1. 1 Carbon Tax Update Paul Stephens Director www.nevettford.com.au

2. 2 Commencement Scheme commences operation 1 July 2012 It operates as a fixed price scheme for the first 3 years starting at $23.00/tonne Moves to a full emission trading scheme on 1 July 2015 www.nevettford.com.au

3. 3 Fixed Price Period No limit on “carbon units” 1 unit = 1 tonne Liable entities pay Government for the carbon emitted Unused “carbon units” forfeited at end of year in which they were issued Carbon units not tradeable www.nevettford.com.au

4. 4 Carbon Trading Scheme Known as “flexible price period” Government auctions a limited number of carbon units each year Units tradeable Unused carbon units can be carried forward to future years – they do not expire www.nevettford.com.au

5. 5 Liable entities Operator of a facility that emits more than 25,000 tonnes of carbon dioxide equivalence greenhouse gasses per annum Large gas consuming facility – one that combusts natural gas with a C02-e of more than 25,000 tonnes Operator of a landfill facility that emits more than 25,000 tonnes of C02-e per annum Operator of a land fill facility that emits more than 10,000 tonnes of C02-e if within a prescribed distance of another Natural gas supplier www.nevettford.com.au

6. 6 Fuels subject to excise An equivalent carbon price will be applied to some uses of fuels such as diesel transport and aviation fuel (applies from 2014 for trucks) Will not apply to transport fuels excluded from the carbon price, eg. private cars www.nevettford.com.au

7. 7 Opting In The ability exists to “opt in” to the scheme Can opt in if a user of fuel covered by the fuel tax system Details yet to be announced Can accept an “Obligation Transfer Notice” if a qualified user of natural gas www.nevettford.com.au

8. 8 Pollution Caps No caps during the fixed price period From 2015 the Government will auction a limited number of carbon units, and allocate a limited number of free carbon units as industry assistance Government should set caps 5 years out www.nevettford.com.au

9. 9 Emissions Units Scheme operates by requiring liable entities to either make a payment for, or surrender eligible emission units Eligible Units are: –Carbon Unit –Australian Carbon Credit Unit –Eligible International Carbon Unit (post 1 July 2015) www.nevettford.com.au

10. 10 Non compliance Fixed price period – shortfall charge = 130% of the fixed charge for that year Post 1 July 2015 – shortfall charge up to 200% of the average auction price www.nevettford.com.au

11. 11 Carbon Tax Update Questions? Contact: Paul Stephens 5331 4444 pstephens@nevettford.com.au www.nevettford.com.au