Private ruling: Fuel tax credit
Date of advice: 24 November 2017
Published: May 2018
Ruling period: 2013 - 14 income year | 2014 - 15 income year | 2015 - 16 income year
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a fuel tax credit at the full rate, less the applicable amount of carbon reduction, for taxable fuel acquired between 1 July 201X and 30 June 201Y and used in vehicles exceeding 4.5 tonnes gross vehicle mass (GVM) at a quarry for the purpose of transporting road construction, repair or maintenance materials? | A1: Yes, to the extent the fuel tax credit entitlement has not ceased under section 47-5 of the Fuel Tax Act 2006 (FTA) . | Q2: Are you entitled to a fuel tax credit at the full rate for taxable fuel acquired on and after 1 July 201Y for use in vehicles, exceeding 4.5 tonnes GVM, at a quarry for the purpose of transporting road construction, repair or maintenance materials? | A2: Yes. | Q3: Are you entitled to a fuel tax credit at the full rate, less the applicable amount of carbon reduction, for taxable fuel acquired between 1 July 201X and 30 June 201Y, for use in vehicles exceeding 4.5 tonnes GVM, at the section of roads that are under construction or repair and are not open to the public, for the purpose of transporting road construction and maintenance materials and spreading it along the part of the roads under construction? | A3: Yes, to the extent the fuel tax credit entitlement has not ceased under section 47-5 of the FTA . | Q4: Are you entitled to a fuel tax credit at the full rate for taxable fuel acquired on and after 1 July 201Y for use in vehicles exceeding 4.5 tonnes GVM, at the section of roads that are under construction or repair and are not open to the public, for the purpose of transporting road construction and maintenance materials and spreading it along the part of the roads under construction? | A4: Yes | Q5: Are you entitled to a fuel tax credit at the full rate, less the applicable amount of carbon reduction, for taxable fuel acquired between 1 July 201X and 30 June 201Y, and used in water trucks to travel on roads that are under construction or maintenance, and not open to the public, for the purposes of dust suppression? | A5: Yes, to the extent the fuel tax credit has not ceased under section 47-5 of the FTA. | Q6: Are you entitled to a fuel tax credit at the full rate for taxable fuel acquired on and after 1 July 201Y and used in water trucks to travel on roads that are under construction or maintenance, and not open to the public, for the purposes of dust suppression? | A6: Yes

Relevant facts and circumstances: You are registered for Goods and Services Tax. You use vehicles exceeding 4.5 tonnes GVM (heavy vehicles) to transport quarried material for use in the construction, repair and maintenance of roads. The heavy vehicles begin their trip at the quarry whereby they are loaded with the quarried material. The heavy vehicles leave the quarry and travel along a public road to the road construction site. The vehicles travel along the road construction or maintenance site to a designated location where it unloads the quarried material, spreading it along the road under construction. After unloading the materials, the heavy vehicles travel on public roads to return to the quarry to repeat the trip. Your heavy vehicles can also operate as water trucks. The quarry Large signs are posted at the entrance to the quarry stating that the site is a private property and prohibiting the entry of unauthorised persons. The roads under construction and maintenance The construction sites are roads that are under construction, repair or maintenance, and are not open to the public for travel. The roads that are closed to the public have signs posted at each end of the road under construction, or, should only one lane of the entire road be closed, have "witches hats" delineating that part of the road that is closed.

