislative
Instruments Act 2003 allows by-laws to apply retrospectively if the
enabling legislation provides the power to do so.
.3 The Excise Tariff Bill authorises the Commissioner of Taxation
(Commissioner) to make a by-law prescribing a `condensate production
area', with effect from a date before the date the by-law is published in the
Commonwealth Gazette. This applies in circumstances where the by-law
has the effect of imposing a higher rate of excise duty on condensate
entered into home consumption [Schedule 1, item 27, subsection 6CA(13A) of the
Excise Tariff Act 1921]. This provision overrides section 169 of the Excise
Act 1901. Section 169 restricts the Commissioner to making a by-law
prescribing a `condensate production area', with effect from the date the
by-law is published in the Commonwealth Gazette, in the circumstances
referred to above.
.4 The by-laws prescribing a `condensate production area' are required
to be in place in order to specify the petroleum field producing
condensate. This enables condensate produced from a petroleum field to
utilise the first 4,767.3 megalitres of cumulative production. It may also
facilitate the payment of excise on the production of condensate which is
produced and entered home consumption after midnight (by legal time in
the Australian Capital Territory) on 13 May 2008.
.5 Consequential amendments are made to paragraphs 6B(5B)(a) and
(5C)(a), 6C(5A)(a) and (5B)(a), and 6D(5A)(a) and (5B)(a) of the Excise
Tariff Act 1921, which deal with stabilised crude petroleum oil, to ensure
that the VOLWARE price is the price applicable to stabilised crude
petroleum oil [Schedule 1, item 26, paragraphs 6B(5B)(a) and (5C)(a), 6C(5A)(a) and
(5B)(a), and item 28, paragraphs 6D(5A)(a) and (5B)(a) of the Excise Tariff Act 1921].
In addition, the definition of `prescribed source' in subsection 3(1), as
well as subsections 3(3) and 6E(2) of the Excise Tariff Act 1921 are
amended to include a reference to the new section 6CA of the Excise
Tariff Act 1921 [Schedule 1, item 8, subsection 3(1), item 14, subsection 3(3) and
item 29, subsection 6E(2) of the Excise Tariff Act 1921].
.6 The Excise Legislation Bill makes an amendment to subsection (1G)
of the Petroleum Excise (Prices) Act 1987 by adding a reference to section
6CA which is inserted into the Excise Tariff Act 1921, together with a note
cross referencing subsection 6CA(5), which specifies, inter alia, the
minimum volume of condensate to which notional duty becomes payable.
[Schedule 1, items 8 to 10, subsection 6(1G) of the Petroleum Excise (Prices) Act 1987]
Duties applied to mixtures of stabilised crude petroleum oil and
condensate
.7 The Excise Tariff Bill amends section 5B of the Excise Tariff Act
1921. Subsection 5B(2) specifies that where two or more kinds of
petroleum are mixed together (such as stabilised crude petroleum oil and
condensate), the principal character of the mixture determines how the
mixture is treated for Crude Oil Excise purposes. However, this outcome
in subsection 5B(2) is subject to two constraints. The first constraint is
where there is a mixture of stabilised crude petroleum oil and a petroleum
product other than condensate, which is deemed to be stabilised crude
petroleum oil. The second constraint is where there is a mixture of
condensate and a petroleum product other than stabilised crude petroleum
oil, which is deemed to be condensate. [Schedule 1, items 17 to 20,
subsections 5B(2), (3) and (3A) of the Excise Tariff Act 1921]
.8 As a result of these amendments, condensate produced from one well
and mixed with stabilised oil from another well is no longer excise free.
In other words, the Excise Tariff Bill repeals the current
subsection 5B(3A) of the Excise Tariff Act 1921.
