Private ruling: fuel tax credits - mining transport activity
Published: April 2012
Ruling period: 2007-08 income year | 2008-09 income year | 2009-10 income year | 2010-11 income year | 2011-12 income year
Date scheme commenced: 1 January 2008

Ruling: Q1: Are you entitled to claim a fuel tax credit at the full rate for the use of diesel fuel in buses that transport mining workers onto and around mine sites? | A1: No. | Q2: Are you entitled to claim a fuel tax credit at the full rate less the road user charge (RUC) for the use of diesel fuel in buses that transport mining workers onto and around mine sites? | A2: Yes.

Relevant facts and circumstances: You transport mining workers onto and around mine sites on behalf of a number of mining companies. Your buses drive along private mine access roads and private mine site roads (ie off public roads) in delivering these services. You operate a number of mining worker transport contracts in areas outside metropolitan boundaries. Every bus used in the relevant activity has a GVM of greater than 4.5 tonnes. You are registered for goods and services tax (GST).

Relevant legislative provisions: Fuel Tax Act 2006 section 41-5 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 Division 2 of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(3) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(5) of Schedule 3 | Energy Grants (Credits) Scheme Act 2003 subsection 11(1) | Energy Grants (Credits) Scheme Act 2003 paragraph 11(1)(a) | Energy Grants (Credits) Scheme Act 2003 paragraph 11(1)(b) | Energy Grants (Credits) Scheme Act 2003 subparagraph 11(1)(b)(i) | Energy Grants (Credits) Scheme Act 2003 subparagraph 11(1)(b)(ii) | Energy Grants (Credits) Scheme Act 2003 paragraph 11(1)(c) | Energy Grants (Credits) Scheme Act 2003 paragraph 11(2)(a) | Energy Grants (Credits) Scheme Act 2003 paragraph 11(2)(b) | Energy Grants (Credits) Scheme Act 2003 paragraph 11(2)(c) | Energy Grants (Credits) Scheme Act 2003 section 12 | Energy Grants (Credits) Scheme Act 2003 paragraph 12(a) | Energy Grants (Credits) Scheme Act 2003 subparagraph 12(a)(i) | Energy Grants (Credits) Scheme Act 2003 subparagraph 12(a)(ii) | Energy Grants (Credits) Scheme Act 2003 paragraph 12(b) | Energy Grants (Credits) Scheme Act 2003 section 42 | Energy Grants (Credits) Scheme Act 2003 section 43 | Energy Grants (Credits) Scheme Act 2003 section 53 | Energy Grants (Credits) Scheme Act 2003 subsection 53(2)

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 in Australia to the extent that 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 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, whilst retaining entitlements under the Energy Grants (Credits) Scheme Act 2003 (EGCSA). Subitem 11(5) of Schedule 3 to the FTCTPA provides that you are not entitled to a fuel tax credit under section 41-5 of the FTA unless 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 or import into Australia off-road diesel fuel for a use by you that qualifies. Subsection 53(2) provides that use in mining operations (otherwise than for the purpose of propelling any vehicle on a public road) is a use that qualifies. The term 'mining operations' is relevantly defined in subsection 11(1) of the EGCSA as: … (a) exploration or prospecting of minerals, or the removal of overburden and other activities undertaken in the preparation of a site to enable mining for minerals to commence; or (b) operations for the recovery of those minerals, being: (i) mining for those minerals including the recovery of salts by evaporation; or (ii) the beneficiation of those minerals, or of ores bearing those minerals; and includes: … (c) a mining transport activity … | Detailed Reasoning - Mining transport activity: The expression mining transport activity means: (a) if minerals, or ores bearing minerals, are beneficiated at a place other than the mining site as an integral part of operations for their recovery: (i) the journey undertaken for the purpose of transporting the minerals or ores from the mining site to that place; and (ii) the return journey of a vehicle, a locomotive or other equipment from that place to the mining site or any part of that journey if it is undertaken for the purpose of repeating a journey referred to in subparagraph (i) or for the backloading of raw materials or consumables for use in a mining operation referred to in paragraph (a) or (b) of the definition of that expression in subsection 11(1); or (b) if natural gas is liquefied at a place other than the mining site - the transporting of the natural gas from the mining site to that place. Clearly, your business activities of using buses to transport mining workers onto and around mine sites would not fall within the meaning of 'mining transport activity' as discussed above. Further, subsection 11(2) of the EGCSA makes reference to activities that do not fall within the meaning of 'mining operations'. These are as follows: (a) quarrying or dredging operations to the extent that the purpose of the operations is to obtain materials for use in building, road making, landscaping, construction or similar purposes; or (b) the use of a vehicle (other than a fork-lift, front-end loader, tractor or other similar vehicle that is specified in the regulations) not exceeding 3.5 tonnes gross vehicle mass, other than such a vehicle that is extensively modified for use underground while it is so used; or (c) the transport, by any means, of people , equipment or goods to or from a place where a mining operation referred to in any of the paragraphs in subsection (1) is, or is to be, carried on, or to or from a place adjacent to that place, other than such transport to the extent that it constitutes the activity described in: (i) the definition of mining transport activity in section 12; or (ii) paragraph (c) of the definition of mining water activity in section 14; or paragraph (a) of the definition of mining waste activity in section 16. (emphasis added) Your business activities of transporting mine workers onto and around mine sites on behalf of a number of mining companies would not fall within the meaning of a mining transport activity, nor would these be considered mining water or mining waste activities. These activities would be excluded from the meaning of 'mining operations' by paragraph 11(2)(c) of the EGCSA. Therefore, you are not entitled to claim a fuel tax credit at the full rate for the use of diesel fuel in buses that transport mining workers onto and around mine sites. | Detailed Reasoning - On-road credit: Subitem 11(3) of the FTCTPA provides that you are not entitled to a fuel tax credit under section 41-5 of the FTA unless you would have been entitled to an on-road credit under the EGCSA. Sections 42 and 43 of the EGCSA provide that you are entitled to an on-road credit to the extent that you are transporting passengers on a road in Australia, provided that, if your vehicle has a gross vehicle mass (GVM) of less than 20 tonnes the transport journey is outside of or crosses a metropolitan area. Your transport activities were undertaken in a number of areas outside metropolitan boundaries. Your buses drive along private mine access roads and private mine site roads (ie off public roads) in delivering these services. Accordingly, as you are transporting passengers on a road in Australia you are entitled to an on-road credit. Consequently you meet the requirement of subitem 11(3) of Schedule 3 to the FTCTPA and are therefore entitled to claim a fuel tax credit for the use of diesel fuel in buses that transport mining workers onto and around mine sites. This entitlement is reduced by the amount of the RUC. The RUC is currently 23.1 cents per litre. Accordingly, you are entitled to a fuel tax credit at the full rate less the road user charge (RUC) for the use of diesel fuel in buses that transport mining workers onto and around mine sites.

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