King & Wood Mallesons

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Carbon tax repeal — delivering on the 'blood oath'?

On 12 October 2011, the federal leader of the Liberal Party of Australia, Tony Abbott, made a ‘pledge in blood’ to repeal the Clean Energy Act 2011 (Cwlth) and related legislation (carbon scheme). Twelve months later, now in power, the coalition government has released draft legislation for the repeal of the carbon scheme. Coinciding with this release, the government has also published terms of reference seeking submissions on the operation of its proposed ‘Emission Reduction Fund’. This alert highlights some of the key messages for business arising from the government’s proposals.

Given the rhetoric of the coalition prior to the election, one could have expected the new government to eliminate the entire carbon scheme with immediate effect. However, this approach has not been taken.

The repeal bills, if passed, will not bring about an immediate termination of the carbon scheme. Rather, the scheme will continue to operate until the end of the current compliance year on 30 June 2014. This means that entities will still be required to meet their compliance obligations in respect of the current compliance year, and the government will collect all outstanding scheme liabilities, including those due after 30 June 2014 (for example the permit surrender in February 2015 for the 2013–14 compliance year). In addition, participants will need to comply with financial services laws until 1 July 2014…

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