Private ruling: Fuel tax credits - marine transport
Published: May 2013
Ruling period: 2008-09 income year | 2009-10 income year | 2010-11 income year | 2011-12 income year
Date scheme commenced: 1 July 2008.

Ruling: Q1: Are you entitled to a fuel tax credit at the full rate of 38.143 cents per litre for diesel fuel acquired for use in operating your identified vessels for the period 1 July 2008 to 30 June 2012? | A1: Yes.

Relevant facts and circumstances: You are an Australian government organisation registered for goods and services tax (GST) and fuel tax credits. You own and operate a number of vessels, which in addition to various other pieces of specialised equipment, carry boats which allow them to perform their required tasks. The boats are used to transfer persons. Also aboard the vessels, in addition to its crew, are your personnel or other personnel. All taxable diesel fuel used on board the vessels is acquired by you for the mobilisation and transport of your staff and equipment. The activities performed by the vessels consist primarily of the transport of your staff to and from the vessel's berth to the point at which they can conduct their tasks. In addition, personnel from other entities may also be embarked on the vessels, depending on the particular tasks being undertaken.

Relevant legislative provisions: Fuel Tax Act 2006 41-5 | 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 subitem 11(5) of Schedule 3 | Energy Grants (Credits) Scheme Act 2003 section 36 | Energy Grants (Credits) Scheme Act 2003 subsection 36(2) | Energy Grants (Credits) Scheme Act 2003 subsection 36(3) | Energy Grants (Credits) Scheme Act 2003 subsection 36(4) | Energy Grants (Credits) Scheme Act 2003 paragraph 36(4)(d) | Energy Grants (Credits) Scheme Act 2003 subsection 53(1) | Energy Grants (Credits) Scheme Act 2003 subsection 53(3)

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 or manufacture in, or import into Australia to the extent that you do so for use in carrying on your enterprise, if you are registered for goods and services tax (GST). However, this entitlement is affected by Division 2 of Part 3 in 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 the period 1 July 2008 to 30 June 2012. For the period 1 July 2008 to 30 June 2012 the specific activities for which an entitlement exists are relevantly listed within subitem 11(1) of Schedule 3 of the FTCTPA. You have stated the activities performed by your vessels consist primarily of the transport of your staff to and from the Vessel's berth to the point at which they conduct their tasks. These are not activities that fall under subitem 11(1) of Schedule 3 of the FTCTPA. However, subitem 11(5) of Schedule 3 of the FTCTPA 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. Where an entitlement arises, the rate of fuel tax credit you can claim is 38.143 cents per litre (full rate). Subsection 53(1) of the EGCSA states that you are entitled to an off-road credit if you purchase or import into Australia off-road diesel fuel for a use by you that qualifies. Subsection 53(3) of the EGCSA provides that use in marine transport, in the course of carrying on an enterprise is a use that qualifies. Section 36 of the EGCSA sets out the meaning of the expression 'use in marine transport' , with subsection 36(3) of the EGCSA stating that: Use: (a) in a vessel, or in equipment in or on a vessel; and (b) while the vessel is in or on the sea or fresh water; and (c) for any of the purposes mentioned in subsection (4); is use in marine transport. Subsection 36(4) of the EGCSA defines the following purposes which comprise marine transport: (a) loading anything onto the vessel, or enabling persons to board the vessel, for the purpose of being transported by the vessel; (b) unloading anything from the vessel, or enabling persons to disembark from the vessel, after being transported by the vessel; (c) providing towing, mooring or piloting services; (d) providing rescue, firefighting or other emergency services; (e) exploring for or mining oil, gas or other minerals; (f) conducting trials of the vessel; (g) conducting aquatic or other scientific research; (h) hiring out or chartering the vessel by a tourism business for use in fishing or other recreational activities. Your vessels carry staff and equipment to position you to respond and assist with emergency and rescue situations. These activities are providing rescue and emergency services and as such are a purpose under paragraph 36(4(d) of the EGCSA. Accordingly, use of diesel fuel in your vessels to undertake these activities is a 'use in marine transport' under subsection 36(3) of the EGCSA. Your vessels also carry various equipment and personnel to enable you to conduct your tasks. The meaning of 'marine transport' was considered by the Federal Court in Port of Brisbane Corporation v Deputy Commissioner of Taxation [2004] FCA 1232 ( Port of Brisbane ) considered the meaning of the expression 'use…in marine transport' in section 164 of the Customs Act 1901 in relation to the diesel fuel rebate scheme (DFRS) which was the precursor to the EGCS. In Port of Brisbane , the AAT reasoned at paragraph 31 that: the phrase use in marine transport should be accorded its ordinary and natural meaning. And further at paragraph 32 that: In the Tribunals opinion, the key to the meaning of marine transport lies in the meaning of the word transport. The Concise Macquarie Dictionary (3 rd edition 1988) lists as the sixth meaning of transport: 6. a means of transporting, as a ship, truck or plane used for transporting soldiers or military stores, or convicts. The first meaning of transport in the Oxford English Dictionary is: 1. the action of carrying or conveying a thing or person from one place to another, conveyance. The use of the word transport in the phrase marine transport suggests a conveyance - something which does the conveying a vehicle or vessel or aircraft which moves through its particular medium (land, water, air) carrying a thing or person. The medium in this case is, of course, water. Thus, marine transport should in this instance be interpreted as meaning the act of conveying a thing The Tribunal then applied this definition of marine transport to conclude at paragraph 35 that: diesel used by the Corporation in powering the self-propelled trailer suction dredges in travelling to and from dredging operations or dump sites or used in towing cutter suction or grab dredges to and from the dredging operations or dump sites should be considered as being used in marine transport because the diesel is being used to power a vessel conveying dredging machinery or the spoil generated by the dredging activities from one place to another. In Re Allseas Marine Contractors SA and Federal Commissioner of Taxation (2005) 58 ATR 1213; [2005] AATA 7, which also dealt with the DFRS provisions, the Tribunal applied Port of Brisbane in finding that various transport activities, including the laying of the pipe onto the sea floor, were 'marine transport'. However, the Tribunal did not accept that the conveyance of crew and equipment on a survey vessel during survey operations fell within the meaning of the expression. The Tribunal stated: Of course, crew and equipment were on board the vessel while the surveying was performed. But the vessel was not then carrying them as part of an activity of marine transport or ancillary to marine transport. The immediate purpose in carrying them was to perform the survey work, which I find is not marine transport. The EGCSA is intended to reflect the same entitlements as the former DFRS (except in specific instances). This view is confirmed in the Explanatory Memorandum to the Energy Grants (Credits) Scheme Bill 2003, paragraphs 2.14-2.16. Therefore cases addressing entitlement under the former DFRS remain relevant under the EGCSA. In your case, as in Port of Brisbane , the vessels in question are conveying equipment and personnel that enable you to conduct your tasks. Your vessels can be distinguished from the vessels in Allseas. The vessel's principal purpose in undertaking the voyage is to convey particular equipment and personnel, and as such this is considered to be a use in marine transport as defined in section 36 of the EGCSA. As such, any diesel fuel used for this purpose would be entitled to an off-road credit under the EGCSA and as such, you satisfy subitem 11(5) of Schedule 3 to the FTCTPA. Accordingly, you are entitled to fuel tax credits at the full rate of 38.143 cents per litre for diesel fuel acquired for use in operating your identified vessels for the period 1 July 2008 to 30 June 2012.