Excise Act 1901 and Excise Tariff Act 1921: alcohol, fuel, tobacco and PSP

Excise statutes and the ATO's role

The Excise Tariff Act 1921 establishes the imposition of excise on goods manufactured or produced in Australia, specifically including alcohol, fuel and tobacco. This Act sets the rates of excise payable. Complementing this, the Excise Act 1901 provides the administrative framework for the excise system.

The Excise Act 1901 governs licensing, manufacture, delivery and payment related to excise. It also outlines the process for goods being ‘delivered for home consumption’, which occurs when they are released into the Australian market in an authorised manner.

The Australian Taxation Office administers both the Excise Tariff Act 1921 and the Excise Act 1901. The ATO is responsible for issuing excise licences, as permitted under section 39A of the Excise Act 1901. Excise-equivalent customs duty is applied to imported alcohol, fuel and tobacco, with rates aligned to domestic excise.

Indexation of excise rates

Excise rates for alcohol and fuel are subject to periodic adjustments. These rates are indexed every six months, in February and August, using the All Groups Consumer Price Index (CPI). This process is governed by section 6A of the Excise Tariff Act 1921. GEMS Act energy labelling

Tobacco excise rates are also adjusted periodically, but using a different measure. They are indexed bi-annually to Average Weekly Ordinary Time Earnings (AWOTE), as outlined in section 6AA of the Excise Tariff Act 1921.

Aviation fuels are an exception to the general indexation rules. Their excise rates are not subject to CPI adjustments and are instead determined by separate, fixed rates. As an example, from 2 February 2026, petrol and diesel excise was at $0.526 per litre, with a CPI indexation factor of 1.019.

Periodic Settlement Permission (PSP)

A Periodic Settlement Permission (PSP) allows a licensed entity to periodically report and pay excise on goods after they have been delivered for home consumption. PSPs are usually weekly, with monthly PSPs available to eligible small business entities. ASRS vs ISSB vs CSRD climate disclosure

From 1 July 2023, eligible small businesses can apply for a quarterly PSP for excise-equivalent goods (excluding like customable goods) to align with Business Activity Statement (BAS) timing. Tobacco is excluded from PSP arrangements; duty on tobacco is payable before delivery into home consumption.

A customs PSP is the equivalent permission for excise-equivalent customs goods, administered jointly by the ATO and ABF.

Licensing, returns and offences

Manufacturers and storers of excisable goods require licences. A manufacturer licence is held under section 39A of the Excise Act 1901. Storage licences, also under section 39A, are needed for excisable goods awaiting delivery for home consumption. Businesses may also need to comply with the NGER greenhouse and energy reporting Act 2007.

Excise returns, accompanied by payment, must be lodged on dates specified in the PSP. These returns detail the manufacture and removal of excisable goods.

Breaches of the Excise Act 1901 can result in significant penalties. Section 117 makes it an offence to evade excise duty, with penalties potentially reaching up to five times the amount of duty evaded. The Australian Taxation Office (ATO) has the power to cancel or suspend excise licences for breaches, as outlined in section 39N of the Excise Act 1901.