These amounts are not indexed so that their real value will fall with inflation. The scheme is, in effect, a subsidy to fuel users in regional areas. As such, it does not address the reasons fuel prices are higher in regional than metropolitan areas. The rebate is payable under section 164 of the Customs Act 1901 and section 78A of the Excise Act 1901 . Rebates are assessable income because registered businesses can claim the cost of fuel as a tax deduction.
Rebates reduce the amount paid for fuel and hence the amount claimable as a deduction.
Alternative fuels are compressed natural gas, liquefied petroleum gas, recycled waste oil, ethanol, canola oil, and other fuel specified by regulation. Eligible fuels are leaded and unleaded petrol and diesel, including light fuel oil, two stroke, premium unleaded and Shell Optimax. For a discussion of some of these causes, see Productivity Commission, 'Inquiry into the Impact of Competition Policy Reforms on Rural and Regional Australia'.