Relevant legislative provisions: Fuel Tax Act 2006 section 41-5, | Fuel Tax Act 2006 section 43-8 | Fuel Tax Act 2006 subsection 43-10(3) | Fuel Tax Act 2006 subsection 43-10(4) | Fuel Tax Act 2006 subsection 47-5(1) | Fuel Tax Act 2006 subsection 65-5(1)

Reasons for decision: Summary: Section 41-5 of the Fuel Tax Act 2006 (FTA) provides that if you are registered for goods and services tax at the time you acquire the fuel, you are entitled to a fuel tax credit for taxable fuel that you acquire or manufacture in, or import into, the indirect tax zone to the extent that you do so for use in carrying on your enterprise. Subsection 43-10(3) of the FTA provides that your fuel tax credit is reduced by the amount of the Road User Charge (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 gross vehicle mass (GVM) of more than 4.5 tonnes. The amount of your fuel tax credit for taxable fuel acquired between 1 July 201X and 30 June 201Y is reduced by the amount of carbon reduction under section 43-8 to the FTA, unless the fuel is used in a heavy vehicle travelling on a public road. From 1 July 201Y section 43-8 of the FTA was repealed. | Detailed Reasoning - Time limit on entitlement to fuel tax credits: If you are entitled to a fuel tax credit, you need to claim it within four years of the end of the tax period in which the credit would be claimed at the time of acquisition of the fuel. If the fuel tax credit is not claimed within this time the entitlement ceases under subsection 47-5(1) of the FTA. Subsection 47-5(1) of the FTA states: You cease to be entitled to a fuel tax credit to the extent that it has not been taken into account, in an assessment of a net fuel amount of yours, during the period of 4 years after the day on which you were required to give to the Commissioner a return for the tax period or fuel tax return period to which the fuel tax credit would be attributable under subsection 65-5(1), (2) or (3). | Detailed Reasoning - Travelling: Fuel Tax Ruling FTR 2008/1: vehicle’s travel on a public road that is incidental to the vehicle’s main use and the road user charge, provides the Commissioner’s views regarding the term ‘travel’ for the purposes of subsections 43-10(3) and (4) of the FTA and states at paragraphs 14 and 15 that: 14. … the terms ‘travel’ and ‘travelling’ mean to go from one place to another place or to move from one point to another point. 15. A vehicle’s travel begins when it commences to move and ends when it arrives at a destination, regardless of the distance. Relevantly, the Commissioner’s consideration of the movement by a vehicle engaged in road construction, repair or maintenance is detailed in FTR 2008/1 at paragraphs 21 to 23 and provides that: 21. The movement of a vehicle engaged in road construction, repair or maintenance to and from a road works site is ‘travelling’ for the purposes of subsection 43-10(3). 22. However, ‘travelling’ in the sense contemplated by subsection 43-10(3) does not include the movement of a vehicle on a public road or portion of a public road where: ● the vehicle is engaged in the construction, repair or maintenance of the road; and ● that road or portion of that road is under construction, repair or maintenance. 23. The movement of a vehicle engaged in the construction, repair or maintenance of a road, for example, a grader, bulldozer, water cart or street sweeper which occurs on the road or portion of the road that is under construction, repair or maintenance is not ‘travelling’ for the purposes of subsection 43-10(3). This exception to the meaning of travel is further elaborated in paragraphs 117 to 119 in FTR 2008/1 and states that, in the context of a vehicle engaged in road construction, repair or maintenance, the vehicle’s movement on a public road is not considered ‘travel’ as its purpose of moving is to benefit the road and not relocate the vehicle. However, if such a vehicle is driven to a new location to carry out road construction, repair or maintenance, its movement would satisfy the term ‘travel’ for the purposes of the FTA. | Detailed Reasoning - Heavy vehicles travelling in the quarry: The term ‘public road’ is not defined in the FTA; however, the Commissioner’s view of what constitutes a public road is discussed in FTR 2008/1. Paragraph 43D of FTR 2008/1 explains the meaning of a public road and paragraph 44 provides examples of roads that are public roads. | Detailed Reasoning - Roads that are public roads: 43D. The term 'public road' is not defined in the FT Act and therefore it takes its ordinary meaning. 44. For the purposes of subsections 43-10(3) and 43-10(4), examples of a 'public road' include, a road: ● opened, declared or dedicated as a public road under a statute; ● vested in a government authority having statutory responsibility for the control and management of public road infrastructure; or ● dedicated as a public road at common law. 45. For the purposes of subsections 43-10(3) and (4) a public road encompasses any shoulder of the road and auxiliary lanes, for example emergency lanes. Paragraph 121 of FTR 2008/1 further explained that: 121. The term 'public road' is not defined in the FT Act and therefore it takes its ordinary meaning. A public road is a road that is available for use by members of the public. Your heavy vehicles collect materials for the construction, repair or maintenance of roads from