Private ruling: Fuel tax credits
Date of advice: 16 August 2018
Published: April 2019
Ruling period: 1 January 2014 to 31 March 2018
Date scheme commenced: 1 January 2014

Ruling: Q1: What are the requirements for a fair and reasonable apportionment of taxable fuel provided by the Commissioner for taxable fuel used to power the air conditioning unit of a sleeper cabin? | A1: The Commissioner considers that for fuel tax credit purposes the driver must be on ‘a sleeping break during the course of a long-haul trip’ for the apportionment of taxable fuel to be applied. The use of the sleeper cabins of your heavy vehicles during the course of loading and unloading while the driver is still in control of the vehicle does not constitute the driver being on ‘a sleeping break during the course of a long-haul trip’. | Q2: Can the data extracted from the GPS devices attached to your heavy vehicles be used to determine the location of the vehicle for the purpose of working out the amount of fuel tax credit entitlement that is not reduced by the road user charge (RUC) under subsection 43-10(3) of the Fuel Tax Act 2006 ( FTA)? | A2: Yes, provided in analysing the data from the GPS device the location of the vehicle when the taxable fuel is used is appropriately determined to be either a public road or a non-public road area. | Q3: Is applying a burn rate, derived from a separate case, for taxable fuel used in your heavy vehicles whilst it is idling during the loading and unloading of the vehicle a fair and reasonable apportionment of the fuel used by the vehicle? | A3: No. You are required to substantiate with evidence that the burn rate you apply is fair and reasonable both for the particular vehicle and in the circumstances in which it is used.

Relevant facts and circumstances: You are a registered company that carry on a road freighting business and operate a fleet of diesel powered heavy trucks to transport materials. Each truck is driven only by one driver. The trucks generally are loaded at the loading site where they then travel to the designated area where materials are unloaded. The distances travelled by trucks in a single trip vary depending on the location of the designated area where materials are unloaded and may be shorter than 10 kilometres or longer than 400 kilometres. Within a day, the frequency of the trips also varies depending on the distance travelled. For example, longer trips are less frequent whereas shorter local trips are more frequent. The fleet of trucks are fitted with a GPS tracking system which is able to generate a report that shows the distance travelled in kilometres at different locations, as well as the idling time and location of the trucks during the loading and unloading process. The idling time during the loading and unloading process includes the amount of time the truck must wait in a queue at both the loading area where the materials are loaded onto the trucks and the designated area where the materials are unloaded. This may range from 30 minutes to two hours, depending on the capability of the loader operator. The trucks must remain running at all times during the loading and unloading process for operational and safety purposes. During the loading and unloading process, where the trucks are idling, drivers use the sleeper compartment to take rest breaks in order to comply with legally required rest breaks and extend their daily runs. Trucks fitted with sleeper compartments use fuel sourced from the truck’s main engine to power the air conditioning units that moderate the temperature in the sleeper compartments. You are registered with the National Heavy Vehicle Regulator under the Basic Fatigue Management scheme. All your drivers are accredited in this fatigue management scheme and utilise log books to ensure their work and rest hours are compliant.

