Private ruling: Fuel tax credits
Date of advice: 21 January 2026
Published: 16 March 2026
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Has Entity A acquired taxable fuel for use in carrying on its enterprise associated with the execution of the Project under its arrangement with Entity B? | A1: Yes. | Q2: If Entity A acquires taxable fuel for use in its enterprise, and that fuel is later sold, supplied for a different purpose, or otherwise disposed of to another entity, is Entity A required to make an adjustment under Division 44 of the Fuel Tax Act 2006 (FTA)? | A2: Yes. | Q3: In relation to any fuel that Entity A has acquired for use in carrying on its enterprise, where that fuel is subject to an excise remission, are they entitled to claim a fuel tax credit under FTA? | A3: No.

Relevant facts and circumstances: Entity A is registered for goods and services tax. Entity B entered into a contract with Entity A for Entity A to carry out the Project. Entity A then hires subcontractors, with vessels, to carry out the work. To acquire taxable fuel Entity A entered into a contract with a fuel supplier. The supply of fuel is subject to a prepayment arrangement. The fuel supplier issue invoices to Entity A. This will need to be paid by Entity A before delivery of the fuel. The agreement between entity A and entity B provides that entity B may, at its discretion, provide Entity A with funding to pay the fuel invoices. However, Entity B has no access to the fuel. The fuel supplier supplies the fuel directly into the subcontractor's vessels. Entity A does not invoice or receive payment for fuel provided to subcontractors in relation to the Project. The subcontractors can only access the fuel for use with the express agreement of Entity A. Entity A has total control over the acquisition, storage and distribution of the fuel acquired from the fuel supplier.

Relevant legislative provisions: Fuel Tax Act 2006 Section 41-5 | Fuel Tax Act 2006 Division 44 | Excise Regulation 2015 Item 11 of subclause 2(1)

Reasons for decision: Summary: Yes, Entity A acquired taxable fuel for use in carrying on its enterprise. | Detailed Reasoning - Acquire:: The term 'acquire' is not defined in Fuel Tax Act 2006 (FTA) and therefore takes its ordinary meaning . According to the Macquarie Dictionary , 'acquire' means: verb (t) (acquired, acquiring) 1. to come into possession of; get as one's own: Example: *You must acquire property at once 2. To gain for oneself through one's actions or efforts: Example: *it is easier to acquire gentlemanly deportment than axe-man's muscle For the purposes of the FTA, per Fuel Tax Ruling 2007/1 Fuel tax: the meaning of 'acquire', 'manufacture' and 'import' in the expression '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' in the Fuel Tax Act 2006 (FTR 2007/1) the Commissioner interprets 'acquire' to mean: To get as one's own from someone else or through one's actions or efforts. This interpretation excludes the broader meaning of merely coming into possession of something. The Commissioner considers that 'getting as one's own' implies obtaining ownership or proprietary rights in the fuel. This typically involves: • a transfer of property or • a grant of proprietary rights through means other than manufacture. Therefore, an entity is considered to have acquired taxable fuel when there is a change in ownership or transfer of rights from one entity to another. As per FTR 2007/1, paragraph 21, you acquire taxable fuel if • You purchase the fuel • The fuel is gifted to you; or • You get the fuel as your own by any other means (other than manufacture or import). This necessarily means that you get ownership of, or proprietary rights in respect of, the fuel. Based on the documents provided, it is evident that Entity A is invoiced for the fuel supplied. Accordingly, the appropriate approach to determine whether a taxable fuel acquisition has occurred, is to assess whether Entity A has acquired the fuel by way of purchase. Paragraphs 36 to 38 of FTR 2007/1 outlines when a taxpayer is considered to have acquired taxable fuel by purchase, including situations involving prepayment and appropriation of fuel. • If you buy a specific amount of fuel that's ready to be delivered, you're considered to have acquired it when the ownership is intended to pass to you-usually when the sale contract is made. • If the fuel isn't specifically identified at the time of the contract (e.g. it's not yet allocated or its use isn't determined), you acquire it when the fuel is later clearly set aside for you in a deliverable state. • If you prepay for fuel to be delivered later, you acquire it once the fuel is identified as yours-such as when it's stored in a tank reserved just for you. Per the above, as Entity A is prepaying the fuel, they would be considered to have acquired taxable fuel when