Commonwealth Numbered Regulations - Explanatory Statements

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ACIS ADMINISTRATION AMENDMENT REGULATIONS 2001 (NO. 1) 2001 NO. 82

Statutory Rules 2001 No. 82

Issued by the Authority of the Minister for Industry, Science and Resources

ACIS Administration Act 1999

ACIS Administration Amendment Regulations 2001 (No. 1)

The ACIS Administration Act 1999 (the Act) establishes the Automotive Competitiveness and Investment Scheme (ACIS) to promote competitiveness and encourage investment in the Australian automotive industry, and for related purposes. ACIS rewards eligible activity by registered participants in the form of duty credits which can be used to acquit a Customs duty liability on eligible imports, or can be sold.

Section 116 of the Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The ACIS Administration Amendment Act 2000 received Royal Assent on 21 December 2000. The amendments provided, amongst other things, for an increased capacity for regulations to define what is approved plant and equipment and approved research and development for the purposes of calculating benefits under the scheme.

The purpose of the regulations is to enable participants in ACIS to determine the maximum claimable value of investment in different kinds of plant and equipment and research and development for the purpose of making claims for ACIS duty credits in what is largely a self-assessed scheme.

The regulations will specify:

•       Circumstances in which production of components, tools and tooling are taken to be for the MVP's own use, that is, used in the production of motor vehicles by the MVP (clause 13A)

•       Circumstances in which provision of services is taken to be for the MVP's own use (clause 13B)

•       When investment is taken to have occurred (clause 13C)

•       When deemed investment is taken to have occurred (clause 13D)

•       What is considered to be allowable plant and equipment (clause 13E)

•       The method for determining the maximum claimable value for allowable plant and equipment (clause 13F)

•       What is considered to be allowable research and development (clause 13G)

•       The method for determining the maximum claimable value for allowable research and development (clause 13H)

•       Meaning of labour costs and costs of recruitment, training and development (clause 13I)

Details of the regulations are set out in Attachment A.

The regulations commenced on gazettal, to provide industry with information as early as possible in the life of the scheme.

Attachment A

Notes on Amendments to the Regulations

Regulation 1        Name of Regulations

This regulation specifies the name of the Regulations as the ACIS Administration Amendment Regulations 2001 (No. 1).

Regulations 2        Commencement

This regulation specifies that the ACIS Administration Amendment Regulations 2001 commence on gazettal.

Regulation 3        Amendment of ACIS Administration Regulations 2000

This regulation specifies that Schedule 1 amends the ACIS Administration Regulations 2000.

Schedule 1        Amendments

Clauses 1-4        Regulation 3

These proposed clauses amend definitions used in the regulations, including changing the definition of 'acquire', deleting the definition of 'raw materials', and inserting definitions for 'deemed investment', 'finance lease', 'operating lease', 'original investor', 'rent' and 'sale and leaseback'. The definitions of operating lease and finance lease are taken from the Australian Accounting Standard on Leases.

Clause 5        Regulations 4 and 5

This clause deletes the definitions of 'approved plant and equipment' and 'approved research and development'. The new section 6A of the ACIS Administration Act 1999 ('the Act') broadened the scope of the regulation making powers under the Act, allowing the definitions of approved plant and equipment and approved research and development to include clarification of the claimable value of investment as well as the types of investment that are allowable. These new definitions are set out in Regulations 13E to 13H under clause 9 below, and include some of the content of the old definitions.

Clause 6        Regulation 7

This clause removes the existing regulation 7 which defines automotive machine tooling. A new definition is inserted by clause 8, set out below.

Clause 7        Subregulation 9(2)

This clause changes the phrase 'automotive machine tooling' to 'automotive tooling' in subregulation 9(2).

Clause 8        After regulation 9

This clause inserts a new definition of 'automotive tooling' to replace the definition of 'automotive machine tooling' previously set out in regulation 7. The phrase 'automotive tooling' is the recognised industry term.

Clause 9        After regulation 13

13A       Circumstances in which components, tools or tooling are taken to be for the MVP's own use

This regulation sets out when the production of automotive components, tools or tooling is taken to be for the MVP's own use (that is, for ultimate use in the production of motor vehicles, engines or engine components by the MVP), for the purposes of determining what is claimable as type A, B or C investment under the Act.

13B        Circumstances in which services are taken to be for the MVP's own use

This regulation sets out when the provision of automotive services is taken to be for the MVP's own use (that is, for ultimate use in the production of motor vehicles, engines or engine components by the MVP), for the purposes of determining what is claimable as type A, B or C investment under the Act.

13C        When investment is taken to have occurred

This regulation is inserted to set out, for substantiation and claiming purposes, a clear time when investment in plant and equipment and research and development is taken to have occurred in particular circumstances.

13D        When deemed investment is taken to have occurred

This regulation is inserted to set out the timing for when deemed investment is taken to have occurred. This regulation will operate in conjunction with the ACIS Administration (Determination of Eligible Investment) Guidelines 2001, made under subsection 6C(2) of the Act, which sets out the circumstances when investment could be taken to be deemed investment.

13E        Allowable plant and equipment

This regulation is inserted to replace the former regulation 4 defining 'approved plant and equipment'. It sets out the types of plant and equipment that are allowable for the purposes of calculating benefits for participants under sections 43, 44, 46, 48 and 50 of the Act.

13F        Maximum claimable value for allowable plant and equipment

This regulation sets out the method for determining the maximum claimable value of investment in the allowable plant and equipment set out in regulation 13E. It provides for an automatic 20% loading on the claimable value of investment in plant and equipment to cover expensed items and labour costs of repairs and maintenance associated with the investment in plant and equipment.

13G         Allowable research and development

This regulation is inserted to replace the former regulation 5 defining 'approved research and development'. It sets out the types of research and development that are allowable for the purposes of calculating benefits for participants under sections 45, 47, 49 and 51 of the Act.

13H        Maximum claimable value for allowable research and development

This regulation sets out the method for determining the maximum claimable value of investment in the allowable research and development set out in regulation 13G. It provides for an automatic 20% loading on the claimable value of investment in research and development to cover the costs of overheads associated with the investment in research and development.

131        Meaning of labour costs and costs of recruitment, training and development

This regulation sets out the method for determining the labour costs and costs of recruitment, training and development in respect of an employee carrying out allowable research and development.

Clause 10        Additional Amendments

This clause changes the phrase 'automotive machine tooling' to the industry recognised phrase 'automotive tooling' where it appears in the regulations.