· Web viewEXPOSURE DRAFT. EXPOSURE DRAFT. Section 14Final date for relinquishment of free...

Carbon Tax Repeal:Final true-up of 2013-14 allocations

under the Jobs and Competitiveness Program

Consultation paper to accompany the

Exposure Draft – Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness

Program) Rules 2014

June 2014

Written and published by the Department of the Environment.

© Commonwealth of Australia 2014

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Disclaimer

This document is made available to inform the public on the proposed process for the final true-up of allocations under the Jobs and Competitiveness Program following the proposed repeal of the carbon tax. Material in this document should not be taken to indicate the Commonwealth's commitment to a particular policy or course of action.

The Commonwealth does not make any representations or warranties that it will implement any or all of the options, preferred positions or dispositions set out in this document. Material in this document is made available for general information only and on the understanding that the Commonwealth is not providing professional advice. Different solutions and outcomes may apply in individual circumstances. While reasonable efforts have been made to ensure the accuracy, completeness and reliability of the material contained in this document, to the extent permitted by law, the Commonwealth provides no express or implied warranties and makes no representations that the information contained in this document is accurate, complete or reliable, and expressly disclaims liability for any loss, however caused and whether due to negligence or otherwise, arising directly or indirectly from the use of, inferences drawn, deductions made, or acts done in reliance on, this document or the information contained in it, by any person.

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CONTENTS

Glossary......................................................................................................................4

Consultation process...................................................................................................5

Proposed final Jobs and Competitiveness Program true-up process..........................7

The repeal of the carbon tax....................................................................................7

The role and purpose of the draft True-up Rules.....................................................7

The current operation of the Jobs and Competitiveness Program........................8

Final true-up of 2013-14 Jobs and Competitiveness Program allocations............8

Key features of the draft True-up Rules...................................................................9

Key terms used in the draft True-up Rules............................................................10

True-up process timeline.......................................................................................10

Explanation of the draft True-up Rules......................................................................13

Structure of the draft True-up Rules......................................................................13

Key steps for a true-up adjustment...........................................................................15

Appendix – Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Rules 2014.....................................................................21

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GlossaryTerm Explanation

EITE emissions-intensive, trade-exposed

JCP Regulations Schedule 1 to the Clean Energy Regulations 2011, which concerns the design and operation of the Jobs and Competitiveness Program.

Main Repeal Bill The Clean Energy Legislation (Carbon Tax Repeal) Bill 2013

Regulator the Clean Energy Regulator

True-up Rules the Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Rules 2014

True-up Shortfall Levy legislation

the True-up Shortfall Levy (General) (Carbon Tax Repeal) Bill 2013 and the True-up Shortfall Levy (Excise) (Carbon Tax Repeal) Bill 2013

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Consultation process

Submissions on the draft Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Rules 2014 are due by no later than 5pm on Friday, 18 July 2014.

As part of the carbon tax repeal process, the Australian Government has released an exposure draft of the Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Rules 2014 (the draft True-up Rules). The draft True-up Rules implement a true-up of 2013-14 allocations under the Jobs and Competitiveness Program, which would be implemented after the repeal of the carbon tax legislation is enacted. The purpose of this consultation process is to identify any technical or implementation issues with the draft True-up Rules.

The exposure draft True-up Rules are available at www.environment.gov.au.

This consultation paper explains how the draft True-up Rules would apply and operate, particularly with regard to the references to the relevant provisions of Schedule 1 to the Clean Energy Regulations 2011, which are to be read as if they apply for the purpose of the true-up rather than a new application for assistance.

Making an enquiry

Information about carbon tax repeal is available at www.environment.gov.au/ carbon-tax- repeal.

If you have an enquiry about the draft True-up Rules consultation process, please email repeal - [email protected] or telephone 1800 057 590.

Making a submission

Where possible, submissions should be lodged electronically at the email address below, preferably in Microsoft Word or other text-based formats. Submissions may be sent to the postal addresses below to arrive by no later than 5pm on Friday, 18 July 2014.

Submissions should be emailed to: [email protected]

Postal submissions should be sent to:

Draft Jobs and Competitiveness Program True-up Rules ConsultationCarbon Tax Repeal TaskforceDepartment of the EnvironmentGPO Box 787Canberra ACT 2601

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mailto:[email protected]

mailto:[email protected]

http://draft.environment.gov.au/carbon-tax-repeal

http://draft.environment.gov.au/carbon-tax-repeal

http://www.environment.gov.au/

http://www.environment.gov.au/

Privacy statement

Your views are being sought by the Department of the Environment for the purpose of providing input on the draft True-up Rules as part of the repeal of the carbon tax. Personal information that you provide will only be used for these purposes. Personal information may be disclosed to employees of other Government agencies assisting the Department for the purposes outlined above. Contents of your submission may be included in subsequent publications.

Confidentiality statement

All submissions will be treated as public documents, unless the author of the submission clearly requests otherwise. Public submissions may be published in full on the Department’s website, including any personal information of authors and/or other third parties contained in the submission.

If your submission contains personal information about any person who is not an author of the submission, please indicate on the cover sheet if the person or persons have not consented to the publication of their information.

Any request under the Freedom of Information Act 1982 for access to a submission marked 'confidential' will be determined in accordance with that Act.

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Proposed final Jobs and Competitiveness Program true-up process

The final Jobs and Competitiveness Program true-up process is aimed at ensuring that facilities that undertook emissions-intensive, trade-exposed activities receive the correct allocation of assistance for the 2013-14 compliance year.

The repeal of the carbon tax

The Australian Government will repeal the carbon tax legislation with effect from 1 July 2014. The Government will re-introduce the legislation to repeal the carbon tax in June 2014.

Despite the repeal of the carbon tax, the Clean Energy Act 2011 and the Clean Energy Regulations 2011 will continue in force, modified, where necessary, for the purposes of liable entities meeting their final carbon tax liabilities for 2013-14 (see Division 2 of Part 3 of Schedule 1 to the Main Repeal Bill).

What will occur if the carbon tax repeal legislation passes after 1 July 2014?

