Private ruling: Amendments to Fuel Tax Credits
Published: June 2013
Ruling period: I July 2013 to 30 June 2014
Date scheme commenced: 12 June 2013

Ruling: Q1: Are you required to amend your previous years' income tax returns under section 170 of the Income Tax Assessment Act 1936 (ITAA 1936) to include fuel tax credits for each income year the credit relates to? | A1: Yes

Relevant facts and circumstances: You are in the business of transport. You use fuel in carrying on a business. The price of fuel includes an amount of fuel tax. You are registered for GST. You are entitled to claim a fuel tax credit under the Fuel Tax Act 2006 (FTA) for all or part of the fuel tax embedded in the price of the fuel. You claim the fuel tax credit when you lodge your business activity statement (BAS) for the relevant period. You have declared government payments to industry income in your previous years' income tax returns. You are looking to include prior year fuel tax credits as a result of the Administrative Appeals Tribunal decision in Linfox Australia Pty Ltd and Commissioner of Taxation [2012] AATA 517 (Linfox Case). You wish to either amend your previous years' income tax returns to include prior year fuel tax credits or declare in your tax return in the year you receive the credits.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 6-5(1), | Income Tax Assessment Act 1936 section 170, | Fuel Tax Act 2006 section 41-5 | Fuel Tax Act 2006 subsection 43-10(3).

Reasons for decision: Summary: As a result of the AAT decision in the Linfox case, you would like to amend your previous years' income tax returns. The issue decided by the AAT was whether fuel acquired by the applicant for use in a refrigeration unit in a refrigerated trailer travelling on a public road was "fuel to use, in a vehicle, for travelling on a public road" for the purposes of subsection 43-10(3) of the FTA. If it was (as the Commissioner contended), the amount of the fuel tax credit to which the applicant was entitled for the fuel would be reduced by the amount of the road user charge. The AAT found that the fuel in question was not acquired for this purpose, but was instead acquired and used for the "entirely different" purpose of refrigerating cargo inside the refrigerated trailer. It followed that the fuel did not satisfy the second condition of subsection 43-10(3) of the FTA and was not, therefore, subject to the road user charge. The Commissioner considers that the AAT reasoning leads to the conclusion that the phrase "fuel to use, in a vehicle, for travelling on a public road" in subsection 43-10(3) covers fuel that is used in a vehicle: · for the purpose of propelling that vehicle on a public road; and · all aspects of the vehicle function and operation that are for the purpose of travelling on a public road. Fuel for travelling would include fuel used for stopping and idling while stationary in the course of a journey as well as the use of lights, brakes, power-steering and windscreen wipers. Accordingly, the road user charge will only apply to such fuel. Fuel used to power auxiliary equipment of a heavy vehicle covers fuel use that is unrelated to a vehicle's movement along a public road, such as fuel used to power the refrigeration unit of a vehicle that transports temperature sensitive goods. The fuel used to power the auxiliary equipment may be sourced from a separate fuel tank or from the tank that fuels the main engine. The auxiliary equipment may also take its power from the main engine (known as 'power take-off'), which in turn increases the fuel used. As a result, you can claim fuel tax credits for liquid or gaseous fuel you use to power auxiliary equipment of a heavy vehicle travelling on a public road. Fuel tax credits for this fuel use are not reduced by the road user charge. If you amend your BAS as a result of the Linfox case, you may increase your entitlements to the fuel tax credits. If there has been a miscalculation of your taxable income as a result of the decision is the Linfox case, section 170 of the ITAA 1936 allows the Commissioner to amend your previous years income tax returns provided the request is made within the required time frames. As stated in ATO ID 2007/71, fuel tax credits received by an entity under section 41-5 of the Fuel Tax Act 2006 are inextricably linked to the business activities of that entity. As such, the fuel tax credit received by the entity forms part of the proceeds of the business carried on by the entity, and is assessable as ordinary income under subsection 6-5(1) of the ITAA 1997. Paragraph 12 of Taxation Ruling TR 2006/3 provides that a Government payment to industry to assist with business operating costs or liabilities is ordinary income in the hands of the recipient and is assessable under section 6-5 in the income year in which it is derived. In your case, you have declared fuel tax credits in your previous years' income tax returns that you have derived in the relevant income years. As a result of the Linfox case, you have miscalculated the amount of fuel tax credits in your previous years' income tax return. You will have to recalculate your entitlement to the fuel tax credit for each income year. After you recalculations, the result will increase the amount of fuel tax credits you are entitled to for the relevant income year. Once you have calculated the fuel tax credits for each period, you would need to amend your previous years' income tax returns to which the fuel tax credits relate to.