Private ruling: Fuel tax credits: generating electricity and operating sundry plant
Published: May 2014
Ruling period: 1 July 2009 to 31 August 2013.
Date scheme commenced: 1 July 2009

Ruling: Q1: Are you entitled to claim a fuel tax credit at the full rate for taxable fuel acquired in the period 1 July 2009 to 30 June 2012 and used to generate electricity to operate specified equipment in a specified place? | A1: Yes. | Q2: Are you entitled to a fuel tax credit, at the full rate less the applicable amount of carbon reduction, for taxable fuel acquired from 1 July 2012 and used to generate electricity to operate specified equipment in a specified place? | A2: Yes. | Q3: Are you entitled to a fuel tax credit, at the half rate, for taxable fuel acquired in the period 1 July 2009 to 30 June 2012, that was used in your diesel powered roller to carry out your enterprise? | A3: Yes. | Q4: Are you entitled to a fuel tax credit, at the full rate less the applicable amount of carbon reduction, for taxable fuel acquired from 1 July 2012 that was used in your diesel powered roller to carry out your enterprise? | A4: Yes. | Q5: Are you entitled to a fuel tax credit, at the half rate, for taxable fuel acquired in the period 1 July 2009 to 30 June 2012, that was used in your chainsaws to carry out your enterprise? | A5: Yes. | Q6: Are you entitled to a fuel tax credit, at the full rate less the applicable amount of carbon reduction, for taxable fuel acquired from 1 July 2012 that was used in your chainsaws to carry out your enterprise? | A6: Yes.

Relevant facts and circumstances: You were registered for goods and services tax and obtained an ABN from a specified date. You were registered for fuel tax credits from a specified date. The land requires sewerage services and you have constructed sewer facilities and these facilities are powered by electricity. The generators run on diesel fuel and you buy this diesel fuel from fuel retailers and wholesalers. The fuel purchased by you is taxable fuel within the definition contained in the Fuel Tax Act 2006 . You have not purchased gaseous fuel. You sometimes purchase fuel directly from a fuel manufacturer, and at other times from fuel retailers and wholesalers. Thus the fuel is acquired in Australia from these merchants. The fuel is either unleaded petrol or diesel. Your enterprise includes the subleasing of land. In addition to the subleasing activity you carry on other specified activities. Your diesel powered roller has a gross vehicle mass of 4.5 tonnes or more but less than 20 tonnes. The roller is registered for use on public roads. The chainsaws operate on petrol. All activities in this ruling application are for non-public road activities. You sometimes on-sell fuel. The fuel on sold represents fuel that is not eligible for a fuel tax credit claim. The total fuel tax credit claim excludes any fuel purchases that are on sold. You do not acquire any fuel for use in an aircraft nor do you own an aircraft. Another entity has not previously been entitled to a fuel tax credit or a decreasing fuel tax adjustment for the fuel.

Relevant legislative provisions: Fuel Tax Act 2006 section 41-5 | Fuel Tax Act 2006 section 43-5 | Fuel Tax Act 2006 section 43-8 | Fuel Tax Act 2006 subsection 43-8(4) | Fuel Tax (Consequential and Transitional Provisions) Act 2006 Division 2 of Part 3 of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(1) to Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(3) to Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(5) to Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(6) to Schedule 3