The Government will pass the carbon tax repeal legislation as soon as possible. When the repeal legislation is enacted, the carbon tax will be repealed with effect from 1 July 2014, regardless of whether the repeal legislation is enacted before or after 1 July 2014.

The role and purpose of the draft True-up Rules

When the carbon tax is repealed, it will be necessary to make some changes to a number of associated programs. One such program is the Jobs and Competitiveness Program.

The Jobs and Competitiveness Program provides assistance to eligible entities that undertake emissions-intensive, trade-exposed (EITE) activities, to help those entities to meet their costs associated with the carbon tax. Each financial year, free carbon units are allocated to such entities in accordance with the JCP Regulations. Units are usually under- or over-allocated each year, with the under- or over-allocation being 'trued-up’ in the following financial year’s allocation.

As part of the carbon tax repeal process, no new assistance will be available under the Jobs and Competitiveness Program for 2014-15 and later financial years. Although the JCP Regulations will continue in force after the repeal of the carbon tax, any further assistance provided under the Jobs and Competitiveness Program will relate only to the 2012-13 and 2013-14 financial years. To permit an orderly wind-up of the Jobs and Competitiveness Program, an additional process is required to true-up 2013-14 under- or over-allocations of free carbon units. Such a process is set out in Part 4 of Schedule 1 to the Main Repeal Bill. The draft True-up Rules set out the details of this process.This process will result in entities either being allocated additional free carbon units for 2013-14, if they were under-allocated units in 2013-14, or having to pay a levy if they were

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over-allocated units in 2013-14 and do not relinquish additional units by a date specified in the draft True-up Rules.

The Minister can make the True-up Rules once the Main Repeal Bill is enacted, and it is expected that the True-up Rules would be made soon after the commencement of the Main Repeal Bill.

As the draft True-up Rules only fill in the details of this process, they should be read in conjunction with Part 4 of Schedule 1 to the Main Repeal Bill, and, where appropriate, also the JCP Regulations.

The current operation of the Jobs and Competitiveness Program

Under the Jobs and Competitiveness Program, EITE entities apply annually to the Clean Energy Regulator (the Regulator) for free carbon units. Provided the eligibility requirements are met, the Regulator provides the majority of the assistance early in the relevant financial year, which is intended to assist with managing carbon tax costs throughout the year. To facilitate the provision of assistance early in the year, the number of units allocated each financial year is based on the level of production from a facility undertaking an eligible activity during the previous financial year. In some cases, where there is no previous year’s production, it is instead based on the expected production for the year.

To correct an allocation of free carbon units for a financial year based on what the actual production was for that year, the Regulator undertakes a ‘true-up’ adjustment process as part of the calculation of assistance for the following year. This involves the EITE entity providing audited production data for the past financial year and the Regulator then calculating an adjustment based on the difference between the previous financial year’s production (on which the allocation was based) and the actual production for the past financial year.

In addition to the adjustment for production, the Regulator will, in certain cases, also make other adjustments as part of the calculation of assistance. These adjustments are for: sub-threshold facilities; a maximum cap on the number of units for new facilities; and a supplementary allocation for liquefied natural gas (LNG) facilities.

Final true-up of 2013-14 Jobs and Competitiveness Program allocations

Once the carbon tax is repealed, the True-up Rules will set out the process that will allow the Regulator to ensure that it receives audited 2013-14 production data and can adjust the allocation of 2013-14 free carbon units to correct any under- or over-allocation of units.

Key features of the draft True-up Rules

The draft True-up Rules are designed to complement the existing carbon tax repeal process and will be administered by the Clean Energy Regulator.

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The key features of the draft True-up Rules are outlined below.

Requirement to submit a true-up report

Most entities which received assistance under the Jobs and Competiveness Program in 2013-14 will be required to submit to the Regulator a true-up report in an approved form. Unlike the Jobs and Competitiveness Program (in which participation is voluntary), the requirement to report under the draft True-up Rules would be compulsory.

Requirement to submit audited data

The true-up report form will require entities to submit audited production data and other information to the Regulator. The auditing requirements will be similar to those set out in the JCP Regulations. The audited data will include information on production for 2013-14, and information relating to other adjustments as relevant. This information will enable the Regulator to determine whether the entity was under- or over-allocated free carbon units for 2013-14.

Option to receive single adjustment notice based on several applications

Entities which made several applications for assistance under the Jobs and Competitiveness Program for 2013-14 for different EITE activities or facilities may choose to ‘aggregate’ true-up adjustments into a combined under- or over-allocation for the set of applications. Entities choosing to do this would receive a single allocation of free carbon units, or would be required to pay a single true-up shortfall levy, for the relevant applications.

Use of the same method for calculating adjustments as the JCP Regulations

An entity’s final true-up adjustment for 2013-14 will be the same as the adjustment that would have been made had the Jobs and Competitiveness Program continued to operate in 2014-15, and the entity made an application for assistance under the Program for that financial year for the same activity at the same facility or facilities.

The draft True-up Rules achieve this result by referring to relevant provisions of the JCP Regulations in relation to the method for calculating the previous year adjustments and ‘modifying’ those provisions as needed to allow the 2013-14 final true-up to be calculated. These ‘modified JCP’ references are designed to reduce any unnecessary duplication of provisions. As a result of relying on the ‘modified JCP’, many of the requirements for the final true-up adjustment process (including the formulae) are the same as those currently in place under the JCP Regulations.

Key terms used in the draft True-up Rules

Term DescriptionDesignated person A designated person is a person who received free carbon units with a vintage

year of 2013-14 under the Jobs and Competitiveness Program. See item 351 of the Main Repeal Bill and section 3 of the draft True-up Rules.

Modified JCP The Rules refer to relevant provisions of the JCP Regulations, and modify those provisions to apply for the purpose of the final Jobs and

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Term DescriptionCompetitiveness Program true-up rather than in relation to an ordinary Jobs and Competitiveness Program application. The modified provisions of the JCP Regulations would operate only for the purposes of the True-up Rules. The JCP Regulations themselves would continue to operate in their unmodified form for all other purposes.

