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Export Law Changes, Tariff Changes and New Tax on Alternative Fuels

Parliament recently passed three bills of importance to the Australian trade community, all of which are now awaiting Royal Assent:

  • Customs Amendment (Export Controls and Other Measures) Bill 2011
  • Customs Tariff Amendment (2012 Harmonized System Changes) Bill 2011, and
  • Customs Tariff Amendment (Taxation of Alternative Fuels) Bill 2011.

The full text of the Bills and their accompanying Explanatory Memorandums can be found here.

What do the changes mean for importers?

The measures in the Customs Amendment (Export Controls and Other Measures) Bill 2011 seek to increase the level of security in ports, airports and cargo storage facilities, particularly with respect to export cargo.

The Bill enacts changes required to enhance Customs’ ability to respond to specific security concerns, especially in respect of high-risk export cargo. Customs will consult industry, as it develops supporting material to implement the measures in the Bill, which includes changes to the Infringement Notice Guidelines for new offences outlined in the Bill. Within 6 months of receiving Royal Assent, the Bill will amend the Customs Act 1901 and the Customs Depot Licensing Charges Act 1997. Australian companies should review the text of the bill in light of their current security and recordkeeping policies and procedures to prepare for the changes.

The Customs Tariff Amendment (2012 Harmonized System Changes) Bill 2011 contains approximately 800 amendments to the Customs Tariff Act 1995 that will implement changes resulting from the World Customs Organization fourth review of the International Convention on the Harmonized System. The amendments, a majority of which are changes to classifications, will come into effect on 1 January 2012.  Importers should prepare for the changes by reviewing the proposed changes in the text of the bill against their import data to understand how the changes will affect their concessional rates and if any changing classifications are associated with Tariff Advices or Tariff Concession Orders issued to them by Customs.

The Alternative Fuels Bills will change the excise tax and duty treatment of liquefied petroleum gas (LPG), liquefied natural gas (LNG) and compressed natural gas (CNG) used in transport. The new taxation arrangements will start to phase in on 1 December 2011 and will be complete from 1 July 2015. As of 1 July 2015, the tax will apply on an energy content basis but with a 50 per cent discount to recognise the potential environmental, regional development and fuel security benefits of alternative fuel use.

Duty rates assessed on imported LNG, CNG and LPG are based on the energy content of the fuel. The applicable duty rate is that which applies on the day goods are delivered for ‘home consumption’ (leave your storage site and enter into the domestic market). A data sheet of transitional duty rates from December 2011 to July 2015, as well as a summary of excise licensing, reporting and payment obligations  can be found here.

Automatic remissions are a type of refund that is available for companies purchasing fuel that is not for use in transport. For example, a person or entity can apply for an automatic remission if the fuel is to be used in a home refuelling system, in a forklift, to refill barbeque cylinders.  It is also important to note that companies selling LPG are required under the new law to provide the buyer with a notice if an automatic remission of duty has already been obtained.

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