ownership is identified as theirs, e.g. when the fuel is in their possession. However, since the fuel is delivered to a chartered vessel, and not to Entity A's location, it's important to confirm whether Entity A actually holds proprietary interest in the fuel to determine if an acquisition has occurred. In determining whether Entity A holds proprietary interest in the fuel, it is appropriate to consider Fuel Tax Ruling 2009/1 Fuel tax: entitlement to a fuel tax credit under section 41-5 of the Fuel Tax Act 2006 in a vehicle or equipment hire arrangement (FTR 2009/1), which provides relevant guidance on the treatment of fuel under hire arrangements for the purposes of fuel tax credits. FTR 2009/1 provides guidance on how fuel tax credits apply in hire arrangements, depending on who acquires and uses the fuel. Where a hire company acquires fuel and retains ownership-such as when using it in its own vehicles or equipment-it may be entitled to fuel tax credits, subject to any disentitling provisions. However, if the hire company disposes of the fuel to the hirer (for example, through sale or mutuum), it is not entitled to claim credits. Conversely, if the hirer acquires the fuel and uses it in the hired equipment, the hirer may be entitled to fuel tax credits, again subject to any disentitling provisions. Disposal of fuel occurs when it is sold or transferred under a mutuum arrangement, but not when the hire company merely grants a licence to use the fuel or supplies it under a wet hire arrangement. Paragraphs 25 and 26 of FTR 2009/1 explain that a sale of fuel generally occurs when one entity supplies fuel to another and requires payment. Whether a sale has occurred in a hire arrangement depends on the intention of the parties, as determined by the relevant contracts and surrounding circumstances. The ATO has noted that no invoices have been provided showing Entity A is charging its subcontractors for fuel, and the Agreement provides that Entity Ashall supply for replenishment purposes fuel for their use. Paragraph 27 of FTR 2009/1 clarifies that fuel is subject to mutuum, a form of gratuitous quasi-bailment, where the supplier provides fuel for consumption and the recipient is required to replace it with an equivalent quantity. In such cases, ownership passes to the recipient at the outset, and the supplier is considered to have disposed of the fuel. The ATO has observed that, based on the documentation provided, there is no indication that Entity A supplied fuel under a mutuum arrangement. Paragraphs 28 to 30 of FTR 2009/1 state that where an entity is granted a licence to use another party's fuel, it does not acquire taxable fuel for the purposes of the FTA. A licence to use fuel does not confer ownership or proprietary interest. Whether such a licence exists depends on the intention of the parties, as reflected in the contracts and surrounding circumstances. Indicators of a licence arrangement include charging a flat fee inclusive of fuel or providing fuel at no cost. The ATO notes no evidence to support the charging of a flat fee has been provided. Based on the evidence currently available, and on the understanding that the information provided is true and complete, it appears that Entity A acquired the fuel. While Entity B may fund the prepayment invoices, this is to Entity B's discretion. Entity B has no access to the fuel. Entity A has total control over the acquisition, storage and distribution of the fuel acquired from the fuel supplier. Entity A has not disposed of the fuel or transferred ownership of the fuel to Entity B. Although the fuel was not physically received by Entity A, the invoice was issued in Entity A's name and relates solely to the Project. The documentation does not indicate that the fuel was sold to subcontractors as Entity A does not invoice or receive payment for fuel provided to subcontractors engaged in relation to the Project, and the subcontractors can only access the fuel for use with the express agreement of Entity A. Rather, it suggests that Entity A retained ownership and granted its contractors a licence to use the fuel. This conclusion is subject to change should further documentation or clarification reveal different facts or arrangements. If additional evidence indicates that the fuel was sold or otherwise disposed of, the assessment of acquisition and entitlement to fuel tax credits may need to be reconsidered. | Detailed Reasoning - For use in carrying on its enterprise:: Under section 41-5 of the FTA, an entity is entitled to a fuel tax credit for taxable fuel that it acquires, manufactures, or imports into the indirect tax zone, to the extent that the fuel is used in carrying on its enterprise. The concept of "use" is addressed in FTR 2009/1. Paragraphs 22 to 24 clarify that "use" means to expend or consume the fuel such that it no longer