Private ruling: Fuel tax credits - use of fuel in prime mover on sugar mill site
Published: May 2012
Ruling period: 2011-12 income year
Date scheme commenced: 1 July 2011

Ruling: A1: Yes.

Relevant facts and circumstances: You have a business that has been operating for many years. You use a diesel prime mover, within a sugar mill site, not on public roads, to move sugar cane bagasse from the mill to a storage site and then back again. The prime mover has a gross vehicle mass (GVM) of greater than 20 tonnes. Diesel fuel is purchased in bulk quantities, and stored in diesel tanks. The prime mover will be refuelled as necessary from these storage tanks. The prime mover does undertake travel on public roads when it is carting bagasse between sugar mills. You are registered for goods and services tax (GST).

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 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 paragraph 21(a) | Energy Grants (Credits) Scheme Act 2003 paragraph 22(1)(b) | Energy Grants (Credits) Scheme Act 2003 section 53

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 states 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. Uses that qualify include use in rail transport or marine transport, at premises to generate electricity, in certain industrial processes, use other than as a fuel and use in mining operations or primary production. Use in primary production (otherwise than for the purpose of propelling a road vehicle on a public road), is a use that qualifies. Paragraph 21(a) of the EGCSA provides that the expression primary production means agriculture. Paragraph 22(1)(b) provides that the expression agriculture means the cultivation or gathering in of crops. Paragraph 247 of Fuel Tax Ruling FTR 2006/1 provides examples of when common crops are gathered in. In relation to sugar cane, the crop is gathered in when it is gathered into one mass by the farmer at a central collection area either on or adjacent to the farm ready for transport to the mill. A crop is also gathered in where the farmer takes the sugar cane from the cane field directly to the mill by a tractor and trailer, when the cane is so delivered to the collection pad at the mill site. You use your prime mover within a sugar mill site to move sugar cane bagasse from the mill to a storage site and then back again. None of this occurs on public roads. Your activities cannot be considered agriculture as they occur after the gathering in of crops has occurred. Therefore, the use of diesel fuel in a prime mover to move sugar cane bagasse from a sugar mill to a storage site is not a use that qualifies under section 53 of the EGCSA. Accordingly, you would not have been entitled to an off-road credit under the EGCSA and you are not entitled to a fuel tax credit at the full rate under section 41-5 of the FTA for the use of diesel fuel in this activity. | Detailed Reasoning - Half rate of 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 to 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. The 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 in a prime mover to move sugar cane bagasse from a sugar mill to a storage site. Therefore, you are entitled to claim a fuel tax credit at the half rate for the use of diesel fuel in a prime mover to move sugar cane bagasse from a sugar mill to a storage site, and back again when necessary. The rate you can claim is 19.0715 cents per litre.

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. | Are you entitled to claim a fuel tax credit at the half rate for the use of diesel fuel in a prime mover to move sugar cane bagasse from a sugar mill to a storage site, and back again when necessary?