Tax office provides more clarity on storing biodiesel blends

Trucking operators will now be able to swap between storing biodiesel blends and diesel in the same depot tank without holding an excise manufacturer’s licence.

The Australian Taxation Office recently announced the decision at a meeting of its Fuel Schemes Advisory Forum.

The ATA raised the issue with the ATO last year on behalf of small trucking operators who swap between biodiesel and diesel.

“It was unclear how the fuel tax laws affected operators who stored diesel in a depot tank containing some leftover biodiesel, or who added biodiesel to a tank with a few litres of diesel left at the bottom,” ATA CEO Stuart St Clair says.

“The ATO could have decided that every operator who blended the remnants of one fuel with another should have held an excise manufacturers licence.”

“We urged the ATO to consider whether the exemption that currently applies to blending fuels in the tank of a vehicle could be extended to cover depot tank blending as well.”

“The ATO has now decided that: – Combining a duty paid biodiesel/diesel blend (such as B20) with duty paid diesel or another duty paid biodiesel/diesel blend does not constitute excise manufacture.”

“Operators are not required to hold an excise manufacturers licence,” he says.

However, combining duty paid pure biodiesel (B100) with duty paid diesel or with a duty paid biodiesel/diesel blend does constitute excise manufacture.

Operators who do this must get a licence from the ATO.

“It’s not an ideal result for the industry,” St Clair says.

“It doesn’t recognise the situations faced by operators who may have swapped between storing B100 and diesel in the same tank and didn’t realise they were blending the remnant fuel.”

“But it does ensure that operators who top up their depot tank with different biodiesel blends are not unwittingly dragged into the excise system.”

“The ATA strongly advises operators not blend pure biodiesel (B100) with anything, unless they want to become a licensed excise manufacturer.”

“There are substantial penalties for blending fuel without a licence,” he says.

The tax office will issue a formal Interpretive Decision on this issue within four weeks.

The formal decision will also clarify the Fuel Tax Credits and Alternative Fuel Grants that operators are entitled to claim if they combine a duty paid biodiesel/diesel blend that meets the diesel standard with a duty paid biodiesel/diesel blend that does not meet the standard.

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