exists as fuel-i.e. it is put into service in the course of carrying on the enterprise. In the context of vehicle or equipment hire arrangements: • Fuel is not used if it is sold or otherwise disposed of; and • Fuel is used if it is consumed in operating the vehicle or equipment as part of the enterprise. Importantly, a hire company does not dispose of fuel where it merely grants another entity a licence to use its fuel. Per the documents provided, Entity A acquires and replenishes the fuel that is used in the charter vessels. The vessels are operated by the owner's personnel throughout the charter period and is capable of 24-hour operation. Under the Agreement, the vessel is to perform services as directed by Entity A, within its legal and safe operating limits. From the evidence provided, there is no indication that Entity A charged the vessel owners for the fuel, nor that any funds were exchanged for its supply. Instead, the vessel owner appears to have been granted the right to use the fuel. Paragraph 46 of FTR 2009/1 confirms that where a hire company acquires fuel for use in hire equipment and does not sell or dispose of it, it may be entitled to a fuel tax credit under section 41-5, subject to any disentitling provisions. Provided that Entity A has not transferred ownership of the fuel to another party, it would be the entity entitled to claim the fuel tax credit. | Detailed Reasoning - Question 2: If Entity A acquires taxable fuel for use in its enterprise, and that fuel is later sold, supplied for a different purpose, or otherwise disposed of to another entity, is Entity A required to make an adjustment under Division 44 of the Fuel Tax Act 2006 (FTA)? | Summary: Entity A is required to make an adjustment under Division 44 of the FTA if the taxable fuel is later sold, supplied for a different purpose, or otherwise disposed of to another entity. | Detailed Reasoning - Detailed reasoning: You have provided relevant clauses of your agreement which detail the obligations of the parties including: • The Charterer to provide the Owner with full details of the cost of bunker fuel remaining on board the vessel at the time of re-delivery. • Upon expiry of the Charter, the Owner shall accept and pay for all bunker fuel remaining on board. FTR 2009/1, paragraph 38 states that where a hire company sells or otherwise disposes of fuel under a hire arrangement, it is not considered to have used the fuel for the purposes of section 41-5 of the FTA. As a result, the company is not entitled to a fuel tax credit for that fuel, as it was not acquired for use in its own enterprise but for onward sale or disposal. Additionally, Division 44 of the FTA provides that entitlement to a fuel tax credit is determined by the intended use of the fuel at the time of acquisition. If the fuel is later used differently, supplied to another party, or not used at all, an increasing or decreasing fuel tax adjustment may be required. Therefore, where Entity A subsequently sells the fuel to another entity, any fuel tax credits previously claimed must be adjusted accordingly by making an increasing fuel tax adjustment. | Detailed Reasoning - Question 3: In relation to any fuel that Entity A has acquired for use in carrying on its enterprise, where that fuel is subject to an excise remission, are they entitled to claim a fuel tax credit under FTA? | Summary: Entity A is not entitled to claim a fuel tax credit under FTA for fuel that is subject to an excise remission as it is no longer considered a taxable fuel. | Detailed Reasoning - Detailed reasoning: As of 1 January 2025, a new remission without application came into effect for certain fuel supplies. Under item 11 of the table in subclause 2(1) of Schedule 1 to the Excise Regulation 2015 , fuel that meets specific criteria can be supplied under remission without the need for a formal application. The decision to apply the remission is at the discretion of the fuel supplier and where applied, this cancels the liability of excise duty on the fuel supplied by the fuel supplier. To qualify, the fuel must: (1) fall under item 10 (other than subitem 10.6 or 10.17) of the Schedule to the Excise Tariff Act 1921 ; (2) be intended as stores for use by passengers or crew of a ship, or for the operation of the ship; (3) be supplied from premises licensed under section 39A of the Excise Act 1901 ; (4) be provided to a person carrying on an enterprise (within the meaning of the A New Tax System (Goods and Services Tax) Act 1999 ); (5) be supplied to a ship with a gross tonnage within the meaning of the Shipping Reform (Tax Incentives) Act 2012) of at least 400; and (6) be used on a domestic voyage. Once fuel is supplied under remission, whether under this new circumstance or any other, it is no longer considered a taxable fuel and is therefore ineligible for a fuel tax credit.