Private ruling: Fuel tax credits - rates of entitlement
Published: December 2013
Ruling period: 2012-13 income year | 2013-14 income year
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a fuel tax credit for the portion of taxable fuel you acquire and use in your business to operate your truck when not travelling on a public road? | A1: Yes. | Q2: Is your fuel tax credit entitlement in relation to the portion of fuel you acquire and use in your business to operate your truck when not travelling on a public road, subject to the applicable amount of carbon reduction for the fuel? | A2: Yes.

Relevant facts and circumstances: You are an Australian company registered for goods and services tax (GST) and fuel tax credits. As part of your business, you operate a vehicle that facilitates the pumping of product at work sites. When your vehicle reaches its job locations, transport vehicles off-load your product into it. Your vehicle then uses fuel to operate its only motor to power the attached pumps and booms used in pumping the product. While the vehicle is pumping product it must remain stationery and is reliant on power from the vehicles motor. This occurs on site and not on public roads. You acquire and use the taxable diesel fuel used in your vehicle.

Relevant legislative provisions: Fuel Tax Act 2006 section 41-5 | Fuel Tax Act 2006 section 43-8 | Fuel Tax Act 2006 subsection 43-8(4) | Fuel Tax Act 2006 subsection 43-10(3)

Reasons for decision: Summary: Section 41-5 of the Fuel Tax Act 2006 (FTA) provides that you are entitled to a fuel tax credit for taxable fuel that you acquire for use in carrying on your enterprise if you are registered for GST. However, the amount of the fuel tax credit to which you are entitled for taxable fuel may be affected by: · an amount of carbon reduction (if applicable) · the amount of any applicable grant or subsidy; or · the amount of the road user charge (RUC) in relation to taxable fuel to use, in heavy vehicle, for travelling on public roads. | Detailed Reasoning - Carbon reduction: Section 43-8 of the FTA sets out the rules for working out the amount of the carbon reduction to fuel tax credit calculations from 1 July 2012. It provides that the amount of carbon reduction that applies to a particular quantity of taxable fuel is worked out by using the following formula: Quantity of fuel x carbon price x carbon emission rate Therefore the carbon reduction for diesel fuel for the period: 1. 1 July 2012 to 30 June 2013 is 6.21 cents per litre 2. 1 July 2013 to 30 June 2014 is 6.521 cents per litre. However, subsection 43-8(4) of the FTA provides for those circumstances where no carbon reduction applies. That is, the amount of carbon reduction that applies to the fuel will be nil where the fuel is acquired for use in vehicles with a GVM of more than 4.5 tonnes travelling on a public road. | Detailed Reasoning - For travel on a public road and application of road user charge: Subsection 43-10(3) of the FTA provides that to the extent that you acquire taxable fuel to use, in a vehicle, for travelling on a public road, the amount of your fuel tax credit for the fuel is reduced by the amount of the road user charge for the fuel. In Fuel Tax Ruling FTR 2008/1, Fuel tax: vehicle's travel on a public road that is incidental to the vehicle's main use and the road user charge, the Commissioner explains the RUC and its application for the purposes of subsections 43-10(3) and (4) of the FTA. Paragraphs 23A to 23D of FTR 2008/1 provides that the phrase "fuel to use, in a vehicle, for travelling on a public road" in subsection 43-10(3) of the FTA covers fuel that is used in a vehicle: · for the purpose of propelling that vehicle on a public road; and · fuel for aspects if the vehicle's function and operation that are for the purpose of travelling on a public road, that is stopping or idling whilst in the course of a journey, as well as the use of lights, brakes, power steering etc. Determining whether an aspect of the vehicles' function or operation has this character requires a practical assessment of its connection with travelling, as distinct from some other function of the vehicle. In contrast, the Commissioner goes on to state at paragraph 23E of FTR 2008/1 that the expression 'for travelling' does not include fuel used for a purpose unrelated to a vehicle's movement on a public road. You acquire and use fuel in your truck and have sought confirmation of the rate of fuel tax credits you can claim for the fuel used in pumping the product on work sites, that is when the vehicle is not travelling on public roads. | Detailed Reasoning - Fuel used to operate concrete booms and pumps on your concrete pumping truck: Your truck is fitted with booms and pumps that facilitate the pumping of product. That is, other than fuel used in the vehicle for the purpose of transporting it to or from work sites on public roads, you also use a portion of fuel in the vehicle for a purpose other than the propulsion of that vehicle. The fuel being used in the pumps and booms to facilitate the pumping of product on work sites is not fuel to use, in a vehicle, for travelling on a public road" as described above. As such, subsection 43-10(3) does not apply and your fuel tax credit for the quantity of fuel used in the pumping systems attached to your truck will not be reduced by the RUC. However, as the fuel used in the pumping systems attached to your vehicle are not used in the vehicle while travelling on a public road, the provision in paragraph 43-8(4)(c) of the FTA does not apply and the fuel tax credit calculated for this quantity of fuel is reduced by the applicable carbon reduction amount for the fuel (diesel). Accordingly, you are entitled to a fuel tax credit at the rate of 38.143 cents per litre less the applicable carbon reduction amount for the quantity of diesel fuel you acquire and use in your truck when not travelling on a public road, during the period 1 July 20XX to 30 June 20YY. The fuel tax rates you can claim for the diesel used for the applicable periods are: 1 July 2012 to 30 June 2013: 31.933 cpl 1 July 2013 to 30 June 2014: 31.622 cpl