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

Reasons for decision: Detailed Reasoning - Detailed reasoning: Section 41-5 of the 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 goods and services tax (GST) at the time you acquire the fuel. You are registered for GST. Your road freight business centres on the transportation of materials from one location, where materials are loaded onto trucks, to another location where those materials are unloaded from the trucks. As part of the loading process, the trucks idle whilst in a queue waiting to be loaded and unloaded. Therefore, the taxable fuel you acquire to power the trucks while they are idling during the loading and unloading process is acquired and used in carrying on your enterprise. You are entitled to fuel tax credits under section 41-5 of the FTA for the fuel. You also use the sleeper compartment during the loading and unloading processes to meet the rest requirements under the Basic Fatigue Management scheme. Some of the taxable fuel you acquire is used to power the air conditioning unit of the sleeper compartment. The amount of fuel tax credit entitlement may be either denied or reduced, depending on the use of the fuel. Subsection 43-10(3) of the FTA provides that the amount of your fuel tax credits are reduced by the amount of the RUC in relation to taxable fuel acquired to use, in a heavy vehicle, for travelling on a public road. A heavy vehicle means a vehicle with a GVM that is more than 4.5 tonnes. As your fleet of trucks travel on both public and non-public areas, the fuel acquired for use in these ‘heavy vehicles’ must be apportioned between fuel used for travelling on public roads versus fuel used either on non-public road areas or to power the auxiliary equipment of the vehicle (the air conditioning units of the sleeper cabins). The Commissioner has published Practical Compliance Guidelines that set out his practical administration approach which is aimed at assisting taxpayers in complying with the fuel tax laws regarding apportionment of taxable fuel. Specifically, PCG 2016/11 Fuel tax credits – apportioning taxable fuel used in a heavy vehicle with auxiliary equipment (PCG 2016/11) provides a list of accepted apportionments for specific heavy vehicles with auxiliary equipment. The applicable accepted apportionment for the air conditioning units of the sleeper compartment of heavy vehicles is item 6 in the table following paragraph 9 of PCG 2016/11. Pursuant to said item 6 of PCG 2016/11, long haul vehicles with sleeper cabins may be eligible for fuel tax credits at the full fuel tax credit rate for 5% of the total fuel acquired to operate these vehicles. This safe harbour applies where a portion of the fuel acquired is used to power the air conditioning units that moderate the temperature of the vehicle’s sleeping compartment when the driver is on a sleeping break during the course of a long haul trip. Item 6 of PCG 2016/11 sets out the following: | Detailed Reasoning - Type of auxiliary equipment: Air conditioner units that moderate the temperature of the vehicle’s sleeping compartment when the driver is on a sleeping break during the course of a long-haul trip . [Emphasis added.] The National Transport Commission (NTC) and the National Heavy Vehicle Regulator (NHVR), in their endeavours to manage fatigue amongst its member drivers, each have separate tables that summarise the maximum hours of work time and minimum rest break within different periods of time. The NHVR has published the Basic Fatigue Management scheme. The table below illustrates the Basic Fatigue Management scheme’s work and rest hour requirements. | Detailed Reasoning - Rest: In any period of… A driver must not work for more than a maximum of… And must have the rest of that period off work with at least a minimum rest break of… 6.25 hours 6 hours work time 15 continuous minutes rest time 9 hours 8.5 hours work time 30 minutes rest time in blocks of 15 continuous minutes 12 hours 11 hours work time 60 minutes rest time in blocks of 15 continuous minutes 24 hours 14 hours work time 7 continuous hours stationary rest time 7 days 36 hours long/night work time No limit has been set 14 days 144 hours work time 24 continuous hours stationary rest time taken after no more than 84 hours work time and 24 continuous hours stationary rest time and 2 x night rest breaks and 2 x night rest breaks taken on consecutive days. ‘ Stationary rest time ’ is defined by NHVR as the time a driver spends out of a regulated heavy vehicle or in an approved sleeper berth of a stationary heavy vehicle. For time periods up to but not including 24 hours, the minimum breaks are essentially a combination of 15 minute blocks of rest. There is no requirement that the driver is out of the vehicle or in an approved sleeper berth. In contrast, the minimum break within a period of 24 hours is more significant and requires the driver to sleep for seven continuous hours either at a lodging facility other than the truck or in the sleeping compartment of the truck. Importantly, when a driver is taking a ‘ stationary rest time ’, they must be either out of the vehicle or in the approved sleeper berth which means that the driver is neither in control of the vehicle, nor required to be in control of the vehicle. As such, consistent with industry standards, the Commissioner considers that the phrase ‘ when the driver is on a sleeping break during the course of a long-haul trip’ for the purposes of item 6 of PCG 2016/11, the driver must be on a long-haul trip and on a ‘ stationary rest time’ . In your circumstance, the driver will utilise the sleeper cabin while the vehicle is idling