Private ruling: Fuel tax credits - use of unleaded petrol in aircraft
Published: October 2011
Ruling period: 2010-11 income year | 2011-12 income year
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a fuel tax credit at the half rate for the use of premium unleaded petrol in an aircraft that is used for training purposes? | A1: Yes.

Relevant facts and circumstances: You acquire premium unleaded petrol for use in your aircraft for the purpose of teaching others to fly a plane. You are registered for goods and services tax (GST).

Relevant legislative provisions: Fuel Tax Act 2006 section 41-5 | Fuel Tax Act 2006 section 41-30 | Fuel Tax Act 2006 subdivision 41-B | Fuel Tax (Consequential and Transitional Provisions) Act 2006 Division 2 of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(1) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(i) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(ii) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(iii) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(iv) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(v) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(vi) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(5) of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(6) of Schedule 3 | Energy Grants (Credits) Scheme Act 2003 section 53

Reasons for decision: Summary: 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 for use in carrying on your enterprise, if you are registered for GST. However, this entitlement is affected by Division 2 of Part 3 of Schedule 3 to the Fuel Tax (Consequential and Transitional Provisions) Act 2006 (FTCTPA) which operates to restrict this entitlement to specific activities and continues the previous entitlement provisions of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) for fuel purchased between 1 July 2008 and 30 June 2012. The specific activities are listed within subitem 11(1) of Schedule 3 to the FTCTPA. Subitem 11(1) of the FTCTPA will apply if you acquire taxable fuel for: (i) use in a vehicle travelling on a public road (ii) incidental use in relation to a vehicle travelling on a public road (iii) use in generating electricity (iv) use other than as a fuel (v) use other than as a fuel in an internal combustion engine (vi) use as heating oil. Further, section 41-30 of the FTA provides that there will be no entitlement to fuel tax credits for any taxable fuel acquired for use as fuel in an aircraft if the fuel was entered for home consumption for that use. You use premium unleaded petrol in a small two seat aircraft to train others how to fly. Premium unleaded petrol is not a fuel entered for the purpose of operating aircraft and is hence not captured by section 41-30 of the FTA. Acquiring premium unleaded petrol for use in aircraft is not a specific activity listed under subitem 11(1) of the FTCTPA as outlined above. Therefore, it is necessary to consider if an entitlement exists under subitem 11(5) of the FTCTPA. Subitem 11(5) provides that you are entitled to a fuel tax credit under section 41-5 of the FTA if you would have been entitled to an off-road credit under the EGCSA. Section 53 of the EGCSA provides that you are entitled to an off-road credit if you purchase 'off-road diesel fuel' for a use by you that qualifies. Note that subparagraph 11(5)(b)(ii) of the FTCTPA states that references to 'off-road diesel fuel' in part 4 of the EGCSA are now references to the fuel. This means any fuel that is classified as a taxable fuel, including petrol, from 1 July 2008. A qualifying use under section 53 of the EGCSA includes using the fuel in certain activities in specific industries such as mining, agriculture or marine transport. Using premium unleaded petrol in your aircraft to train others to fly is not a use that qualifies under section 53 of the EGCSA. Accordingly, you would not have been entitled to an off-road credit for premium unleaded petrol used in your aircraft for training purposes under the EGCSA and therefore you are not entitled to a fuel tax credit under the FTA. However, subitem 11(6) of the FTCTPA provides that if you acquire taxable fuel for use in carrying on your enterprise between 1 July 2008 and 30 June 2012, you are entitled to half of the amount of the fuel tax credit if you would not have been entitled to a credit previously. This provision is subject to the disentitlement rules of subdivision 41-B of the FTA which disallows a fuel tax credit: · if another entity was previously entitled to a credit, · for fuel used in light vehicles travelling on public roads, · for fuel used in motor vehicles that do not meet environmental criteria, or · aviation fuels used in aircraft. It has been determined above that you were not entitled to an off-road credit previously for the use of premium unleaded petrol in your aircraft. Therefore, you are entitled to a fuel tax credit at the half rate for the use of premium unleaded petrol in an aircraft that is used for training purposes. The half rate is currently 19.0715 cents per litre.

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