Reportable application

Generally, an approved application for free carbon units under the Jobs and Competitiveness Program for 2013-14 in relation to an eligible activity contained in the JCP Regulations as currently in force.

True-up report A report to be provided by designated persons to the Regulator containing production data and other information, accompanied by an assurance report, statutory declaration and other relevant documents as would usually be provided in a Jobs and Competitiveness Program application. A true-up report would differ from a usual Jobs and Competitiveness Program application in that it would not include information which relates to expected production for financial year 2014-15.

True-up adjustment The difference between the number of free carbon units that were issued for 2013-14 based on audited 2012-13 production and the number of free carbon units that would have been issued based on audited 2013-14 production, adjusted by any relevant adjustments that need to be made to allocations1.

Further true-up information

Further information that the Regulator has requested a designated person to provide which is specifically relevant to the calculation of the true-up adjustment (and not ancillary information that the Regulator may request to complete the true-up report).The Regulator may also ask for further information that does not relate to the calculation of the true-up adjustment, where it is necessary to do so.

True-up process timeline

To minimise potential complexity, the dates and deadlines for the true-up process are designed to align with both the existing dates for EITE entities to make applications for assistance and the key dates relating to carbon tax repeal.

In designing the draft True-up Rules, a key consideration in determining the timing of the true-up process was to ensure that that entities entitled to an additional allocation of units have sufficient opportunity to meet their carbon tax liabilities or sell the units back to the Government before 2 February 2015 (the final surrender date for 2013-14 liabilities).

1 Adjustments are made as a result of a facility: being sub-threshold; being subject to the maximum cap; or claiming the LNG supplementary allocation.

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Proposed true-up process timeline

Date Proposed process/step31 October 2014 True-up report due date: Due date for entities to submit a true-up report

containing audited 2013-14 production data and other relevant information to the Regulator.Unlike the Jobs and Competitiveness Program, under which participation was voluntary, submission of a true-up report under the draft True-up Rules would be compulsory for affected entities.

1 December 2014 Extension true-up report due date: Due date for entities to submit a true-up report, if an extension has been granted by the Regulator.

Up to 45 days after true-up report is received, or requested further information is provided

True-up adjustment notice provided: Maximum time for the Regulator to provide an entity with an ‘adjustment notice’, which will inform the entity whether it has an under- or over-allocation for 2013-14. Note: Where further information has been requested by the Regulator, the 45 days would commence once the requested information has been provided.

15 December 2014 Submission of additional information: If the Regulator requests further information from a designated person relating to their true-up report, the Regulator will specify a date for provision of that information. The Regulator will not be able to specify a date that is after 15 December 2014.

16 January 2015 Last date for true-up adjustment notification: Final date for the Regulator to issue a true-up adjustment notice.

2 days after the issue of a true-up adjustment notice and no later than 23 January 2015

Final issuance date: Final date for the Regulator to issue any additional units that relate to an under-allocation.

1 February 2015 Final buy-back date: Final date for Government buy-back of units.

2 February 2015 Final surrender date: Final date for entities to relinquish units to deal with any over-allocation. After this date, the value of over-allocated units will be payable as cash in the form of a true-up shortfall levy. The Regulator will issue a notice indicating the amount of true-up shortfall levy due and when it is to be paid.

9 February 2015 Designated carbon unit day: All carbon units will cease to exist after this date (or a date specified by legislative instrument).

16 February 2015 True-up shortfall levy due: The true-up shortfall levy is calculated as number of over-allocated units not relinquished x $24.15. If not paid by this date, the levy will be subject to a 20 per cent per annum penalty rate.

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Explanation of the draft True-up Rules

The True-up Rules will be a legislative instrument made by the Minister for the Environment under item 359 of the Main Repeal Bill (once it is enacted). It is a disallowable instrument under section 42 of the Legislative Instruments Act 2003.

The True-up Rules will commence on the date after the day on which they are registered on the Federal Register of Legislative Instruments.

Structure of the draft True-up Rules

Reference Explanation

Part 1 – Preliminary Part 1 contains:

formal matters relating to the title and commencement of the draft Rules; and

definitions and provisions relating to interpretation of the Rules, including interpretation of references to modified provisions of the JCP Regulations.

Part 2 – Reporting requirements

The purpose of the information requirements set out in Part 2 is to ensure that the Regulator receives the information required to determine the true-up adjustment to be made to an applicant’s 2013-14 allocation, and to make other calculations under the draft True-up Rules. Part 2 of the draft True-up Rules should be read in conjunction with, in particular, Division 2 of Part 4 of Schedule 1 to the Main Repeal Bill.

Part 2 contains:

requirements for the Regulator to approve a true-up report form; reporting requirements that apply to recipients of free carbon units for

2013-14, in particular the compulsory requirement to submit a true-up report;

timing for submitting a report (the timing is intended to be consistent with that which would have applied for a new Jobs and Competitiveness Program application, had the carbon tax not been repealed and the Jobs and Competitiveness Program continued to operate); and

powers for the Regulator to request further information if the true-up report as submitted by a designated person does not contain sufficient information for the Regulator to make a determination of the final true-up adjustment.

Part 3 – Notice of true-up adjustment

Part 3 – Notice of true-up adjustment

Part 3 deals with notices of true-up adjustments.

Part 3 makes provision for situations where a designated person does not comply with the requirement to provide:

a true-up report to the Regulator; or further true-up information, if requested.

