Commonwealth Numbered Regulations - Explanatory Statements

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FUEL (PENALTY SURCHARGES) ADMINISTRATION REGULATIONS 1997 NO. 387

STATUTORY RULES 1997 No. 387

Issued by the Authority of the Minister for Small Business and Consumer Affairs

Fuel (Penalty Surcharges) Administration Act 1997

Fuel (Penalty Surcharges) Administration Regulations

Section 53 of the Fuel (Penalty Surcharges) Administration Act 1997 (the Act) provides that the Governor-General may make regulations not inconsistent with the Act prescribing matters which by the Act are required or permitted to be prescribed, or are necessary or convenient to be prescribed for carrying out or giving effect to the Act.

Fuel Substitution Package

During the 1997 Spring sittings, Parliament passed the Government's fuel substitution legislation, a package of 9 Acts which implements the Government's Budget decision to combat revenue loss through the minimisation of fuel substitution practices. These practices involve the substitution of fuel entered at concessional rates of duty (generally for non-automotive use) for fuel used in automotive engines. Such substitution practices are harmful to the engines of the (usually unwitting) motorist concerned, and cause significant revenue leakage in respect of the duty avoided on the substituted fuel.

The legislation package addresses the problem by providing for the introduction of a chemical marker into concessionally entered fuel, and imposing document keeping and retention obligations, audit powers and sanctions in relation to the acquisition, storage and disposal of fuel. Importantly, these measures are directed at those dealing in large volumes of fuel, and it is intended that the average motorist be exempted from these obligations in the normal course of dealing.

Supporting Regulations

Supporting Regulations are required for the following purposes:

*        to prescribe the chemical marker and the proportions which are to be added to fuels - Excise Regulations (Amendment),

*       to prescribe the record keeping particulars and to exempt the "average motorist" from the document keeping and retention obligations and audit provisions in the package - these Regulations;

*        to prohibit the importation of fuel that is not appropriately marked - Customs (Prohibited Imports) Regulations (Amendment).

*       to allow concessions in relation to certain uses of fully duty paid fuels (such as their use as solvents, which are non-fuel uses) - Excise Regulations (Amendment) and Customs Regulations (Amendment); and

*        to make consequential amendments to the Customs Regulations and Excise Regulations to take account of revised structures of Customs and Excise tariff headings incorporating the introduction of the chemical marker - - Excise Regulations (Amendment) and Customs Regulations (Amendment;

Purpose of Regulations

This Statutory Rule makes the Fuel (Penalty Surcharges) Administration Regulations to:

*       prescribe the level of chemical marker which will render fuel "marked fuel" for the purposes of the Act regulation 4;

*       prescribe the requisite particulars in relation to the record-keeping obligations imposed by the Act regulations 5, 6 and 7; and

*       provide for exemptions to the record-keeping and notification obligations imposed by the Act regulations 8, 9, 10 and 11.

Details of the regulations are contained in the Attachment.

The Regulations commenced on 31 January 1998, which is the date on which the Fuel (Penalty Surcharges) Administration Act 1997 commenced.

ATTACHMENT

Fuel (Penalty Surcharges) Administration Act 1997

Fuel (Penalty Surcharges) Administration Regulations

Citation, Commencement and Definitions

Regulation 1 provides for the Regulations to be cited as the Fuel (Penalty Surcharges) Administration Regulations.

Regulation 2 provides that the Regulations commence on 31 January 1998.

Regulation 3 defines "the Act" when used in the Regulations to be the Fuel (Penalty Surcharges) Administration Act 1997.

Level of Marker - "Marked Fuel"

Regulation 3 will prescribe 'I milligram per litre" as the proportion of chemical marker which will render fuel "marked fuel" for the purposes of the Act.

*       the Act imposes severe penalties on those who incorrectly sell, use or blend "marked fuel"

Record-keeping obligations

To ensure viability of audit the Act adopts a model familiar in Commonwealth legislation, consisting of 3 main features:

a) document-retention and record creation obligations;

b) audit powers; and

c) sanctions

Regulations 5, 6 and 7 will prescribe the requisite particulars in relation to the record-keeping obligations imposed by the Act

Regulation 5 prescribes the particulars required to be kept in relation to a Type A Record, which is a record required to be kept by a person who acquires ownership or physical control of fuel.

*       regulation 8 exempts record-keeping obligations where the fuel acquired is in an amount less than 1000 litres;

Regulation 6 prescribes the particulars required to be kept in relation to a Type B Record, which is a record required to be kept by a person who stores fuel.

*       regulation 8 exempts record-keeping obligations where the fuel stored is in an amount less than 1000 litres;

Regulation 7 prescribes the particulars required to be kept in relation to a Type C Record, which is a record required to be kept by a person who uses, blends or disposes of fuel.

*       regulation 8 exempts record-keeping obligations where the fuel used or disposed of is in an amount less than 1000 litres, or where the resulting blend is less than 1000 litres; Exemptions from record-keeping obligations

During passage of the Bill through the Parliament during the Spring 1997 sittings, the Government stated its intention that the fuel substitution countermeasures were directed at large suppliers and dealers. The following is extracted from the notes to Clause 9 of the Explanatory Memorandum which accompanied the Bill on its introduction into the Parliament:

"By this approach the Government wishes to send the clear message that no person should be misusing concessionally-entered fuel, while affirming its position that efforts to eliminate the practice of fuel substitution will be concentrated on those large suppliers and dealers who engage in it. "

Regulation 8 will exempt from the record-keeping obligations imposed by the Act:

a) the acquisition (as to which see regulation 5

b) the storage (as to which see regulation 6

c) the use, blending or disposal (as to which see regulation 7)

of fuel in amounts less than 1000 litres

Section 15 of the Act requires the keeping of records in relation to the movement of fuel. Regulation 9 provides an exemption from this requirement where the fuel moved is less than 1000 litres.

Section 16 of the Act provides that person who transfers fuel to another person must provide an accompanying notice stating whether the fuel is marked or unmarked fuel (ie whether the fuel being transferred contains the chemical marker). That section also provides for a penalty of 10 penalty units for failure to comply. Regulation 10 provides an exemption from this requirement where the amount of fuel being transferred is less than 1000 litres.

Part 4 of the Act provides for audit powers to ensure compliance with the Act. Section 22 provides that an authorised officer may exercise those audit powers where that authorised officer has reasonable grounds to believe that there is, at any premises, a quantity of fuel, or a fuel storage facility, that exceeds a limit prescribed by the Regulations. Regulation 11 will set that limit at 1000 litres of fuel.