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History of the Fuel Subsidy Scheme

The Fuel Subsidy Scheme was abolished on 1 July 2009.

History of the scheme

The Fuel Subsidy Scheme was introduced after a High Court decision prevented the states and territories from collecting business franchise fees on fuel, tobacco and alcohol. Because Queensland never had a fuel tax, the government reached an agreement with the Commonwealth and the fuel industry to provide a subsidy for:

  • retailers—to pass the benefit to consumers
  • bulk end users
  • licensed off-road diesel users.

Changes to the Commonwealth tax system affected the subsidy, especially for off-road diesel users. All off-road diesel licenses for the subsidy ceased in 2000.

From 1 November 1997 to 30 June 2009, Queensland motorists automatically received the benefit of the subsidy as it was paid directly to fuel retailers (including local petrol stations) who passed it on by reducing the price of the fuel they sold by the amount of the subsidy.

The subsidy was also paid to bulk end users (BEUs), who purchased fuel in bulk from distributors at the unsubsidised rate. Licensed retailers and BEUs claimed the subsidy on some types of motorspirit and diesel.

Between 1 July 2000 and 31 May 2006, the off-road diesel subsidy could only be claimed on diesel engine road vehicles that were designed solely or mainly for transporting persons, goods or animals by public road.

On 1 June 2006, the definition of a diesel engine road vehicle changed to allow other vehicles to receive the subsidy for the diesel used while travelling on a public road.

Diesel-engined vehicles that were conditionally registered (or were of a kind that would be eligible for conditional registration in Queensland) were not eligible for the subsidy on the diesel they used.

Note: Vehicles such as tractors, skid steer loaders (bobcats), backhoes and earthmoving equipment were not eligible for the subsidy as they did not fit into the definition of a diesel engine road vehicle.

Abolition of the scheme

On 2 June 2009, the Queensland Government announced the abolition of the Fuel Subsidy Scheme from 1 July 2009. The Fuel Subsidy Repeal and Revenue and Other Legislation Amendment Bill 2009 was introduced into Parliament on 16 June 2009, passed on 20 June 2009 and received Royal Assent on 22 June 2009.

The abolition of the Fuel Subsidy Scheme meant that subsidies will not be paid on any fuel:

  • sold by a fuel retailer after 30 June 2009

    or

  • used by a bulk end user (BEU) after 30 June 2009. 

These changes did not affect subsidy entitlements before 1 July 2009.

See Abolition information for BEUs (PDF 6,310 K) and Abolition information for retailers (PDF 2,405 K) for more information about how these changes affected bulk end users and fuel retailers.

Top call centre questions

When do I stop being entitled to receive the fuel subsidy?

Retail fuel sold before 1 July 2009 will be eligible for the subsidy. However, you must pass on the full benefit of the subsidy to your retail customers for those sales. Fuel sales after that date will not be subsidised.

Bulk end user fuel which has been delivered directly into the running tank of your vehicle or equipment before 1 July 2009 will be eligible for the subsidy. Fuel used after that date will not be subsidised.

What should I do if I discover I have incorrectly claimed subsidies in the past?

We encourage all retailers and bulk end users to review their subsidy entitlements and claims for the 2008–09 financial year and previous years. 

If you discover any overpayment, you should immediately notify us and repay the amount. If you do this before we investigate or contact you and ask you to make a repayment, we will not impose any incorrect payment penalty. We will also reduce the interest payable from 20% per year to 10% per year. 

Do I have a time limit for claiming extra subsidies if I have underclaimed in the past?

Yes. Your entitlement to the subsidy ends on 30 September 2009 or 2 years after the fuel was sold or used, whichever is earlier. No subsidies can be paid for claims received after 30 September 2009.

If you received a provisional payment and do not lodge your annual return by 30 September 2009 at the latest, you will also have to repay the full amount of your provisional payment for 2008–09.

Do I still have to keep records now that the Queensland Fuel Subsidy Scheme has been abolished?

Yes. You must keep the required subsidy records for 5 years after the records were made. 

See Record keeping for retailers and Record keeping for BEUs for more information.

These records must be available in case we investigate your claims. If you have to repay a subsidy following an investigation, you may have to pay an incorrect payment penalty equal to the overpaid amount. You may also have to pay interest on any unpaid amount at the rate of 20% per year.

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Last reviewed 3 October 2011

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