Part 3 also includes:

provisions under which an estimate of the true-up adjustment is made by the Regulator and notice of the estimate is provided to the designated person with an opportunity to respond;

requirements for the Regulator to decide on the true-up adjustment for a designated person, as well as any under-allocation or over-allocation of free carbon units. The Regulator would send a

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Reference Explanation

(continued) notice to each designated person that identifies the number of units that would equate to:

o an under-allocation (where additional units would be issued); or

o an over-allocation (in which case a designated person would relinquish units or pay a shortfall levy);

Where a designated person submits true-up reports for a number of related JCP applications, the notice will contain the individual true-up adjustment for each report and the net balance of all true-up adjustments as the combined under- or over-allocation amount.

timing restrictions for true-up adjustment notices which are intended to ensure that, to the extent possible, the Regulator is able to finalise all adjustments and issue notices by 16 January 2015. This is intended to ensure that, in the event that a designated person is entitled to additional units, it would have an opportunity to surrender those units or realise value for the units through the buy-back mechanism before the final date for buy-back (1 February 2015);

a method for calculating the true-up adjustment by referring to the existing calculation of the previous year adjustments in Part 9 of the JCP Regulations (as modified in accordance with the draft True-up Rules).

Under this method, the true-up adjustment will be reduced to zero if a true-up report or requested further true-up information is not provided.

Part 4 – Under- and over- allocations of free carbon units

Part 4 outlines the timing for designated persons to receive their additional units or pay a levy. Part 4 of the draft True-up Rules should be read in conjunction with, in particular, Divisions 3 and 4 of Part 4 of Schedule 1 to the Main Repeal Bill.

Where a final true-up adjustment calculation indicates that a designated person has an under-allocation of free carbon units, the Regulator would be required to issue units within 2 business days of issuing the true-up adjustment notice (and no later than 23 January 2015).

Where a final true-up adjustment calculation indicates that a designated person has an over-allocation of free carbon units, a levy would be imposed on their true-up shortfall, unless the designated person was able to reduce this shortfall to zero by relinquishing additional units by 2 February 2015.

Part 5 – Collection of levy

Part 5 outlines the timing for paying any true-up shortfall levy. Part 5 of the draft True-up Rules should be read in conjunction with, in particular, Division 6 of Part 4 of Schedule 1 to the Main Repeal Bill.

The levy would be due and payable by 16 February 2015, after which date a late payment penalty would be payable.

Part 5 also outlines that the Regulator must issue a notice to designated persons that have a shortfall stating the amount of shortfall levy that is payable and when it is due to be paid.

Part 6 – Miscellaneous

Part 6 contains decisions that are intended to be reviewable in relation to the calculation of the true-up adjustment.

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Key steps for a true-up adjustmentThe following table summarises the key steps set out in the draft True-up Rules for finalising a Jobs and Competitiveness Program true-up adjustment.

Step Issue ExplanationReference in draft True-up Rules2

1. Requirement to report

The Regulator will communicate the requirement for affected designated persons to submit a true-up report.

A ‘designated person’ is an EITE entity that received 2013-14 vintage free carbon units under the Jobs and Competitiveness Program.

Definition of ‘designated person’ in subsection3(2), and subitem 351(2) of the Main Repeal Bill

Closure of production equipment in 2013-14

Entities that have relevant production equipment which has closed during 2013-14 are exempt from the requirement to submit a true-up report.

Definition of ‘reportable application’ in subsection 3(2)

These entities must report to the Clean Energy Regulator, and relinquish units, under the existing closure provisions in the JCP Regulations.

Division 2 of Part 13 of the JCP Regulations

2. True-up report Each designated person must submit a true-up report in the form approved by the Regulator by 31 October 2014.

Subsection 5(2) and paragraph 6(1)(a)

Shared eligibility Where assistance under the Jobs and Competitiveness Program has been allocated to more than one entity in relation to a single JCP application, the draft True-up rules require the applicants to submit one combined true-up report.Any entity that has received assistance under the Jobs and Competitiveness Program, including entities that received assistance pursuant to a combined application, will be subject to penalties for non-compliance.

Subsection 5(4)

Compliance Submitting a true-up report is compulsory for all designated persons. This is different to the voluntary nature of an application for Jobs and Competitiveness Program assistance.

Subsection 5(2)

Civil penalties may apply for non-compliance with these reporting requirement.

Subitem 351(3) of the Main Repeal Bill

The maximum civil penalty is 10,000 penalty units for a body corporate or 2,000 penalty units for a person other than a body corporate.3

Part 17 of the Clean Energy Act 2011

A designated person may apply to the Clean Energy Regulator for an extension to submit a true-up report.

Subsections 6(2) to (6)

If granted, the person must provide the report no later than 1 December 2014.

Paragraph 6(1)(b)

Contents of the The true-up report form will indicate what documents Subsection 5(1)

2 References are to provisions of the draft True-up Rules unless indicated otherwise.3 A penalty unit is $170 – see section 4AA of the Crimes Act 1914 and section 2B of the Acts Interpretation Act 1901.

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Step Issue ExplanationReference in draft True-up Rules

report and other information will be required. These requirements will be similar to those for Jobs and Competitiveness Program applications.

The required information will include an audit report which provides a reasonable assurance opinion in regard to the eligible activity that was undertaken and the amount of relevant product for 2013-14.

Subsections 5(2) and (3). Clause 604 of the JCP Regulations, and items 3 and 4 of the table to subsection 4(1)

The report must also include information relating to the maximum cap on new facilities, sub-threshold facilities and LNG supplementary allocation, where relevant, that would otherwise have been included in an application for 2014-15.

Paragraphs 4(2)(a), (b) and (d)

This information allows the Regulator to appropriately adjust the 2013-14 allocation.

The true-up report must also identify the relevant approved Jobs and Competitiveness Program application for the EITE activity.

Subparagraph 5(3)(a)(ii)

If a designated person has more than one approved application, it may choose to identify those related applications to enable all applications to be considered in aggregate.

Paragraph 5(3)(b), and definition of ‘related reportable application in section 2

Requests for further information

The Regulator may request further information in relation to the true-up report if it considers that the report contains insufficient detail to calculate the true-up adjustment. The Regulator may specify in the request for further information the date that it is required to be provided, but that date may not be later than 15 December 2014.The Regulator may also ask for further information that does not relate to the calculation of the true-up adjustment.

Section 7

3. Calculation of true-up adjustment

The true-up adjustment is determined by the Regulator by:

accepting the true-up report submitted by the designated person;

accepting the true-up report on the basis of having requested and received further information; or

making its own calculation of the true-up adjustment where the person does not submit a report or further true-up information.

