Private ruling: Fuel tax credits - road transport - loading and unloading
Published: January 2014
Ruling period: 2009-10 income year | 2010-11 income year | 2011-12 income year | 2012-13 income year | 2013-14 income year
Date scheme commenced: 1 December 2009

Ruling: Q1: Is the fuel tax credit in relation to a quantity of taxable fuel you acquire and use in your vehicles with a gross vehicle mass (GVM) of more than 4.5 tonnes, and which is not used for travelling on a public road, subject to the road user charge (RUC) for the period 1 December 2009 to 30 June 2014? | A1: No. | Q2: Is the fuel tax credit in relation to a quantity of taxable fuel you acquire and use in your vehicles with a GVM of more than 4.5 tonnes and which is not used for travelling on a public road to transport fertiliser to and from farms and commercial properties subject to the carbon reduction for the period 1 July 2012 to 30 June 2014? | A2: Yes.

Relevant facts and circumstances: You are an Australian company registered for goods and services tax (GST) and fuel tax credits. You lodge your business activity statements (BAS) on a monthly basis. As part of your business, you operate vehicles with a GVM greater than 4.5 tonnes to transport fertiliser and other goods between farms and commercial properties. Your vehicles are designed for on-road use and use public roads to travel to their job locations which are not on public roads. When your vehicles reach their job locations they are required to idle while loading and unloading. That is they are stationary and not being propelled on a public road. You acquire and use the taxable diesel fuel used in your vehicles.

Relevant legislative provisions: Fuel Tax Act 2006 section 41-5 | Fuel Tax Act 2006 section 43-5 | Fuel Tax Act 2006 section 43-8 | Fuel Tax Act 2006 subsection 43-8(4) | Fuel Tax Act 2006 subsection 43-10(3) | Fuel Tax Act 2006 subdivision 43-B | Fuel Tax Act 2006 section 47-15 | Fuel Tax Act 2006 section 47-5 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 Division 2 of Schedule 3 | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(i) | Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(ii) | Energy Grants (Credits) Scheme Act section 8 | Energy Grants (Credits) Scheme Act paragraph 8(a) | Energy Grants (Credits) Scheme Act subparagraph 8(a)(i) | Energy Grants (Credits) Scheme Act subparagraph 8(a)(ii) | Energy Grants (Credits) Scheme Act subparagraph 8(a)(iii) | Energy Grants (Credits) Scheme Act paragraph 8(b) | Energy Grants (Credits) Scheme Act paragraph 8(c)

