THE Gillard government this week released the draft legislation for its plan to introduce a tax on carbon by July next year, but already some of the definitions are being queried.
Senior associate at law firm Freehills Michael Voros told a briefing this week that some parts of the legislation, like ‘designated joint venture partner’, were not drafted well.
According to Mr Voros, the DJV rule’s intent is unclear, but he suggested it might purport to allow joint venture partners to be liable in accordance with their participating percentages in a project.
“I expect this is an area in which industry might in particular look to make submissions to the government to try and clean it up,” he said.
He explained that under the CPRS (carbon pollution reduction scheme), the controlling corporation was liable for payment of the tax, while the operational company is liable under the carbon tax.
“It sounds like a minor change but it is something that might have significant ramifications,” he said.
Other terms, such as ‘facility’ are not clearly defined, according to Mr Voros.
“A facility is a series of activities done at one place for the duration of production of one good. It needs to be interpreted in each individual circumstance. A mine would be a facility, a power station and a factory would be a facility,” he said.
While that seems clear, it is not known whether a number of small facilities could be amalgamated to become liable under the threshold rule.
To take effect in July 2012, the Clean Energy Bill 2011 will directly target emissions from power generation; fugitive emissions from gas fields, pipelines and coal mines; waste; natural gas and industrial processes.
Those liable for the cost will be operators, designated joint venture participants, natural gas retailers and liability transfer certificate holders.
The emissions threshold for companies that will be liable will sit at 25,000 tonnes of carbon dioxide or an equivalent (including methane and nitrous oxide) each year, with a reduced threshold of 10,000 tonnes for some waste facilities, such as a landfill operator in close proximity to another larger liable operator.
Liability will not be permanent, should companies’ emissions fluctuate from year to year.
Submissions in response to the legislation close on August 22.