Failure to submit a true-up report

If a designated person has not submitted a true-up report or provided further true-up information as requested by the Regulator, then the Regulator estimates the true-up adjustment.

Paragraphs 8(1)(a), (b) and (c)

If this occurs, the Regulator must:o notify the designated person of the

estimate; ando provide an opportunity for the person

Paragraph 8(1)(d)

Paragraph 8(1)(e)

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to respond with more accurate information which that person considers should be used in the calculation of the true-up adjustment.

If the Regulator’s estimate would result in the designated person having an under-allocation (in which case it would otherwise be owed additional units), then the true-up adjustment would be reduced to zero. As a result, the designated person would not be entitled to those additional units. Conversely, if the estimate would result in an over-allocation, then the person would be required to relinquish the estimated number of over-allocated units or pay a shortfall levy.

Subsection 10(3)

Calculating the true-up adjustment

The Regulator must decide: each designated person’s true-up adjustment,

for each application covered by the true-up Rules; and

for each such application, or aggregated group of such applications – whether each designated person had an over- or an under-allocation of free carbon units for 2013-14.

Paragraph 9(1)(a), section 10

Paragraph 9(1)(b), sections 11 and 13

The final true-up adjustment would be calculated in a manner consistent with the process currently used to adjust previous year allocations under the JCP Regulations, modified in accordance with the draft True-up Rules (the modified JCP).

Sections 4 and 10

The true-up adjustment includes the previous year adjustment for actual production, calculated as ‘T’ in the JCP Regulations, plus any of the following adjustments that are relevant to an application:

maximum cap for new facilities; sub-threshold adjustment; and LNG supplementary allocation.

Previous year adjustment for production

The previous year adjustment calculation uses the current Jobs and Competitiveness Program adjustment process for production set out in the JCP Regulations.

Section 10, clause 906 of the modified JCP

The 2013-14 adjustment uses the difference between the 2013-14 allocation (less the 2012-13 true-up adjustment) and the allocation that would have been made based on actual 2013-14 production.

One minor variation is that the relative carbon pricing charge has been removed, as 2013-14 is the only relevant year.

Paragraph (d) of table item 7 of the table to subsection 4(1)

This calculation is summarised as:

The previous year adjustment for actual production (T) = (1+ interest rate) x (previous year’s calculated assistance based on 2013-14 production – previous year’s actual received assistance based on 2012-13 production less the 2012-13 true-up adjustment).

Other adjustments – In line with the current Jobs and Competitiveness Paragraphs 4(2)(a)

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maximum cap Program adjustment process, a cap is placed on the number of free carbon units that can be issued for facilities established after 10 July 2011. Assistance in these circumstances may not exceed 120 per cent of a facility’s total carbon tax costs. Where the maximum cap applies to a facility, the Regulator then makes a final adjustment to account for any over-allocation included in the 2013-14 allocation.

This is calculated as the number of units above the amount which represents 120 per cent of the facility’s carbon tax costs. The number of units is also adjusted by the interest rate as per the true-up adjustment for production.

and (f), and Division 5 of Part 7 and Division 6 of Part 9 of the modified JCP

Under the draft True-up Rules, and similarly to the JCP Regulations, designated persons that are subject to the maximum cap must provide the Regulator with additional information regarding emissions and electricity use to enable the maximum cap adjustment to be calculated.

Other adjustments – Sub-threshold facilities

The current Jobs and Competitiveness Program adjustment process reduces the allocation of free carbon units to eligible EITE entities with a facility that does not meet the threshold for liability under the carbon tax. The draft True-up Rules include the same adjustment to ensure that entities do not receive an allocation for direct emissions that do not attract a carbon price.Where entities have chosen not to receive any units in respect of their direct emissions allocation, no further adjustment is required as part of the final true-up process.However, where relevant entities received units for direct emissions, an adjustment will need to occur as part of the final true-up. The adjustment covers scope 1 emissions at the facility minus emissions from the combustion of natural gas. The number of units is also adjusted by the interest rate as per the true-up adjustment for production.

Paragraphs 4(2)(b) and (g), and Division 6 of Part 7 and Division 7 of Part 9 of the modified JCP

Other adjustments – LNG supplementary allocation

The draft True-up Rules also use provisions in the JCP Regulations to allow for an additional allocation of units for facilities that produce LNG, to ensure that the effective assistance rate for those facilities is at least 50 per cent. Eligible recipients of Jobs and Competitiveness Program assistance in relation to the LNG activity can choose to apply for the supplementary allocation by providing additional information to the Regulator in the true-up report. This is the same process that would have applied for 2014-15 Jobs and Competitiveness Program applications set out in the JCP Regulations.

Paragraphs 4(2)(d) and (h), and Division 8 of Part 7 and Division 9 of Part 9 of the modified JCP

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4. Notice of true-up adjustment

The Regulator must issue a notice to a designated person of its:

true-up adjustment; and under- or over-allocation of free carbon units;

that has been calculated on the basis of the information in the true-up report and other information as requested, or on the basis of an estimate made by the Regulator, if appropriate.

Paragraph 9(1)(c)

The Regulator must take all reasonable steps to issue these notices within 45 days after receiving the true-up report or receiving additional information where requested by the Regulator (whichever is applicable), but in any case no later than 16 January 2015.

Subsection 9(2)

5. Under- and over-allocations of free carbon units

The Regulator calculates the amount of units either under- or over-allocated to an EITE entity.

Under-allocation Where a designated person has a positive true-up adjustment amount, that person will have an under-allocation equal to that amount. In these cases, the Regulator will issue to the designated person an additional allocation of units equal to its under-allocation amount within 2 days of the Regulator having issued an adjustment notice, to the extent it is practicable for the Regulator to do so, and, in any case, no later than 23 January 2015.

Sections 10, 11 and 12, and items 352 and 353 of the Main Repeal Bill

Over-allocation Where a designated person has a negative true-up adjustment amount, then that person will have an over-allocation of units equivalent to the negative of that true-up adjustment amount. In these cases, the designated person will have to pay a true-up shortfall levy. The amount of the levy can be reduced to zero by relinquishing carbon units at any time up to 2 February 2015.