the quarry. These materials are loaded onto the heavy vehicles at the quarry. To allow access to these activities, roads are constructed within the quarry that lead from the entrance to the material loading point and back to the exit. These roads within the quarry are not used for transport of the public from one point to another; and are not for used by the public, and as such they not ‘public roads’ for the purposes of subsections 43-10(3) and 43-10(4) of the FTA. As your heavy vehicles are not travelling on a public road at the quarry, your fuel tax credit entitlement for the taxable fuel used at the quarry is: ● not reduced by the road user charge under subsection 43-10(3) of the FTA; and ● is reduced by a carbon charge under section 43-8 of the FTA in respect of the taxable fuel acquired between 1 July 201X and 30 June 201Y. However, your fuel tax credit entitlements cease where it is not claimed within four years of the tax period in which the credit was attributable under subsection 65-5(1) of the FTA. Generally the tax period determined under subsection 65-5(1) is the period in which the taxable fuel was acquired. | Detailed Reasoning - Heavy vehicles travelling in construction site: Your heavy vehicles transport quarried materials from the quarry to the roads that are under construction, repair or maintenance. At these construction sites, your vehicles may idle for an extended period while waiting to distribute the quarried materials. Your vehicles then distribute the materials, spreading them along various areas of the roads that are under construction or repair. Your vehicles are engaged in the construction, repair or maintenance of the road and as such are not travelling for the purpose of subsection 43-10(3) of the FTA. As a result, the fuel tax credit for the taxable fuel used in your heavy vehicles while idling and spreading the quarried material is at the full rate. However, as it is considered that the vehicles are not travelling during this activity, section 43-8 of the FTA applies to reduce the amount of fuel tax credit entitlement by the amount of carbon reduction for the fuel acquired and used between 1 July 201X and 30 June 201Y. Further, your fuel tax credit entitlements cease where it is not claimed within four years of the tax period in which the credit was attributable under subsection 65-5(1) of the FTA. Generally the tax period determined under subsection 65-5(1) is the period in which the taxable fuel was acquired. | Detailed Reasoning - Water Trucks used for suppression of dust: As discussed above, the Commissioner considers that vehicles engaged in the activity of road construction, repair and maintenance are not travelling. Paragraph 23 of FTR 2008/1 specifically refers to water carts, and similarly water trucks, and relevantly states: 23. The movement of a vehicle engaged in the constructions, repair or maintenance of a road, for example, a grader, bulldozer, water cart or street sweeper which occurs on the road or portion of the road that is under construction, repair or maintenance is not ‘travelling’ for the purposes of subsection 43-10(3). Example 16 in FTR 2008/1 further discusses the use of water carts to spray water within the construction site for dust suppressions: Example 16: travel on a public road that is incidental to the vehicle's main use - water cart 69. In the course of carrying on its enterprise, Waterwize Enterprises (Waterwize) uses a water cart on a construction site that straddles a public road. To move between parts of the construction site, the water cart has to travel along or across the public road. The distance travelled along the public road is no more than 500 metres . 70. The water cart travels along or across the public road on several occasions during the day. The water cart's main use is off road to transport and spray water within the construction site for dust suppression . 71. The water cart's travel on the public road occurs in the course of its off-road use. The travel on the public road is incidental to the water cart's main use as it is so interspersed with its off-road use so as to be part of that vehicle's off-road use (main use ). Your water trucks are engaged in the construction, repair or maintenance of roads because they spray water to suppress dust that result from other activities relevant to the construction, repair or maintenance of the road. The water trucks’ travel on roads or portions of roads that are under construction, repair or maintenance to suppress the dust is therefore not ‘travelling’ for the purposes of section 43-10(3) of the FTA. As a result, the taxable fuel used in your water trucks that spray water to suppress dust whilst travelling on roads that are under construction, repair or maintenance is eligible for fuel tax credits at the full rate. However, as it is considered that the vehicles are not travelling during this activity, section 43-8 of the FTA applies to reduce the amount of fuel tax credit entitlement by the amount of carbon reduction for the fuel acquired and used between 1 July 201X and 30 June 201Y. Further, your fuel tax credit entitlements cease where it is not claimed within four years of the tax period in which the credit was attributable under subsection 65-5(1) of the FTA. Generally the tax period determined under subsection 65-5(1) is the period in which the taxable fuel was acquired.