Private ruling: Fuel tax credits - rates
Published: July 2014
Ruling period: 1 July 20XX to 30 June 20YY
Date scheme commenced: The scheme has commenced

Ruling: Q1: Is the fuel tax credit for the taxable fuel you acquire and use to propel your commercial charter yacht and tender subject to the carbon reduction? | A1: Yes. | Q2: Is the fuel tax credit for the taxable fuel you acquire and use to propel a commercial charter yacht and tender subject to the road user charge? | A2: No. | Q3: Is the business use of fuel in a vehicle with a gross vehicle mass of less than 4.5 tonnes travelling on a public road eligible for fuel tax credits? | A3: No. | Q4: Are you entitled to fuel tax credits for liquefied petroleum gas (LPG) you acquire and use for non-transport use in your business? | A4: No.

Relevant facts and circumstances: You are a sole trader registered for goods and services tax (GST) and for fuel tax credits. Since dd/mm/yyyy you have operated a commercial charter yacht on Australian waters. You acquire and use taxable diesel fuel to use in the propulsion of your yacht. You also operate a tender to transport your passengers, goods and equipment to and from your yacht. You acquire taxable unleaded petrol to use in the propulsion of your tender. You also operate a car which has a gross vehicle mass (GVM) of less than 4.5 tonnes to transport, food, beverages and other equipment associated with the operation of your yacht. You acquire and use taxable unleaded petrol to use in your car. You also acquire and use non-transport liquefied petroleum gas (LPG) in containers of approximately 9.5 kilograms for cooking on board your yacht.

Relevant legislative provisions: Fuel Tax Act 2006 section 2-1 | Fuel Tax Act 2006 section 41-5 | 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 section 110-5 | Excise Act 1901 section 78 | Excise Regulations 1925 regulation 50A Schedule 1 of the Excise Regulations 1925 item 9

Reasons for decision: Summary: Section 2-1 of the Fuel Tax Act 2006 (FTA) explains that fuel tax credits are paid to reduce or remove the incidence of the fuel tax levied on taxable fuels with a view to fuel tax only being applied to: 1. fuel used in private vehicles and for certain private purposes; and 2. fuel used on-road in light vehicles for business purposes. Section 41-5 of 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. Section 41-20 of the FTA denies a fuel tax credit for fuel that you acquired for use in a vehicle with a GMV of 4.5 tonnes or less travelling on a public road. Taxable fuel is defined in section 110-5 of the FTA as: (a) fuel in respect of which duty is payable under: (i) the Excise Act 1901 and the Excise Tariff Act 1921 ; or (ii) the Customs Act 1901 and the Customs Tariff Act 1995 ; or (b) compressed natural gas, liquefied petroleum gas, or liquefied natural gas, that is subject to the carbon pricing mechanism(within the meaning of subsection 42A-5(3) or (4)); but does not include fuel covered by: (c) item 15, 20 or 21 of the Schedule to the Excise Tariff Act 1921 ; or (d) any imported goods that would be classified to item 15 of the Schedule to the Excise Tariff Act 1921 , if the goods had been manufactured in Australia. The amount of the fuel tax credit to which you are entitled for taxable fuel may be affected by: 1. an amount of carbon reduction (if applicable) 2. the amount of any applicable grant or subsidy; or 3. the amount of the road user charge (RUC) in relation to taxable fuel to use, in heavy vehicle, for travelling on public roads. | Detailed Reasoning - Carbon reduction: 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. It 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 The carbon reduction for diesel fuel for the period 1 July 2013 to 30 June 2014 is 6.521 cents per litre. The carbon reduction for unleaded petrol for this period is 5.796 cents per litre. However, subsection 43-8(4) of the FTA provides for those circumstances where no carbon reduction applies. That is, the amount of carbon reduction that applies to the fuel will be nil where the fuel is acquired for use in: 1. vehicles with a GVM of more than 4.5 tonnes travelling on a public road; or 2. specified agriculture, fishing or forestry activities; or 3. activities that do not involve combustion of the fuel - for example, fuel used to clean machinery or as a mould release agent; or 4. liquid fuels used by businesses that have been declared by the Clean Energy Regulator as a designated opt-in person under the opt-in scheme; or As your usage of fuel to propel your yacht and tender does not met any of the exemptions in subsection 43-8(4) of the FTA, the fuel tax credit calculated for this quantity of fuel must be reduced by the applicable carbon reduction amount. Accordingly, you are entitled to a fuel tax credit at the rate of 38.143 cents per litre less the applicable carbon reduction amount for the quantity of taxable fuel you acquire and use in your commercial charter yacht and tender during the year ended 30 June 20YY. | Detailed Reasoning - Road user charge (RUC): 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 RUC for the fuel. As the fuel you acquire and use in your yacht and tender is not used for travel on a public road, any fuel tax credit calculated for that use will be unaffected by the RUC. Consequently, in relation to the taxable diesel fuel you acquire for use in propelling your commercial charter yacht, the applicable fuel tax credit rate is 31.622 cents per litre and the fuel tax credit for taxable ULP you acquire for use in propelling your tender is 32.347 cents per litre for the year ended 30 June 20YY. | Detailed Reasoning - LPG: You use non-transport liquefied petroleum gas (LPG) on board your yacht for cooking From 1 July 2013 onwards the carbon liability for LPG and liquefied natural gas (LNG) for non-transport use is imposed under the carbon pricing mechanism (CPM) rather than via the excise system. As a result, a full automatic remission of excise duty applies to the non-transport LPG and LNG delivered for home consumption from 1 July 2013. The full remission of excise duty for non-transport use is provided through the operation of section 78 of the Excise Act 1901 , Regulation 50A of the Excise Regulations 1925 and item 9 of Schedule 1 of the Excise Regulations 1925 . As the effective fuel tax for non-transport LPG is therefore zero, there is no entitlement to fuel tax credit for its use in your commercial yacht charter business