Sections 10, 13 and 14, and items 354 and 355 of the Main Repeal Bill

The levy is due and payable by 16 February 2015.

If not paid by this date, a late payment penalty of 20 per cent per annum applies.

Section 15 and items 356 and 357 of the Main Repeal Bill

Aggregated true-up reports

If a designated person has elected to have multiple true-up reports considered in aggregate, the entity’s under- or over-allocation is the sum of the true-up adjustments that apply to each relevant application.

Paragraphs 11(1)(b) and 13(1)(b)

Joint applicants In the case of joint applicants, the true-up value specified in the adjustment notice is divided between entities according to the ratio by which assistance was requested to be allocated in the application process.

For example, if entities applying for joint assistance requested that Entity X receive 30 per cent of the calculated assistance, then Entity X will be liable for 30 per cent of units in the case of an over-allocation, or will be entitled to 30 per cent of the additional allocation in the case of an under-allocation of units.

Paragraph 10(4)(b)

6. True-up shortfall Where a designated person has a true-up shortfall4, Section 15 and item

4 A designated person has a true up shortfall if they have been determined by the Regulator as having an over-

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levy (if required) the draft True-up Rules provide that a true-up shortfall levy is payable no later than 16 February 2015. The True-up Shortfall Levy legislation provides that the amount of the levy is the number of units in the true-up shortfall multiplied by $24.15 (which is the fixed price of 2013-14 vintage year carbon units).

356 of the Main Repeal Bill

In accordance with the provisions of the Main Repeal Bill concerning the failure to pay the shortfall charge for a final 2013-14 surrender of carbon units, if the levy remains unpaid after 16 February 2015, a late payment penalty of 20 per cent per annum would be payable.

Item 357 of the Main Repeal Bill

allocation of free carbon units and those additional units have not been relinquished to the Government by 2 February 2015.

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Appendix – Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Rules 2014

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Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Rules 2014

Clean Energy Legislation (Carbon Tax Repeal) Act 2013

I, GREG HUNT, Minister for the Environment, make these rules under item 359 of the Clean Energy Legislation (Carbon Tax Repeal) Act 2013.

Dated DD MM 2014

[DRAFT ONLY – NOT FOR SIGNATURE]

GREG HUNT

Minister for the Environment

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ContentsPart 1 Preliminary

1 Name 3

2 Commencement 3

3 Interpretation—general 3

4 Interpretation—modified JCP 4

Part 2 Reporting requirements

5 Requirement to report 6

6 Timing of report 7

7 Regulator may require further information 7

Part 3 Notice of true-up adjustment

8 Estimate of true-up adjustment for application 8

9 Notice of true-up adjustment for application 8

10 Calculation of true-up adjustment for application 9

Part 4 Under- and over-allocations of free carbon units

11 Under-allocation of free carbon units 10

12 Final date for issue of additional free carbon units 10

13 Over-allocation of free carbon units 10

14 Final date for relinquishment of free carbon units 11

Part 5 Collection of levy

15 Notice of true-up shortfall levy 11

16 When levy is due and payable 11

Part 6 Miscellaneous

17 Review of decisions 11


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1 Name011 Name1 Name

Part 1 Preliminary

1 NameThese rules are the Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Rules 2014.

2 CommencementThese Rules commence on the day after registration.

3 Interpretation—general(1) An expression used in these Rules and in any of the following legislation has the

same meaning in these Rules as in that legislation:(a) the Clean Energy Act;(b) the Clean Energy Regulations;(c) the Repeal Act.

Note Terms used in the legislation referred to above include the following:● Jobs and Competitiveness Program;● over-allocation of free carbon units;● under-allocation of free carbon units;● Regulator;● true-up shortfall.

(2) In these Rules:Clean Energy Act means the Clean Energy Act 2011 as continued in force by the Repeal Act.Clean Energy Regulations means the Clean Energy Regulations 2011 as continued in force by the Repeal Act.designated person means a person who is a designated person for the purpose of item 351 of the Repeal Act.further true-up information—see paragraph 7(1)(a).modified JCP—see section 4.related reportable application, for a reportable application, means another reportable application that:

(a) is made by the same applicant, or if there was more than one applicant, by the same applicants; and

(b) is identified as a related reportable application in a true-up report.Repeal Act means the Clean Energy Legislation (Carbon Tax Repeal) Act 2013.


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14 Final date for relinquishment of free carbon units0714 Final date for relinquishment of free carbon units14 Final date for relinquishment of free carbon units

reportable activity means an activity that was an emissions-intensive trade-exposed activity under the Jobs and Competitiveness Program as in force on 26 November 2013.reportable application means an application for free carbon units:

(a) that was approved under the Jobs and Competitiveness Program for financial year 2013-14; and

(b) that related to a reportable activity; and(c) for which there was no requirement, under Division 2 of Part 13 of the Jobs

and Competitiveness Program, to relinquish carbon units in relation to financial year 2013-14.

true-up adjustment—see section 10.true-up report—see subsection 5(2).

4 Interpretation—modified JCP(1) In these Rules, a reference to the modified JCP is a reference to the Jobs and

Competitiveness Program, modified in accordance with the following table:

Modifications to the Jobs and Competitiveness ProgramItem

Provision of Jobs and Competitiveness Program

Modification

1 Part 1 (a) Omit heading to Schedule 1, substitute ‘Modified JCP’.(b) Omit ‘(section 7.1)’.(c) Omit clauses 101 to 104, substitute ‘101 This is the

modified JCP.’

2 subclause 201(1) (a) Omit ‘this program’, substitute ‘the modified JCP’.(b) Insert:

(i) ‘designated person has the same meaning as in the Rules.’.

(ii) ‘true-up report has the same meaning as in the Rules.’; and

(iii) ‘Rules means the Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Rules 2014.’.

