• Service: Tax, Global Transfer Pricing Services
  • Type: Regulatory update
  • Date: 24/10/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Andy Russell

Andy Russell
Senior Manager, Tax

+61 2 9346 5705

Fuel tax credits and carbon pricing – more changes ahead? 

by Andy Russell, Customs & Fuel Tax Specialist

The new Coalition Government’s recently released draft legislation regarding the proposed abolition of the carbon pricing mechanism contains some key aspects concerning fuel tax credit, customs duty and excise. Submissions are due by 4 November 2013.

Subject to the legislation passing through Parliament, it is proposed from 1 July 2014 that:


  • fuel tax credit rates, currently reduced by an equivalent carbon charge, will revert to the original rates. For example, diesel used in eligible off road activities will qualify for a fuel tax credit of 38.143 cents per litre, rising from the current credit of 31.622 cents per litre
  • the carbon charge applied to imports of aviation fuel into Australia will be removed
  • the carbon charge applied to excise on aviation fuel manufactured in Australia will be removed
  • the aviation fuel opt in scheme, permitting entities to offset the additional carbon charge applicable to aviation fuel, by way of fuel tax credit, will be abolished
  • non-transport gaseous fuels used in specified agriculture, fishing or forestry activities will no longer be eligible for fuel tax credits in an amount equivalent to the carbon charge
  • the equivalent carbon charge will no longer be applied to the importation or manufacture of synthetic greenhouse gases from 1 July 2014.


The requirement that a carbon charge is applied to fuel tax credit calculations will remain in place for any eligible fuels acquired, imported or manufactured in Australia up to 30 June 2014.


If the legislation gains Royal Assent later than 1 July 2014, it will apply retrospectively from that date. Accordingly business should consider procurement schedules to ensure fuel tax credit entitlements and system changes are addressed appropriately, should the legislation be enacted.


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