Private ruling: Fuel tax credits - domestic electricity generation
Published: December 2012
Ruling period: 2010-11 income year | 2011-12 income year | 2012-13 income year
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a fuel tax credit at the rate of 38.143 cents per litre for diesel fuel you acquire and use in your generator for domestic electricity generation for the period 1 January 2010 to 30 June 2012? | A1: Yes. | Q2: Are you entitled to a fuel tax credit at the rate of 31.933 cents per litre for diesel fuel you acquire and use in your generator for domestic electricity generation for the period 1 July 2012 to 30 June 2013? | A2: Yes.

Relevant facts and circumstances: You use your generator to generate electricity when the sky is overcast and your solar panels do not generate enough power. You use the generator solely for the purposes of domestic electricity generation. You acquire diesel fuel for use in your generator. You are registered for goods and services tax (GST).

Relevant legislative provisions: Fuel Tax Act 2006 section 42-5 | Fuel Tax Act 2006 section 43-8 | Fuel Tax Act 2006 subsection 43-8(4)

Reasons for decision: Summary: Section 42-5 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 by you in generating electricity for domestic use. You acquire diesel fuel for use in your generator for the purposes of domestic electricity generation. During the period 1 January 2010 to 30 June 2012, the rate you can claim for fuel used in this activity is 38.143 cents per litre. Therefore, you are entitled to a fuel tax credit at the rate of 38.143 cents per litre for diesel fuel you acquire and use in your generator for domestic electricity generation for the period 1 January 2010 to 30 June 2012. | Detailed Reasoning - Tax periods from 1 July 2012 onwards: From 1 July 2012, there were changes to the FTA resulting from the Clean Energy (Fuel Tax Legislation Amendment) Act 2011 . As a result of these changes the amount of your fuel tax credit for taxable fuel can also be affected by the amount of carbon reduction. | 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. In relation to diesel fuel, the carbon reduction is equal to the quantity of diesel multiplied by the carbon emission rate of 0.0027, multiplied by the carbon price. The carbon price for the year starting on 1 July 2012 is 2,300 cents and this amount will continue to rise at a fixed rate for the following two years and then six monthly thereafter. Subsection 43-8(4) of the FTA provides for those circumstances where the amount of carbon reduction is nil. That is, where the fuel is acquired for use in: · specified activities within agriculture, fishing operations; or forestry; or · vehicles with a gross vehicle mass (GMV) of more than 4.5 tonnes travelling on a public road; or · if the fuel is not used for combustion. As you are using diesel fuel to generate domestic electricity, the fuel is being used for combustion and as such the carbon reduction applies. The amount of carbon reduction which applies to diesel fuel acquired during the year ended 30 June 2013 is 6.21 cents per litre. As a result, the amount of fuel tax credit you can claim from 1 July 2012 is reduced. Accordingly, you are entitled to a fuel tax credit at the rate of 31.933 cents per litre for diesel fuel you acquire and use in your stationary generator for domestic electricity generation for the period 1 July 2012 to 30 June 2013.

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.