3 Parts 6 and 7 Throughout Parts 6 and 7:(a) omit ‘application’, substitute ‘true-up report’;(b) omit ‘an application’, substitute ‘a true-up report’;(c) omit ‘applicant’, substitute ‘designated person’;(d) omit ‘an applicant’, substitute ‘a designated person’;(e) omit references to each of the following (however

described), and substitute references to financial year 2013-14:


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Modification

(i) the financial years to which an application relates;(ii) the previous financial year.

4 Part 6 (a) Omit the heading to Part 6, substitute ‘Part 6—Approval of true-up report form’.

(b) Omit clauses 601 and 602 and subclause 604(8).(c) In subparagraphs 604(7)(b)(ii) and (c)(ii), and sub-

subparagraphs 604(7)(d)(i)(B) and (iii)(B), omit ‘by the applicant in the application’, substitute ‘in the reportable application’.

(d) In paragraph 604(9), omit ‘the Clean Energy Act 2011 and these regulations’, substitute ‘the Clean Energy Legislation (Carbon Tax Repeal) Act 2013 and the Rules’.

5 Part 7 (a) Omit the heading to Part 7, substitute ‘Part 7—True-up report’.

(b) Omit Divisions 1, 2, 3 and 4.

6 Part 8 Omit.

7 Part 9 (a) Throughout Part 9, omit references to each of the following (however described), and substitute references to financial year 2013-14:(i) financial year to which the current application

relates; and(ii) the previous financial year.

(b) Omit the following:(i) clause 901;(ii) subclause 902(1);(iii) sub-subparagraph 902(2)(a)(i)(A);(iv) sub-subparagraph 902(2)(a)(i)(E);(v) subparagraph 902(2)(a)(ii);(vi) paragraph 902(2)(b);(vii) subclauses 902(3), (4), (5), (6) and (7);(viii)Divisions 2, 3 and 8;(ix) subparagraphs 907(15)(a)(iii) and (iv), and

paragraphs 907(15)(c) and (d);(x) subclauses 907(17) and (18).

(c) In paragraph 902(2)(a), omit ‘as soon as practicable after approving the application:’.

(d) In subclauses 911(4), 912(6) and 914(3), omit the semi-


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Modification

colon and the text following the semi-colon, substitute ‘ multiplying the number by (1+r).’.

(e) In paragraphs 911(1)(c) and 914(1)(d), omit ‘before a decision is made on the current application,’ (each occurrence).

(f) In paragraph 915(10)(a), omit ‘clauses 710 and 801’, substitute ‘clause 710 and section 7 of the Rules’.

8 Parts 10, 11, 12, 13 and 14

Omit.

(2) If any of the following provisions of the Jobs and Competitiveness Program applied in relation to a reportable application:

(a) clause 707;(b) clause 708;(c) clause 709;(d) clause 710;(e) paragraph 710(2)(f);(f) clause 911;(g) clause 912;(h) clause 914;

the corresponding provision of the modified JCP applies in relation to the related true-up report or application referred to in paragraph 10(2)(b), as appropriate.

Note The effect of paragraphs (2)(a), (b), (c) and (d) is to require a true-up report to comply with clauses 707, 708, 709 and 710 respectively of the modified JCP where appropriate.The effect of paragraphs (2)(d), (e) and (f) is to require paragraph 604(7)(d), subparagraph 604(7)(d)(iii) and paragraph 604(7)(c) respectively of the modified JCP to apply in relation to a true-up report form.The effect of paragraphs (2)(f), (g) and (h) is to ensure that, if a maximum cap adjustment, a sub threshold emissions adjustment, or an LNG supplementary allocation adjustment applied in relation to a reportable application, those adjustments apply in relation to the corresponding true-up report.

Part 2 Reporting requirementsNote A person who fails to comply with a requirement under this Part may be liable to a civil penalty. See

subsections 151(1) and (4) of the Clean Energy Act and subitem 351(3) of the Repeal Act.


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5 Requirement to report(1) The Regulator must approve a form for making a true-up report, which complies

with Part 6 of the modified JCP.(2) A designated person must give the Regulator a report, in the approved form, for

each reportable application (a true-up report).(3) The report:

(a) must:(i) include the matters set out in paragraphs 603(1)(a) to (c) of the

modified JCP that are required by the report form; and(ii) identify the reportable application to which the report relates; and

(iii) comply with Part 7 of the modified JCP; and(b) may identify one or more related reportable applications.

(4) If the application was required, by clause 703 of the Jobs and Competitiveness Program, to be a combined application, the report must:

(a) be a combined report; and(b) include the details of all designated persons.

6 Timing of report(1) A true-up report must be given to the Regulator not later than:

(a) if an extension is not granted under this section—31 October 2014; or(b) if an extension is granted under this section—1 December 2014.

(2) A designated person may request an extension under this section.(3) The request must:

(a) be in writing; and(b) identify the reportable application to which the request relates; and(c) set out the reasons why the extension is being requested; and(d) be given to the Regulator not later than 30 October 2014.

(4) As soon as practicable after receiving the request, the Regulator must:(a) grant the extension; or(b) refuse to grant the extension.

(5) In making a decision under subsection (4), the Regulator must have regard to:(a) the reasons set out in the request; and(b) the other circumstances of the request; and(c) any other matter the Regulator considers relevant.

(6) As soon as practicable after making the decision, the Regulator must notify the person who made the request, in writing, of the decision.


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7 Regulator may require further information(1) If a designated person has given the Regulator a true-up report, the Regulator may,

by written notice, require the designated person to give the Regulator, by the date specified in the notice, either or both of the following:

(a) further information which, in the Regulator’s view, is needed to calculate the person’s true-up adjustment for the application (further true-up information);

(b) other further information.(2) The Regulator must not specify a date that is later than 15 December 2014.(3) The Regulator must ensure that:

(a) the information required is relevant to the report; and(b) powers under this section are exercised in a reasonable way; and(c) any notices are given under this section as soon as practicable.

