Excise: request for amendment of diesel fuel rebate claim

Is an entity entitled to a diesel fuel rebate for diesel fuel purchased prior to 1 July 2000 and used in rail transport on or after 1 July 2000?

No. An entity is not entitled to a diesel fuel rebate for diesel fuel purchased prior to 1 July 2000 and used in rail transport on or after 1 July 2000.

An entity conducts the business of running a railway.

The entity purchased diesel fuel for use in rail transport prior to 1 July 2000.

The entity used the diesel fuel in rail transport after 30 June 2000.

The legislative framework for the diesel fuel rebate scheme is contained in the Customs Act 1901 and the Excise Act 1901 .

In the context of taxation reform, the Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Act 1999 introduced a rebate for diesel and other like fuel, for an extended group of off-road uses, where the fuel is used for the purpose of carrying on an enterprise. The amendments relevantly extended the existing diesel fuel rebate scheme to provide a rebate for rail transport in the course of carrying on an enterprise.

The document Tax Reform: not a new tax, a new tax system (the ANTS document), was circulated by the Treasurer in August 1998. This document set out the plan for reform of the taxation system, including the introduction of the goods and services tax (GST) and reform of other indirect taxes.

Section 15AA of the Acts Interpretation Act 1901 directs that in the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.

As the Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Act forms part of the Government's Tax Reform measures, it is necessary to consider the overall objectives of Tax Reform in identifying the purpose and objects specific to the Customs and Excise amendments.

Prior to 1 July 2000, diesel fuel was subject to a higher rate of excise than fuel purchased on or after that date. On the other hand, fuel purchased on or after 1 July 2000 attracts the GST.

In recognition of this, resellers who bought petroleum and diesel prior to 1 July 2000 (and therefore paid the higher rate of excise) became entitled to a credit equal to the difference between the excise rate as at 30 June 2000 and the excise rate as at 1 July 2000.

The ANTS document (at page 23) relevantly indicated that from 1 July 2000, for registered businesses, the effective excise payable on diesel fuel used in heavy transport and rail would be reduced from around 43 cents per litre to 18 cents per litre. This reduction was due to the recognition that petrol and diesel would be subject to the GST from 1 July 2000.

Accordingly, the rate of excise on diesel was reduced from 1 July 2000 so that, together with the new tax system changes, the cost for enterprises of fuel for rail transport was reduced by about 44 cents per litre from that date.

The introduction of the rebate for fuel used for rail transport was an integral part of the indirect taxation arrangements applying to diesel fuel purchased on or after 1 July 2000, when diesel fuel became subject to the new, lower rate of excise at the time of the introduction of the GST.

The intention of the legislation was to provide a rebate for diesel fuel for rail transport commencing at the time the excise on diesel was reduced and the GST was introduced, that is on 1 July 2000. Diesel fuel purchased prior to that date was subject to the former taxation system and a higher rate of excise. Therefore, the logical conclusion is that an entity is not entitled to a diesel fuel rebate for diesel fuel purchased prior to 1 July 2000 and used in rail transport on or after 1 July 2000.