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 in Australia to the extent that you do so for use in carrying on your enterprise if you are registered for GST. | Detailed Reasoning - Fuel acquired from 1 December 2009 to 30 June 2012: Your fuel tax credit entitlement for fuel acquired during the period 1 July 2008 to 30 June 2012 is affected by Division 2 of Schedule 3 to the Fuel Tax (Consequential and Transitional Provisions) Act 2006 (FTCTPA) which operates to restrict this entitlement to specific activities, whilst retaining entitlements under the Energy Grants (Credits) Scheme Act 2003 (EGCSA). Subparagraph 11(1)(b)(i) of Schedule 3 to the FTCTPA provides that an entitlement to a fuel tax credit arises under section 41-5 of the FTA for taxable fuel acquired between 1 July 2008 and 30 June 2012 'for use in a vehicle travelling on a public road'. Further, subparagraph 11(1)(b)(ii) of Schedule 3 to the FTCTPA provides an entitlement to a fuel tax credit under section 41-5 of the FTA for taxable fuel acquired for 'incidental use' of a vehicle travelling on a public road between 1 July 2008 and 30 June 2012. 'Incidental use' is defined in section 8 of the EGCSA. You operate heavy vehicles to transport fertiliser and other goods between farms and commercial properties. You use public roads and private roads to travel to job locations which are not on public roads (farms and commercial properties). When your vehicles reach their job locations they are required to idle while loading and unloading. You request advice on whether the fuel used in travelling on private roads and properties is subject to the road user charge. Having regard to the provisions outlined above, it is necessary to consider whether the fuel is for 'incidental use' in relation to the vehicles when they are not travelling on a public road and loading and unloading on farms and commercial properties. | Detailed Reasoning - Incidental use: Incidental use is defined in section 8 of the EGCSA as: Each of the following, whether or not it takes place on a road, is an incidental use in relation to a vehicle: (a) powering the vehicle, or auxiliary equipment, while goods to be transported are loaded or while: (i) goods to be transported in or on the vehicle are loaded or goods that have been so transported are unloaded; or… (ii) … (iii) the vehicle is moved to a place where anything in subparagraph (i) or (ii) is to happen or from a place where any such thing has happened; (b) powering the vehicle, or auxiliary equipment, in order to maintain the quality of goods transported or to be transported in or on the vehicle; (c) … Subparagraph 8(a)(iii) provides that where the vehicle is moved to a place where loading or unloading is to happen or vice versa it is 'incidental use'. Your vehicles travel off the public road network onto private roads and farms and commercial properties. As such, the fuel used to travel on the private roads and the private properties to undertake loading and unloading activities is considered incidental use and entitlement to fuel tax credits falls within section 41-5 of the FTA. | Detailed Reasoning - Road user charge (RUC): In accordance with section 43-5 of the FTA, the amount of the fuel tax credit for taxable fuel is the amount of effective fuel tax that is payable on the fuel. However, your fuel tax credit entitlement can also be affected by: · the amount of any applicable grant or subsidy; or · the amount of the RUC in relation to use of taxable fuel in heavy vehicles for travelling on public roads; or Subsection 43-10(3) of the FTA provides that to the extent that you acquire taxable fuel to use, in a vehicle, for travelling on a public road, the amount of your fuel tax credit for the fuel is reduced by the amount of the road user charge for the fuel. You use fuel to operate your vehicles on private roads and commercial properties and farms. Subsection 43-10(3) only applies to fuel used in propelling the vehicle on public roads. As such, the fuel that is not directly used for that purpose for the period 1 December 2009 to 30 June 2012 incidental use - private roads and commercial properties and farms to load and unload) is not subject to the road user charge. For the period 1 July 2012 to 30 June 2014 your entitlement to fuel tax credits is considered within section 41-5 of the FTA. The incidental use provision mentioned previously applies to fuel acquired up until 30 June 2012. As shown above, in accordance with section 43-5, the amount of fuel tax credit is affected by any grant or subsidy or the RUC. From 1 July 2012 to 30 June 2014, subsection 43-10(3) still only applies to fuel used for propelling the vehicle on public roads. As such, fuel that is not directly used for that purpose (including private roads, commercial properties and farms to load and unload fertiliser and other goods) is not subject to the RUC. All taxable fuel for the period 1 December 2009 to 30 June 2014 that is not used for propelling the vehicle on public roads (that is, the private roads, commercial properties and farms) is not subject to the RUC. | Detailed Reasoning - Carbon reduction: From 1 July 2012 a carbon charge applies to certain taxable fuels. The carbon charge is an amount equal to the price of carbon emissions from the use of liquid or gaseous fuels. Section 43-8 of the FTA sets out the rules for working out the amount of the carbon reduction to fuel tax credit calculations from 1 July 2012. Section 43-8 of the FTA provides that the amount of carbon reduction that applies to a particular quantity of taxable fuel is worked out by using the following formula: Quantity of fuel x carbon price x carbon emission rate Therefore the carbon reduction for diesel fuel for the periods: 1. 1 July 2012 to 30 June 2013 is 6.21 cents per litre 2. 1 July 2013 to 30 June 2014 is 6.521 cents per litre. Currently subsection 43-8(4) of the FTA provides for those circumstances where no carbon reduction applies. Relevantly, the amount of carbon reduction that applies to fuel will be nil where: · the fuel is covered by the Opt-in scheme; or · you acquire fuel for use in agricultural, fishing or forestry activities; or · you acquire fuel for use in a vehicle with a GVM of more than 4.5 tonnes travelling on a public road; or · you acquire fuel for use otherwise than by combustion of the fuel The agricultural, fishing or forestry activities are further defined in subdivision 43-B of the FTA. | Detailed Reasoning - Fuel used in a vehicle travelling on private roads and off-road from 1 July 2012: As previously explained, from 1 July 2012 fuel tax credits are affected by the carbon reduction unless the fuel use in question meets any of the exclusions in subsection 43-8(4) of the FTA. On occasion, your vehicles travel on private roads and off-road transporting fertiliser and other goods between farms and commercial properties. Agriculture is defined in section 43-15 of the FTA to include the cultivation or gathering in of crops. However, agriculture does not include the delivery to, and unloading of, fertiliser (or other goods) on a farm by a farmer or contractor as these activities take place prior to cultivation of the soil. Furthermore, transporting fertiliser after the crops have been gathered in is also not 'agriculture' within section 43-15. As the fuel you use in your transport activities is therefore not considered to be a use in agriculture (nor any of the other activities covered within subsection 43-8(4) of the FTA), any quantities of fuel you use for this purpose would not be excluded from the application of the carbon reduction. Accordingly, in respect to quantities of diesel fuel you acquire and not used in travelling on public roads and for transporting fertiliser and other goods between farms and commercial properties, you are entitled to a fuel tax credit at the rate of 38.143 cents per litre less the applicable carbon reduction amount, during the period 1 July 2012 to 30 June 2014. | Detailed Reasoning - Four year rule: Please note that section 47-5 of the FTA provides that your fuel tax credit entitlements cease four years from the due date of the relevant business activity statement or fuel tax return. The four year time limit is designed to provide certainty and finality in the tax affairs of taxpayers and the administration of the tax system.