Private ruling: Fuel tax credits - fuel used in aircraft
Date of advice: 14 July 2015
Published: July 2015
Ruling period: 1 July 2014 to 30 June 2017
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to fuel tax credits for premium unleaded fuel used in your training and hire aircraft from 1 July 2014? | A1: Yes

Relevant facts and circumstances: You carry on an enterprise providing flight training and aircraft hire. You registered for goods and services tax (GST) prior to the period the ruling applies to. You account for GST using the cash method. All of your training and hire aircraft are fitted with engines which run on premium unleaded fuel, not aviation gasoline. You purchase premium unleaded fuel from retail service stations and collect and store the fuel using your portable fuel trailer. You maintain an aircraft log which records the fuel levels of your aircraft on a daily basis. You maintain a logbook for your portable fuel trailer which records the quantity of fuel dispensed. You charge for flight training and aircraft hire at an hourly rate, irrespective of the quantity of fuel used. Your aircraft are refuelled as needed using fuel stored in your portable fuel trailer. In the event that your aircraft requires refuelling away from your base of operations, the pilot is reimbursed by you for the cost of the fuel. You have provided relevant clauses of your agreement which detail the obligations of the parties.

Relevant legislative provisions: Fuel Tax Act 2006 section 41-5 | Fuel Tax Act 2006 section 41-30 | Excise Act 1901 | Excise Tariff Act 1921 subitem 10.5 of the Schedule.

Reasons for decision: Summary: Section 41-5 of the Fuel Tax Act 2006 (FTA) states that you are entitled to a fuel tax credit (FTC) for taxable fuel you acquire to the extent that you do so for use in carrying on your enterprise, provided you were registered or required to be registered for GST at the time you acquired the fuel. However, your entitlement to FTCs is also affected by other provisions of the FTA. Section 41-30 of the FTA states that you are not entitled to an FTC for taxable fuel that you acquire for use in an aircraft if the fuel was entered into home consumption for that use (within the meaning of the Excise Act 1901 ). The Excise Act imposes duty on excisable goods listed in the Schedule to the Excise Tariff Act 1921 . You have stated that you acquire premium unleaded fuel from local service stations using your portable fuel trailer. You have also stated that all your aircraft run on premium unleaded fuel and not aviation gasoline. We consider that premium unleaded fuel falls under Subitem 10.5 in the Schedule to the Excise Tariff Act as gasoline (other than for use as fuel in aircraft). Hence it is reasonable to assume that the fuel was not entered into home consumption as fuel for use in an aircraft. Consequently section 41-30 of the FTA does not apply. Taxable fuel is defined in the FTA as fuel in respect of which duty is payable under the Excise Act and the Excise Tariff Act . You used the premium unleaded fuel in your flight training and aircraft hire activities. Customers and members are charged at an hourly rate for these activities, irrespective of the quantity of fuel used. Aircraft are refuelled as required from your portable fuel trailer. As such, you have acquired taxable fuel (premium unleaded) for use in your enterprise (flight training and aircraft hire activities). You are registered for GST and therefore have entitlement to a fuel tax credit for the taxable fuel. You have stated that, in the event aircraft require refuelling away from your base of operations, you reimburse the customer or member for the cost of the fuel. You have provided relevant clauses of your agreement which detail the obligations of the parties. The relevant clauses indicate that you have authorised the customer to acquire fuel on your behalf. You are entitled to a fuel tax credit for this taxable fuel as you have acquired premium unleaded fuel for use in your flight training and aircraft hire activities and were registered for GST at the time you acquired the fuel. You are entitled to claim FTCs for the fuel used in flight training and aircraft hire at the following rates: Rate for fuel acquired from 1 July 2014 Rate for fuel acquired from 10 November 2014 Rate for fuel acquired from 2 February 2015 Rate for fuel acquired from 1 July 2015 $0.38143 per litre $0.386 per litre $0.389 per litre $0.389 per litre Please also note that FTC rates change on a regular basis.