Schedule to the Excise Tariff Act 1921
.9 The Excise Tariff Bill repeals and replaces Item 21 of the Schedule to
the Excise Tariff Act 1921. This Item deals with that rate of excise duty
imposed on the production of condensate from particular areas subject to
excise. [Schedule 1, item 30, Item 21 of the Schedule to the Excise Tariff Act 1921]
.10 The effect of the new Item 21 is to impose a rate of excise duty on
condensate as set out in section 6CA which is inserted into the Excise
Tariff Act 1921 by the Excise Tariff Bill. It also ensures that `exempt
offshore condensate' (which is condensate falling with the first
4,767.3 megalitres of cumulative production for a petroleum field located
offshore) and `pre-threshold onshore condensate' (which is condensate
falling with the first 4,767.3 megalitres of cumulative production for a
petroleum field located onshore) is excise free. Production of condensate
from an area subject to the petroleum resource rent tax or a prescribed
source (such as the Barrow Island petroleum field) continues to be excise
free. Further, Item 21.1 ensures that condensate as prescribed in the
by-laws is excise free. By-laws will be made under Item 21.1 to cover
17
condensate used in the operation of extracting condensate. There is
corresponding exemption for stabilised crude petroleum oil.
.11 A consequential amendment is made by replacing the definition of
`exempt offshore oil' in section 3 of the Excise Tariff Act 1921. This term
now means stabilised crude petroleum oil falling within the first 4,767.3
megalitres of cumulative production for a petroleum field located
offshore. The term is used in Item 20 of the Schedule to the Excise Tariff
Act 1921. It has the effect of ensuring that `exempt offshore oil' is excise
free (as is currently the case). [Schedule 1, item 3, subsection 3(1) of the Excise
Tariff Act 1921]
.12 Similarly, the definition `pre-threshold onshore oil' in section 3 of the
Excise Tariff Act 1921 is replaced. This term means stabilised crude
petroleum oil falling within the first 4,767.3 megalitres of cumulative
production for a petroleum field located onshore. The term is used in Item
20 of the Schedule to the Excise Tariff Act 1921. It has the effect of
ensuring that `pre-threshold onshore oil' is excise free (as is currently the
case). [Schedule 1, item 11, subsection 3(1) of the Excise Tariff Act 1921]
Other amendments
.13 A number of consequential amendments are made including the
following:
7 The term `condensate' is added to the definition of
`delayed-entry oil' so that delayed-entry condensate is treated
the same as delayed-entry oil [Schedule 1, item 1, subsection 3(1)
of the Excise Tariff Act 1921].
8 The term `condensate' is added to the definitions of
`installation' and `platform' in the Excise Tariff Act 1921.
The definition of `platform' is used in the definition of
`installation' which is in turn used in the definition of a
`place outside Australia'. The definition of a `place outside
Australia' is relevant in the control of excisable goods (see
section 4A of the Excise Act 1901) [Schedule 1, items 5 and 7,
subsection 3(1) of the Excise Tariff Act 1921].
9 The term `condensate' is added to the definition of `relevant
accumulation' which is used in the context of the definition
of `prescribed condensate production area' in section 6CA,
which is inserted into the Excise Tariff Act 1921 as a result of
this Excise Tariff Bill [Schedule 1, item 13, subsection 3(1) of the
Excise Tariff Act 1921].
10 The term `condensate' is added to subsections 5B(4) and
(4A) of the Excise Tariff Act 1921 to ensure that, similar to
stabilised crude petroleum oil, condensate is taken to be
produced from the relevant `production area'. The definition
of `production area' is amended to cover a prescribed
production area within the meaning of section 6CA, which is
inserted into the Excise Tariff Act 1921 as a result of this
Excise Tariff Bill [Schedule 1, items 15 and 16, subsection 5B(1) and
items 21 to 24, subsections 5B(1), (4 ) and (4A) of the Excise Tariff
Act 1921].
11 Subsection 58(2) of the Excise Act 1901 is amended to
ensure that condensate is not exported under the Customs Act
1901 unless and until it has been entered for home
consumption, or is treated as though it had been entered into
home consumption, under the Excise Act 1901. This means
that condensate cannot be exported until the liability to pay
excise duty on it has been triggered [Schedule 1, item 1,
subsection 58(2) of the Petroleum Excise (Prices) Act 1987].