Reasons for decision: Summary: Are you entitled to claim a fuel tax credit at the full rate for taxable fuel acquired in the period 1 July 2009 to 30 June 2012 and used to generate electricity to operate specified equipment in a specified place? 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 to the extent that you do so for use in carrying on your enterprise, if you are registered for goods and services tax. For taxable fuel purchased between 1 July 2008 and 30 June 2012 this entitlement may be affected by item 11 of Division 2 of Part 3 of Schedule 3 to the Fuel Tax (Consequential and Transitional Provisions) Act 2006 (FTCTPA). However, subparagraph 11(1)(b)(iii) of the FTCTPA states that the Act does not apply to taxable fuel acquired for use by you in generating electricity. As such any fuel tax credit entitlement for taxable fuel used by you in generating electricity is not affected by the transitional provisions. Accordingly, you are entitled to a fuel tax credit, at the full rate for diesel fuel acquired in the period 1 July 2009 to 30 June 2012 and used to generate electricity to operate specified equipment in a specified place. Are you entitled to a fuel tax credit, at the full rate less the applicable amount of carbon reduction, for taxable fuel acquired from 1 July 2012 and used to generate electricity to operate specified equipment in a specified place? Section 43-5 of the FTA provides the amount of the fuel tax credit to which you are entitled for taxable fuel is the amount of effective fuel tax that is payable on the fuel less the amount of carbon reduction (if applicable). 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. However, subsection 43-8(4) of the FTA provides that the amount of carbon reduction that applies to the fuel is nil to the extent that certain conditions are met. These include vehicles with a GVM of more than 4.5 tonnes travelling on public roads, fuel used in specified agriculture, fishing or forestry activities or, fuel used other than by combustion of the fuel. The combustion of fuel to generate electricity does not satisfy the conditions in subsection 43-8(4). Therefore, the carbon reduction is not nil. Accordingly, you are entitled to a fuel tax credit, at the full rate less the applicable amount of carbon reduction, for taxable fuel acquired from 1 July 2012 that was used to generate electricity to operate specified equipment in a specified place. Are you entitled to a fuel tax credit, at the half rate, for taxable fuel acquired in the period 1 July 2009 to 30 June 2012, that was used in your diesel powered roller to carry out your enterprise? You acquire and use taxable fuel in powering your diesel powered roller to carry out your enterprise. For taxable fuel purchased between 1 July 2008 and 30 June 2012, entitlement to a fuel tax credit may be affected by the FTCTPA. Your diesel powered roller is not travelling on a public road when carrying out its activities. Therefore subparagraph 11(1)(b)(i) of the FTCTPA does not apply so as to exclude item 11 of the FTCTPA from operating. Therefore the operation of the FTCTPA must be considered. Subitems 11(3) and 11(5) of the FTCTPA apply, respectively, if you would have been entitled to an on-road or off-road credit under the Energy Grants (Credits) Scheme Act 2003 (EGCS Act) for taxable fuel acquired between 1 July 2009 and 30 June 2012 for these activities. Section 43 of the EGCS Act provides an entitlement to an on-road credit for vehicles of 4.5 tonnes or more but less than 20 tonnes where the vehicle is used for purposes that are specified in section 43. Section 53 of the EGCS Act provides that you are entitled to an off-road credit for fuel that is used for certain purposes. You would not have been entitled to an on-road or off-road credit under the EGCS Act for taxable fuel used in your diesel powered roller. However subitem 11(6) of the FTCTPA provides that, even if you do not meet the conditions in subitems 11(3) and 11(5) of the FTCTPA, you are entitled to a fuel tax credit at the half rate. Are you entitled to a fuel tax credit, at the full rate less the applicable amount of carbon reduction, for taxable fuel acquired from 1 July 2012 that was used in your diesel powered roller to carry out your enterprise? Section 43-5 of the FTA provides the amount of the fuel tax credit to which you are entitled for taxable fuel is the amount of effective fuel tax that is payable on the fuel less the amount of carbon reduction (if applicable). 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 the reasoning to question 2 we explained that subsection 43-8(4) of the FTA lists certain eligible activities where the amount of carbon reduction that applies to the fuel is nil to the extent that certain conditions are met. You use taxable fuel that has been acquired in your diesel powered roller to carry out activities in your enterprise. The diesel powered roller is not used in any of the activities that are listed in subsection 43-8(4). Accordingly, you are entitled to a fuel tax credit, at the full rate less the applicable amount of carbon reduction, for taxable fuel acquired from 1 July 2012 that was used in your diesel powered roller to carry out activities in your enterprise. Are you entitled to a fuel tax credit, at the half rate, for taxable fuel acquired in the period 1 July 2009 to 30 June 2012, that was used in your chainsaws to carry out your enterprise? You acquire and use taxable fuel (ie petrol) in powering your chainsaws to carry out your enterprise. For taxable fuel purchased between 1 July 2008 and 30 June 2012, entitlement to a fuel tax credit may be affected by the FTCTPA. Subparagraphs 11(1)(b)(i) to 11(1)(b)(vi) of the FTCTPA do not apply so as to exclude item 11 of the FTCTPA from operating. Therefore the operation of the FTCTPA must be considered. Subitems 11(3) and 11(5) of the FTCTPA apply, respectively, if you would have been entitled to an on-road or off-road credit under the Energy Grants (Credits) Scheme Act 2003 (EGCS Act) for taxable fuel acquired between 1 July 2009 and 30 June 2012 for these activities. You would not have been entitled to an on-road or off-road credit under the EGCS Act for taxable fuel used in your chainsaws. Therefore subitem 11(6) of the FTCTPA applies which provides that, even if you do not meet the conditions in subitems 11(3) and 11(5) of the FTCTPA, you are entitled to a fuel tax credit at the half rate. Are you entitled to a fuel tax credit, at the full rate less the applicable amount of carbon reduction, for taxable fuel acquired from 1 July 2012 that was used in your chainsaws to carry out your enterprise? Section 43-5 of the FTA provides the amount of the fuel tax credit to which you are entitled for taxable fuel is the amount of effective fuel tax that is payable on the fuel less the amount of carbon reduction (if applicable). 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. The application of subsection 43-8(4) of the FTA was explained in the reasoning for question 2. You use taxable fuel that has been acquired in your chainsaws to carry out activities in your enterprise. These chainsaws are not used in any of the activities that are listed in subsection 43-8(4). Accordingly, you are entitled to a fuel tax credit, at the full rate less the applicable amount of carbon reduction, for taxable fuel acquired from 1 July 2012 that was used in your chainsaws to carry out activities in your enterprise.