Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The bill gives effect to the government’s announcement in its energy white paper Securing Australia’s energy future of 15 June 2004 that the current complex system of fuel tax concessions will be replaced by a single fuel tax credit system from 1 July 2006.

The introduction of 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 system is fully implemented, fuel tax will only be effectively applied to:

• fuel used in private vehicles and for certain other private purposes; and
• fuel used on-road in light vehicles for business purposes.

This bill sets out the principles concerning a taxpayer’s entitlement to a fuel tax credit and the mechanisms for claiming a credit.

Businesses will generally be entitled to a fuel tax credit for fuel they acquire, manufacture or import for use in carrying on their enterprise. For the use of fuel on-road in heavy vehicles the credit will be equal to the effective fuel tax less a road user charge.

Businesses will also be entitled to a fuel tax credit for taxable supplies they make of kerosene or heating oil for domestic heating and taxable supplies they make of packaged fuel such as kerosene, mineral turpentine and white spirit for use other than in an internal combustion engine.

Non-business taxpayers will be able to claim a fuel tax credit for fuel used by them in generating electricity for domestic use.

The use of fuel on-road in diesel motor vehicles will generally not be entitled to a fuel tax credit unless the vehicle meets one of four emission performance criteria.

Claimants will be responsible for self-assessing their entitlements and will claim a fuel tax credit through their business activity statement in the same way as they claim their goods and services tax input tax credits. A separate claiming mechanism will apply for non-business taxpayers claiming a credit for fuel used in electricity generation for domestic use.

The bill contains a requirement that large fuel users, those receiving more than $3 million per year in fuel tax credits, join the Greenhouse Challenge Plus Program in order to receive payment of credit entitlements.

The companion bill, the Fuel Tax (Consequential and Transitional Provisions) Bill 2006, relates to the transition from the existing arrangements to the fuel tax credit system, the phasing in of extended entitlements and the administration of the new system.

Full details of the measures in the bill are contained in the explanatory memorandum.

I present the combined explanatory memorandum for the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006.

Debate (on motion by Mr Murphy) adjourned.