12 Paragraph 58(3)(a) of the Excise Act 1901 is also amended
to include condensate in addition to stabilised crude oil,
effectively removing the need for condensate to be entered
before being exported, where the condensate has come from
a resource rent tax area as defined in the Excise Tariff
Act 1921 [Schedule 1, item 2, subsection 58(2) of the Petroleum Excise
(Prices) Act 1987].
13 The Petroleum Revenue Act 1985 (which imposes a resource
rent royalty on oil produced from Barrow Island) is amended
to ensure that condensate produced from a prescribed
condensate production area for the purposes of the Excise
Tariff Act 1921 is not captured by the Petroleum Revenue
Act 1985. This amendment is required because the Excise
Tariff Act 1921 and the Petroleum Revenue Act 1985 are read
as one Act [Schedule 1, item 11, paragraph(2)(b) of the Petroleum
Excise (Prices) Act 1987].
Application and transitional provisions
.1 The amendments made in the Excise Tariff Bill to the Excise Tariff
Act 1921, will apply to condensate produced after midnight (by legal time
in the Australian Capital Territory) on 13 May 2008 [Schedule 1, subitems
31(1) and 31(3) of the Excise Tariff Bill]. Similarly, the application date for the
amendments to the Excise Act 1901, the Petroleum Excise (Prices) Act
19
1987 and the Petroleum Revenue Act 1985 in the Excise Legislation Bill
will also apply to condensate produced after midnight (by legal time in the
Australian Capital Territory) on 13 May 2008 [Schedule 1, subitem 13(1) of the
Excise Legislation Bill].
.2 The Excise Tariff Bill includes application provisions which have the
effect of including production of condensate from prescribed petroleum
fields before midnight (by legal time in the Australian Capital Territory)
on 13 May 2008, as well as after that time, towards meeting the relevant
4,767.3 megalitres cumulative production threshold [Schedule 1, subitems
31(5) and 31(6) of the Excise Tariff Bill]. To avoid doubt, a provision is
included in the Excise Tariff Bill indicating that these application
provisions do not affect any excise in relation to stabilised crude
petroleum oil produced before midnight (by legal time in the Australian
Capital Territory) on 13 May 2008 [Schedule 1, subitem 31(4) of the Excise
Tariff Bill].
.3 For the purposes of Item 21 of the Schedule, the Excise Tariff Bill
prevents paragraphs 5(2)(b) and 5(2)(c) of the Excise Tariff Act 1921 from
imposing excise on condensate produced before midnight (by legal time in
the Australian Capital Territory) on 13 May 2008. [Schedule 1, subitem 31(7)
of the Excise Tariff Bill]
.4 An application provision in each of the Excise Tariff Bill and the
Excise Legislation Bill enables an entity to enter condensate for home
consumption without having to first pay or settle their excise liability.
The effect of this provision is to complement section 15 of the Excise
Act 1901 which deems an entity to hold a licence where a proposal is
before Parliament to impose excise on goods (in this case production of
condensate) which were previously excise free. The entity has a grace
period of two months in which to become licensed and to obtain a formal
permission from the Commissioner under section 61C of the Excise Act
1901 so they can continue to enter condensate for home consumption
without having to first pay or settle their excise liability. The application
provision covering this issue in the Excise Tariff Bill applies to the Excise
Tariff Act 1921, while the equivalent provision in the Excise Legislation
Bill applies to the Excise Act 1901 and the Petroleum Excise (Prices) Act
1987. [Schedule 1, item 32 of the Excise Tariff Bill and Schedule 1, item 14 of the
Excise Legislation Bill]
.5 As transitional provisions, certain definitions and the formula set out
in subsection 6CA(3) of the Excise Tariff Act 1927, as inserted by the
Excise Tariff Bill, are modified for the period from midnight (by legal
time in the Australian Capital Territory) on 13 May 2008 until the end of
30 June 2008, reflecting the fact that there is no excise duty paid on
production of condensation in the previous year [Schedule 1, subitem 31(2) of
the Excise Tariff Bill]. The requirement of three consecutive months for the
purposes of section 6 of the Petroleum Excise (Prices) Act 1987 is turned
off until there have been three consecutive full months after midnight (by
legal time in the Australian Capital Territory) on 13 May 2008 [Schedule 1,
subitem 13(2) of the Excise Legislation Bill].
