The Minister for Revenue and Assistant Treasurer today announced the release of a discussion paper on the proposed legislative arrangements for the new fuel tax credit system. This system is the next step in the Government's major programme of reform to modernise and simplify the fuel taxation system, as announced on 15 June 2004, in Securing Australia's Energy Future.
Under the reforms to fuel taxation the current system of fuel grants, rebates and remissions, including the Energy Grants (Credits) Scheme, will be replaced from 1 July 2006 with a single fuel tax credit claimable via the Business Activity Statement. The fuel tax credit system will lower compliance costs, reduce tax on business and remove the burden of fuel tax from thousands of individual businesses and households.
When the fuel tax credit reforms are fully implemented the burden of fuel tax will be removed entirely from businesses using fuel in off-road applications. The extension of fuel tax credits for off-road use will be phased in, with a 50 per cent credit applying to newly eligible activities from 1 July 2008 and a full credit from 1 July 2012. Alternative fuels used in off-road business activities will be eligible for a full credit from 1 July 2011, when fuel tax is first effectively levied on these fuels.
The reforms will also provide a partial fuel tax credit for all fuels, including petrol, used on-road in heavy vehicles from 1 July 2006. The partial credit will be equal to the amount of effective fuel tax embedded in the purchase price of the fuel less a road user charge.
Grants for the use of alternative fuels on-road will continue to apply under the Energy Grants (Credits) Scheme Act 2003 until 1 July 2010. Beginning on 1 July 2006 and ending on 1 July 2010, the grants rate will be progressively reduced to zero.
This discussion paper provides industry and the community with the opportunity to express their views on the proposed design of the fuel tax credit legislation. Interested parties are invited to make written submissions on the proposed legislation by close of business 27 June 2005. The discussion paper is available at www.treasury.gov.au.
Submissions may be emailed to fueltax@treasury.gov.au or sent to:
The Manager, Fuel Grants and GST Entities Unit
Indirect Tax Division
The Treasury
Langton Crescent
PARKES ACT 2600