Part 3 Notice of true-up adjustment

8 Estimate of true-up adjustment for application(1) If a designated person does not give the Regulator either or both of the following in

accordance with these Rules:(a) a true-up report;(b) further true-up information;

the Regulator must:(c) estimate the person’s true-up adjustment for the application; and(d) give the person notice, in writing, of the following:

(i) the Regulator’s reasons for making an estimate under this section;(ii) the Regulator’s estimate of the person’s true-up adjustment for the

application; and(e) invite the person to provide more accurate information by the date specified

in the notice.Note The Regulator is able to require a person to give the Regulator information or documents

under section 221 of the Clean Energy Act if the Regulator believes on reasonable grounds that a person has information or a document that is relevant to the operation of these Rules. See also paragraph 358A(b) of the Repeal Act.Section 44 of the Clean Energy Regulator Act 2011 deals with the use that the Regulator is able to make of information or documents in its possession. See also item 333, and paragraph 333(2)(b), of the Repeal Act.

(2) The Regulator must not specify a date that is earlier than 5 business days after the date of the notice.


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9 Notice of true-up adjustment for application(1) The Regulator must:

(a) for each reportable application, decide each designated person’s true-up adjustment; and

(b) for each reportable application or set of related reportable applications, decide whether each designated person has:

(i) an under-allocation of free carbon units; or(ii) an over-allocation of free carbon units; and

(c) give each designated person notice of a decision under this section.(2) The Regulator must take all reasonable steps to give the notice to the person:

(a) if the person gave the Regulator a true-up report in accordance with Part 2—within 45 days after:

(i) if the Regulator required further true-up information—the earlier of:(A) the day the Regulator receives the information; and(B) the date specified in the notice; or

(ii) otherwise—the day the Regulator received the report; and(b) in any event—not later than 16 January 2015.

(3) When calculating the person’s true-up adjustment for the application, if the person provided additional information in response to an invitation referred to in paragraph 8(e):

(a) by the date referred to in that paragraph—the Regulator must take the information into account;

(b) after that date—the Regulator may, but need not, take the information into account.

10 Calculation of true-up adjustment for application(1) A designated person’s true-up adjustment for a reportable application is calculated

in accordance with this section.(2) First, work out the number of free carbon units that would be issued in accordance

with subclause 902(2) of the modified JCP, if:(a) the modified JCP were operative; and(b) an application had been made in relation to financial year 2014-15, and that

was a fixed charge year; and(c) the application related to the same reportable activity and the same facility

or facilities as that to which the reportable application related; and(d) t, in the modified JCP, referred to financial year 2014-15; and(e) in the formula in subclause 907(16), for t = 2014-15, CPt-1/CPt = 1, that is,

CP2013-14/CP2014-15 = 1.


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Note The number of free carbon units calculated in accordance with subsection (2) is equal to the adjustments that would have been made by sub-subparagraphs 902(2)(a)(i)(B), (C), (D) and (F) of the Jobs and Competitiveness Program, and that would have related to financial year 2013-14, had that program continued in operation and an application been made for free carbon units under that program for financial year 2014-15.

(3) The designated person’s true-up adjustment for the reportable application is zero if:

(a) the designated person failed to give the Regulator, in accordance with these Rules:

(i) a true-up report; or(ii) further true-up information; and

(b) the number of free carbon units calculated under subsection (2) is greater than zero.

(4) Otherwise, the designated person’s true-up adjustment for the reportable application is:

(a) if there was one applicant—the number of free carbon units calculated in accordance with subsection (2); and

(b) if there was more than one applicant—the number of free carbon units calculated in accordance with subsection (2), as apportioned to the designated person in accordance with the formula or other arrangement set out in the application.

Part 4 Under- and over-allocations of free carbon units

11 Under-allocation of free carbon units(1) For paragraph 352(b) of the Repeal Act, the conditions are satisfied if:

(a) for a reportable application with no related reportable applications—the true-up adjustment for the application (the under-allocation number) is greater than zero; and

(b) for a set of related reportable applications—the sum of the true-up adjustments for the applications (the under-allocation number) is greater than zero.

(2) For paragraph 352(d) of the Repeal Act, the number of units in the designated person’s under-allocation in relation to the reportable application or applications is the under-allocation number.

12 Final date for issue of additional free carbon unitsThe Regulator must issue free carbon units in accordance with item 353 of the Repeal Act not later than the earlier of:

(a) 2 days after issue of a notice under section 9; andClean Energy Legislation (Carbon Tax Repeal) (Jobs and

Competitiveness Program) Rules 201410

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(b) 23 January 2015.

13 Over-allocation of free carbon units(1) For paragraph 354(b) of the Repeal Act, the conditions are satisfied if:

(a) for a reportable application with no related reportable applications—the true-up adjustment for the application (the over-allocation number) is less than zero; and

(b) for a set of related reportable applications—the sum of the true-up adjustments for the applications (the over-allocation number) is less than zero.

(2) For paragraph 354(d) of the Repeal Act, the number of units in the designated person’s over-allocation in relation to the reportable application or applications is the negative of the over-allocation number.

14 Final date for relinquishment of free carbon unitsFor the definition of number of units relinquished in sub-item 355(2) of the Repeal Act, the period ends on 2 February 2015.

Part 5 Collection of levy

15 Notice of true-up shortfall levyThe Regulator must, as soon as practicable after the date referred to in section 14, notify each designated person who has a true-up shortfall, in writing:

(a) that levy is due and payable on the true-up shortfall by the date referred to in section 16; and

(b) of the amount of the levy.Note For the amount of the levy, see the True-Up Shortfall Levy (General) (Carbon Tax Repeal)

Act 2013 and the True-Up Shortfall Levy (Excise) (Carbon Tax Repeal) Act 2013.

16 When levy is due and payableFor item 356 of the Repeal Act, levy imposed on a true-up shortfall of a person is due and payable by 16 February 2015.

Note A late payment penalty applies to any amount of levy that is not paid by this date. See item 357 of the Repeal Act.

Part 6 Miscellaneous

17 Review of decisionsAn application may be made to the Administrative Appeals Tribunal to review a decision of the Regulator under paragraphs 9(1)(a) or (b).


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