21
Index
Schedule 1: Amendments
Bill reference Paragraph number
Item 1, subsection 3(1) of the Excise Tariff Act 1921 1.41
Item 1, subsection 58(2) of the Petroleum Excise (Prices) Act 1987 1.41
Item 2, subsection 58(2) of the Petroleum Excise (Prices) Act 1987 1.41
Item 3, subsection 3(1) of the Excise Tariff Act 1921 1.39
Item 3, section 164 of the Excise Act 1901, and item 6, 1.23
subsection 4(1B) of the Petroleum Excise (Prices) Act 1987
Items 3 and 4, subsection 3(1) of the Excise Tariff Act 1921 1.10
Item 4, subsection 3(1) of the Excise Tariff Act 1921 1.11
Item 5, subsection 4(1) of the Petroleum Excise (Prices) Act 1987 1.19
Items 5 and 7, subsection 3(1) of the Excise Tariff Act 1921 1.41
Item 6, subsection 3(1) of the Excise Tariff Act 1921 1.22
Item 7, subsection 5(1) and subsections 5A(1) to (3) of the 1.20
Petroleum Excise (Prices) Act 1987
Item 8, subsection 3(1), item 14, subsection 3(3) and item 29, 1.33
subsection 6E(2) of the Excise Tariff Act 1921
Items 8 to 10, subsection 6(1G) of the Petroleum Excise (Prices) 1.34
Act 1987
Item 11, paragraph(2)(b) of the Petroleum Excise (Prices) Act 1987 1.41
Item 11, subsection 3(1) of the Excise Tariff Act 1921 1.40
Items 11 and 12, subsection 3(1) of the Excise Tariff Act 1921 1.12
Item 12, subsection 3(1) of the Excise Tariff Act 1921 1.13
Item 13, subsection 3(1) of the Excise Tariff Act 1921 1.41
Items 15 and 16, subsection 5B(1) and items 21 to 24, 1.41
subsections 5B(1), (4 ) and (4A) of the Excise Tariff Act 1921
Items 17 to 20, subsections 5B(2), (3) and (3A) of the Excise Tariff 1.35
Act 1921
Items 25 and 27, sections 6AB, 6AC and 6CA of the Excise Tariff 1.17
Act 1921
Item 26, paragraphs 6B(5B)(a) and (5C)(a), 6C(5A)(a) and (5B)(a), 1.33
and item 28, paragraphs 6D(5A)(a) and (5B)(a) of the Excise Tariff
Act 1921
23
Bill reference Paragraph number
Item 27, section 6CA of the Excise Tariff Act 1921 1.27
Item 27, subsections 6CA(1) to (4), (6) to (9) and (11) to (14) of the 1.29
Excise Tariff Act 1921
Item 27, subsections 6CA(1) and (13) of the Excise Tariff Act 1921 1.30
Item 27, subsections 6CA(5) and (10) of the Excise Tariff Act 1921 1.28
Item 27, subsection 6CA(13A) of the Excise Tariff Act 1921 1.31
Item 30, Item 21 of the Schedule to the Excise Tariff Act 1921 1.37
Item 31 sections 3 to 6 of the Excise Tariff Act 1921 1.14
Item 32 of the Excise Tariff Bill and Schedule 1, item 14 of the 1.45
Excise Legislation Bill
Subitem 13(1) of the Excise Legislation Bill 1.42
Subitem 13(2) of the Excise Legislation Bill 1.46
Subitems 31(1) and 31(3) of the Excise Tariff Bill 1.42
Subitem 31(2) of the Excise Tariff Bill 1.46
Subitem 31(4) of the Excise Tariff Bill 1.43
Subitems 31(5) and 31(6) of the Excise Tariff Bill 1.43
Subitem 31(7) of the Excise Tariff Bill 1.44
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