Private ruling: Fuel tax credits - equipment used off-road
Published: June 2012
Ruling period: 2008-09 income year | 2009-10 income year | 2010-11 income year | 2011-12 income year
Date scheme commenced: 1 July 2008

Ruling: Q1: Are entitled to claim fuel tax credits at the half rate (19.0715 cents per litre) for diesel fuel acquired for use in your off-road equipment at your off-road site for the period 1 July 2008 to 30 June 2012. | A1: Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are involved in the business of recycling construction/demolition waste, general skip waste and concrete. You acquire diesel fuel for use in off-road equipment that you use at your plant site. This ruling does not apply to any use of fuel in vehicles travelling on-road. You are registered for both fuel tax credits and goods and services tax (GST). Issue 1 - period 1 July 2008 to 30 June 2012 Detailed reasoning 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 in Australia to the extent you do so for use in carrying on your enterprise, if you are registered for GST. However, this entitlement is affected by Division 2 of Part 3 of Schedule 3 to the Fuel Tax (Consequential and Transitional Provisions) Act 2006 (FTCTPA) which operates to restrict this entitlement to specific activities for fuel purchased between 1 July 2008 and 30 June 2012. For an entitlement to a fuel tax credit under section 41-5 of the FTA you must acquire taxable fuel for use in a specific activity in carrying on your enterprise. The specific activities are listed in paragraphs 11(1)(a) & 11(1)(b) of Schedule 3 to the FTCTPA. These are as follows: (i) for use in a vehicle travelling on a public road; or (ii) for incidental use in relation to a vehicle covered by subparagraph (i); or (iii) for use by you in generating electricity; or (iv) for use other than as a fuel; or (v) for use other than as a fuel in an internal combustion engine; or (vi) for use as heating oil; You use diesel fuel at your off-road plant site as part of your business activities. These are not activities that meet any of the specific activities listed under paragraphs 11(1)(a) or 11(1)(b) of Schedule 3 of the FTCTPA. Subitem 11(5) of the FTCTPA provides that you are entitled to a fuel tax credit if you would have been entitled to an off-road credit under the EGCSA. Section 53 of the EGCSA provides that you are entitled to an off-road credit if you purchase fuel for a use by you that qualifies. Examples of qualifying activities include use in mining operations or in primary production (otherwise than for the purpose of propelling a road vehicle on a public road). Use of fuel at your off-road plant site is not a use by you that qualifies under section 53 of the EGCSA. As such, subitem 11(5) of the FTCTPA does not apply. Half rate fuel tax credits However, if you would not have been entitled to an on-road or an off-road credit under the EGCSA for a quantity of fuel you acquire and use in your business, subitem 11(6) of Schedule 3 of the FTCTPA provides that from 1 July 2008, an entitlement to a fuel tax credit arises under section 41-5 of the FTA. The amount of the credit is half of the amount of the full rate. This provision is subject to the disentitlement rules of subdivision 41-B of the FTA, which disallows a fuel tax credit: · if another entity was previously entitled to a credit, · for fuel used in light vehicles travelling on public roads, · for fuel used in motor vehicles that do not meet environmental criteria, or · for fuel used in aircraft. It has been determined above that you were not entitled to an off-road credit previously for the use of diesel fuel at your off-road site. Accordingly, you are entitled to claim fuel tax credits at the half rate (19.0715 cents per litre) for diesel fuel acquired for use at your off-road site for the period 1 July 2008 to 30 June 2012. Issue 2 - period 1 July 2012 to 30 June 2013 Detailed reasoning 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 in Australia to the extent you do so for use in carrying on your enterprise, if you are registered for GST. However, entitlement to fuel tax credits is still subject to the disentitlement rules under subdivision 41-B of the FTA, amongst other requirements. This provides that you are not entitled; · if another entity has previously been entitled to a fuel tax credit, or · for fuel used in vehicles with a gross vehicle mass (GVM) of 4.5 tonnes, or less, travelling on a public road, or · for fuel used in motor vehicles that do not meet the environmental criteria. However, subsection 43-5(1) of the FTA (as amended) provides that the amount of your fuel tax credit for taxable fuel is the amount worked out by reducing the amount of effective fuel tax by the amount of carbon reduction. Section 43-8 of the FTA provides for working out the amount of carbon reduction. The general rule for the amount of carbon reduction is explained in subsection 43-8(1) which provides: Subject to subsections (3) and (4), the *amount of carbon reduction that applies to a particular quantity of taxable fuel you acquire, manufacture or import is worked out, to 3 decimal places (rounding up if the fourth decimal place is 5 or more), using the following formula: Quantity of fuel x Carbon price x Carbon emission rate Further, subsection 43-8(4) of the FTA provides for circumstances where the amount of carbon reduction to apply to the fuel will be nil. That is: (4) The *amount of carbon reduction that applies to the fuel is nil to the extent that: you acquire, manufacture or import the fuel for use in: (i) *agriculture; or (ii) *fishing operations; or (iii) *forestry; or you acquire, manufacture or import the fuel for use in a vehicle with a gross vehicle mass of more than 4.5 tonnes travelling on a public road; or You use diesel fuel in off-road equipment at your off-road site. This is not an activity that falls within subsection 43-8(4) of the FTA described above and as such this subsection will not apply in your circumstances. Accordingly, you are required to reduce your fuel tax credit entitlement for the use of diesel in your equipment at your off-road site from 1 July 2012 by the amount of carbon reduction. The amount of carbon reduction worked out in accordance with subsection 43-8(4) of the FTA for the period 1 July 2012 to 30 June 2012 is 6.21 cents per litre. Therefore, the rate of fuel tax credits for diesel fuel you can claim for the financial year 1 July 2012 to 30 June 2013, is 31.933 cents per litre. Note: This rate is subject to change. For example, for the period 1 July 2013 to 30 June 2014 the rate for diesel fuel will be 31.622 cents per litre.

Relevant legislative provisions: Fuel Tax Act 2006 section 41-5 | Fuel Tax Act 2006 subdivision 41-B | Fuel Tax (Consequential and Transitional Provisions) Act 2006 Division 2 of Part 3 of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 paragraph 11(1)(a) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 paragraph 11(1)(b) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(i) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(ii) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(iii) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(iv) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(v) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(vi) of Schedule 3 Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(5) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(6) of Schedule 3 | Energy Grants (Credits) Scheme Act 2003 section 53 Issue 2 | Question 1: | From 1 July 2012, are you required to reduce your fuel tax credit entitlement for the use of diesel in your equipment in undertaking activities 'off-road' at your site, by the amount of the carbon reduction? | Answer: | Yes.


Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Fuel Tax Act 2006 subsection 43-5(1) | Fuel Tax Act 2006 section 43-8 | Fuel Tax Act 2006 subsection 43-8(1) | Fuel Tax Act 2006 subsection 43-8(4) | Fuel Tax Act 2006 paragraph 43-8(4)(b) | Fuel Tax Act 2006 subparagraph 43-8(4)(b)(i) | Fuel Tax Act 2006 subparagraph 43-8(4)(b)(ii) | Fuel Tax Act 2006 subparagraph 43-8(4)(b)(iii) | Fuel Tax Act 2006 paragraph 43-8(4)(c)