Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Hansard source

The loophole is in the claiming of excise on a biodiesel blend that has not had excise paid on it for the full value. If you were to buy 100 per cent mineral diesel, you would pay excise on it at the full volume and claim that back. If you were to use a biodiesel blend of B49, you would be paying excise on the mineral diesel component of 51 per cent. But, under the tax legislation, there was a capacity to describe it as diesel and therefore claim a full fuel diesel rebate of whatever the rebate value was at the time on the full volume of the litre of diesel. Therefore, you are claiming 49 per cent of that excise value on the biodiesel value, which had already had a cleaner fuel grant payment and which effectively left it tax free. That is where the loophole is. It is not in the cleaner fuels grant; it is in the taxation treatment. That became apparent to the government about 18 months ago, just after biodiesel came into the tax system.