waiting in queue to be loaded or unloaded. Although the driver may use the sleeper cabin, the rest break is only between 30 minutes and over two hours. Further, the driver is still required to be prepared to perform their work duties when it is their turn to load or unload and as such is still in control of the vehicle. This use of the sleeper cabin of the vehicles does not constitute ‘on a sleeping break during the course of a long-haul trip’ for the purposes of item 6 of PCG 2016/11. | Detailed Reasoning - Question 2: Can the data extracted from the GPS devices attached to your heavy vehicles be used to determine the location of the vehicle for the purpose of working out the amount of fuel tax credit entitlement that is not reduced by the road user charge (RUC) under subsection 43-10(3) of the FTA? | Detailed Reasoning - Detailed reasoning: As discussed above the amount of the entitlement to fuel tax credits under section 41-5 of the FTA may be either denied or reduced, depending on the use of the fuel. Subsection 43-10(3) of the FTA provides that your fuel tax credits are reduced by the amount of the RUC for taxable fuel acquired to use, in a heavy vehicle, for travelling on a public road. A heavy vehicle is a vehicle with a GVM of more than 4.5 tonnes. In Fuel Tax Determination FTD 2010/1, it is explained that entities may need to use a 'fair and reasonable' apportionment method to calculate the extent of their entitlement to a fuel tax credit. The Commissioner recognises the use of GPS technology to confirm relevant information as a known reliable measure for calculating the amount of taxable fuel acquired for use in an eligible activity. The use of reports generated by GPS technology may also be used as a means of record keeping. Essentially, the use of GPS technology is a recognised means of reporting data relevant to the calculation of the fuel tax credit claim but not determinative of a fair and reasonable claim. The GPS technology installed in your vehicles identifies where travel is undertaken and then attempts to differentiate between travel on public roads versus travel off public road through the GPS’s geofencing capability. This is achieved through the user’s input of coordinates for specific travel locations and categorising them accordingly. Regardless of whether these coordinates are based on the idiosyncrasies of the individual user or a preselected set of coordinates from a GPS or mapping supplier, they are not determinative of whether a particular location is or is not on a public road for the purposes of the FTA. Accordingly, the use of a GPS with geofencing capability does not directly result in a fair and reasonable apportionment claim for fuel tax credits. To the extent that fuel is consumed by your heavy truck for travelling off a public road in the course of carrying on your business, you are entitled to claim fuel tax credits at the full rate. You may use the GPS’s record of the distance travelled off a public road as a means of calculating the apportionment of fuel used by your heavy trucks. However you will nevertheless remain obligated to ensure that the apportionment of the fuel tax credit claim is fair and reasonable by ensuring that in analysing the data, the location of the vehicle when the fuel is used is appropriately determined to be either a public road or a non-public road area. You will also need to keep all the appropriate records to substantiate this. | Detailed Reasoning - Question 3: Is applying a burn rate, derived from a separate case, for taxable fuel used in your heavy vehicles whilst it is idling during the loading and unloading of the vehicle a fair and reasonable apportionment of the fuel used by the vehicle? | Detailed Reasoning - Detailed reasoning: Fuel Tax Determination FTD 2010/1 explains that entities may need to use a 'fair and reasonable' apportionment method to calculate the extent of their entitlement to a fuel tax credit. Generally, if an entity adopts a manufacturer’s specification for their fuel consumption, that entity must substantiate that the facts and circumstances of their vehicles’ operation are similar to the facts and circumstances to which the manufacturer’s specifications were derived. Essentially, this principle acknowledges that the facts and circumstances surrounding the use of particular vehicles can vary from entity to entity. The manufacturer’s specification may only be adopted where an entity can substantiate that the facts and circumstances of their vehicle’s operation are similar those from which the manufacturer’s specifications were derived. To the extent that fuel is used by your heavy vehicles for idling off a public road in the course of carrying on your business, you are entitled to claim fuel tax credits at the full rate. The eligibility to apply a particular fuel consumption rate for your vehicles’ idling in calculating your fuel tax credit claim does not automatically follow from any previously accepted fuel consumption rate for idling. Instead, the onus remains on you to substantiate that the facts and circumstances under which your vehicles operate are similar to those whose fuel consumption rates for idling were accepted by the Commissioner. You are obligated to ensure that the apportionment of the fuel tax credit claim is fair and reasonable, and keep all the appropriate records to substantiate this. By way of further information, fuel tax credits cease under section 47-5 of the FTA to the extent that they are not claimed within four years of the day you were required to give the Commissioner the BAS for the tax period in which they would be attributable under subsection 65-5(1) of the FTA.