Private ruling: Fuel tax credit eligibility and domestic heating
Published: February 2014
Ruling period: 1 July 2013 to 30 June 2014.
Date scheme commenced: 1 July 2013.

Ruling: Q1: Are you eligible for a fuel tax credit on diesel you acquire for use in a boiler for hot water and heating in your home? | A1: No.

Relevant facts and circumstances: You are not registered for GST. You are not carrying on an enterprise. You purchased a home (home). The home has a diesel boiler for hot water and central heating. The boiler heats the hot water which can also be circulated around the house through a piping system for home heating. The home has a 1000L diesel storage tank. You purchase diesel for use in the boiler which is delivered by tanker.

Relevant legislative provisions: Fuel Tax Act 2006 Section 41-5, | Fuel Tax Act 2006 Section 41-10, | Fuel Tax Act 2006 Section 42-5 , | Fuel Tax Act 2006 Section 110-5 and | Excise Tariff Act 1921 Item 10.10 of The Schedule.

Reasons for decision: Summary: In this ruling, please note: · All legislative references are to the Fuel Tax Act 2006 (FTA) unless stated otherwise. · All terms marked by an asterisk are a defined term in the FTA unless stated otherwise. Diesel attracts an excise duty rate of $0.38143 per litre as provided for within item 10.10 of the Schedule to the Excise Tariff Act 1921 . Fuel tax credits provide relief to businesses and to non-business taxpayers that generate electricity for domestic use, for the fuel tax (excise or customs duty) included in the price of fuel. 'Fuel tax credit' is defined in section 110-5 as: fuel tax credit means an entitlement arising under section 41-5, 41-10 or 42-5. The entitlements arising under these sections relate to a: · fuel tax credit for fuel to be used in carrying on your enterprise · fuel tax credit for fuel supplied for domestic heating, and · fuel tax credit for fuel to be used in generating electricity for domestic use. We will look at each entitlement in turn and determine if under your specific circumstances any entitlement arises. | Detailed Reasoning - Fuel tax credit for fuel to be used in carrying on your enterprise: Subsection 41-5(1) states: You are entitled to a fuel tax credit for taxable fuel that you acquire or manufacture in, or import into, Australia to the extent that you do so for use in *carrying on your *enterprise. Section 41-5 also provides that you are only entitled to a fuel tax credit if at the time you acquire, manufacture or import the fuel, you are registered for GST or required to be registered. You do not acquire the taxable fuel, diesel for your use in an enterprise that you carry on. Furthermore, you are not registered for GST. Therefore, you do not have an entitlement arising under section 41-5. | Detailed Reasoning - Fuel tax credit for fuel supplied for domestic heating: Subsection 41-10(1) states: You are entitled to a fuel tax credit for taxable fuel that you acquire or manufacture in, or import into, Australia to the extent that: (a) you do so to make a *taxable supply of the fuel to an entity; and (b) the fuel is kerosene, heating oil or any other fuel prescribed by the regulations; and (c) you have a reasonable belief that the entity: (i) will not use the fuel in *carrying on an *enterprise; but (ii) will use the fuel for domestic heating. For the purposes of 41-10(1)(b) above, there is no other fuel prescribed by the regulations. The intention of these provisions is outlined in paragraphs 2.38, 2.39 and Example 2.1 of the Revised Explanatory Memorandum to Fuel Tax (Consequential and Transitional Provisions) Bill 2006 (EM), which state: | Detailed Reasoning - Section 41-10 - Fuel tax credit for fuel to be sold or packaged: 2.38 Section 41-10 is intended to provide fuel on an effectively fuel tax-free basis for use by private users: · in home heating [subsection 41-10(1)]; … 2.39 A fuel tax credit will be provided to the sellers and packagers of these fuels rather than requiring the private users to register to claim the fuel tax credit. It is expected that the fuel tax-free status of these fuels will be reflected in the price of the fuel to the private end user. … Example 2.1 Tony runs a fuel distribution company. His company makes taxable supplies of heating oil to private residences in the Canberra area. Tony reasonably believes that the heating oil will be used for private purposes because he delivers the fuel into tanks that are attached to the sides of his customer's houses. Tony is entitled to claim a fuel tax credit for the supply of the heating oil because it is reasonable to believe it will be used for domestic heating. … In your case, these provisions do not apply as you acquire diesel for domestic use and not kerosene or heating oil to make a subsequent taxable supply to an entity for domestic heating. Therefore, you do not have an entitlement arising under section 41-10. | Detailed Reasoning - Fuel tax credit for fuel to be used in generating electricity for domestic use: Currently, a credit is only provided for fuel to be used by non-business taxpayers for generating electricity for domestic use. Section 42-5 states: You are entitled to a fuel tax credit for taxable fuel that you acquire or manufacture in, or import into, Australia to the extent that you do so for use by you in generating electricity for domestic use. This provision requires the use by you to be in generating electricity for domestic use. Fuel is used for the purpose of generating electricity where the electricity is an end use in itself and can in turn be used for any purpose for which electricity is required. For example, fuel is used in generating electricity when it is used in a generator to make power available to premises. In your case, you acquire the taxable fuel, diesel for use in a boiler for domestic hot water and heating. You do not use the diesel to generate electricity for domestic use. Therefore, you do not have an entitlement arising under section 42-5. In your present circumstances, there is no entitlement to a fuel tax credit when you acquire diesel for domestic heating.