Outwardly, there’s little difference between oils.
But when it comes to tax law and financial incentives to businesses to recycle oils and greases, just a pair of parentheses can mean millions of dollars.
The federal Parliament has been forced into overhauling a pioneering piece of Howard government-era legislation after a Federal Court ruling that up-ended almost 20 years of accepted tax law.
The Product Stewardship (Oil) Act was introduced in 2000 in a bid to reduce the amount of oil poured down the nation’s drains. Under the act, companies pay a small levy on certain types of oils and greases but they are reimbursed with a benefit payment from the government if the firms recycle the oils.
Up to 320 megalitres of oil that may have otherwise been stored behind car mechanic buildings or washed down the drain is now recycled annually under the scheme which includes lubricant oils, hydraulic fluids, brake fluids and greases.
But in June 2016, Caltex made a claim under the scheme for almost $8.4 million. It had used diesel to clean the walls of the ships it used to bring crude oil into the country.
Under the scheme, there is no special levy imposed on diesel. No company before had sought to bring diesel into the scheme. But Caltex sought a payment because it had recycled the so-called “slop” diesel to a level it could be used as a fuel.
The tax office rejected the claim and Caltex went to the Federal Court to fight the decision. It was there on November 14 last year that almost two decades of agreed law was turned on its head.
A key issue was the way the legislation back in 2000 was framed. For the sake of the levy, and the benefit payment back to the company, oils were defined as “petroleum-based oils”.
The term was then followed, in parentheses, by a list of oils that began with the word “including”.