Class Ruling CR 2019/54

What this ruling is about: 1. This Ruling sets out when the EROAD Fuel Tax Credits product report (the Report) generated from EROAD (Australia) Pty Ltd's EROAD Fuel Tax Credits product (the Product) can be used as a record (but not the only record) for record-keeping purposes as part of the process for calculating fuel usage. 2. Full details of the EROAD Fuel Tax Credits product are set out in paragraphs 10 to 43 of this Ruling. 3. The Commissioner makes this Ruling based on the precise scheme identified in the Ruling and does not rule on whether particular roads are public roads for the purposes of the Fuel Tax Act 2006 (FTA). [1] Nor does this Ruling extend to determining entitlement to claim and calculation of fuel tax credits. It does not extend to determining whether or not the road user charge is correctly applied in the apportionment methodology. For example, this Ruling does not rule on whether the methodology or processes used to determine location, the nature of the activity taking place at that location or other inputs such as fuel consumption rates are correct. Note: By issuing this Ruling, the ATO is not endorsing the EROAD Fuel Tax Credits product. Potential purchasers/users must form their own view about this product. Who this Ruling applies to 4. This Ruling applies to you if you are a client of EROAD (Australia) Pty Ltd registered for goods and services tax purposes and use measurements from the EROAD Fuel Tax Credits product (including the EROAD telematics system and associated reports) for apportioning fuel usage between activities for fuel tax credit purposes. When this Ruling applies 5. This Ruling applies from 21 January 2019 to 30 June 2020. 6. EROAD (Australia) Pty Ltd's EROAD Fuel Tax Credits product (the Product) is a Global Positioning System (GPS) technology based reporting tool which generates a report named the EROAD Fuel Tax Credits product report (the Report). The Report provides information on the litres used based on categorisation of the travel, the idle litres and auxiliary equipment litres used for a tax period. 7. The Report is in English. 8. The Report is a document that is a record for the purposes of subsection 382-5(8) of Schedule 1 to the Taxation Administration Act 1953 (TAA). 9. Provided the Report is retained for 5 years, or in accordance within the specific requirements of section 382-5 of Schedule 1 of the TAA, it can be used as a record (but not the only record) for record-keeping purposes as part of the process for calculating fuel usage to the extent that it shows details of the: 10. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. Note: Certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. 11. EROAD (Australia) Pty Ltd has developed the Product. This system has a means of electronically recording and reporting information relevant to fuel tax credits. 12. The Product system consists of: 13. The central piece of equipment is the IVEDR. The IVEDR gathers a range of data relating to the location and operation of the vehicle it is installed in. This is a hard-wired installation that draws information on the vehicle system's activities from the electrical system. 14. At the start of a journey when ignition is switched on, the following information is collected: 15. At the end of each vehicle journey the following information is collected: 16. Vehicle travel related information on each journey is sent as encrypted data via the mobile network from the IVEDR and stored in an Amazon Web Services data centre (a third-party central data store and application server) where it is accessed via the Depot portal. All Depot portal users are given an individual user name and a password for access to the web portal. 17. If the mobile network is not available, all data is stored on the IVEDR until such time as the network becomes available again. Each IVEDR has an inbuilt battery unit that will continue to record and provide a signal in the event of vehicle battery failure. 18. All information sent via the mobile network is encrypted to ensure secure transmission, and backed up to ensure safety of the information in the event of a disaster. 19. The EROAD back office system called 'Depot' is used to create vehicle and auxiliary equipment master data. Vehicles are classified as heavy or light based on their gross vehicle mass (GVM) entered into Depot. The following vehicle and auxiliary equipment data must be entered by the clients using Depot: 20. EROAD's Depot is used for entering fuel acquisitions data: 21. The fuel purchases must record, within Depot, the following details: Fuel dispense data is sourced from the client's fuel acquisition or purchase records. 22. The Product requires clients to create their vehicles and auxiliary equipment master data (vehicle make, model, year and fuel type combination) along with the vehicle idle consumption rates and auxiliary consumption rates. 23. Clients can enter idling consumption rates using the following methods: 24. Clients can enter auxiliary equipment consumption rates using one of the following methods: 25. Clients can set geo-fenced areas on a temporary basis to exclude areas from automatically being determined as public roads. When this overlaps with the public roads network, there will be warnings within the system and an explanation is required and will be included in the off-road trip detail report. A review date is input for assurance purposes. Examples include a temporary construction zone, a depot or factory sitting flush with the road and within the automated geotunnel for the road identified by the mapping data tool. 26. The client can extract the off-road trip extract (in csv format) listing all off-road trips per vehicle for the selected period. The client can review this report and where the client finds an invalid geo-fence or off-road journeys they can re-apportion the distance travelled off-road to on-road and disregard idling duration in the invalid geo-fence. 27. The Product provides a summary and detailed fuel apportionment reports for clients to review and use that data to submit a fuel tax credit claim for a specified period. Clients can search for a particular vehicle activity or can filter by business department activity. 28. The Report (organisation level data) shows the following information: 29. The Report (vehicle level data) shows the following information for a selected period: Fuel apportionment calculation methods - idling 30. Idling time is based on a stationary heavy vehicle and engine turned on because the device connects to 'true ignition', which records the actual time the engine is operating. Only idle time used off public roads is apportioned within the system. 31. In heavy vehicles the system can attach to true idle and record when the engine is operating, this is not the case for all light vehicles, which fall into these categories: Only push-button ignition light vehicles where these vehicles operate in On or Off mode will have off-road idling time recorded for the purposes of fuel tax credits for this system. Fuel apportionment calculation methods for vehicles without auxiliary equipment 32. For vehicles without auxiliary equipment, the Product apportions the fuel used by each vehicle by each activity as: 33. Fuel dispensed for a vehicle is first reduced by the fuel calculated for off-road idling. The remaining fuel is allocated between the percentage of on-road travel and percentage of off-road travel on a distance basis. Fuel apportionment calculation methods for vehicles with auxiliary equipment 34. Where the client does not enter an hourly consumption rate for the auxiliary equipment, the calculation method will be the same as for vehicles without auxiliary equipment set out in paragraphs 32 and 33 of this Ruling. 35. Where the client enters the hourly consumption rate for the auxiliary equipment, the apportionment of fuel for that vehicle will be calculated as: 36. If the vehicle idles while operating auxiliary equipment it will be necessary to ensure that there is no double counting of fuel. For instance, you cannot use an hourly consumption rate for idling as well as an hourly consumption rate for auxiliary equipment that includes fuel used when idling. 37. Fuel dispensed for a vehicle is first reduced by the fuel calculated for off-road idling and for auxiliary equipment. The remaining fuel is allocated between the percentage of on-road travel and percentage of off-road travel on a distance basis. Fuel apportionment - reconciliation 38. The Product reconciles the total fuel allocated to each activity with total fuel dispensed within the period to make sure it matches the fuel usage with on-road, off-road, idle off-road and auxiliary equipment usage (where entered) over the same period. 39. The Report contains other information on vehicle type, fuel type and auxiliary equipment type. The type of auxiliary equipment of a vehicle is not included in the Report if the client has not named and identified it. 40. Should any record details be incomplete the administrator will be alerted of these omissions through a scheduled exception report and will be able to take the appropriate action to correct. 41. The Fuel Exception Report for a period shows details of the transaction date, odometer reading, distance (kilometres), the fuel quantity (litres), cost (dollars), site location, the exception details and the driver (where applicable). The Report 42. The EROAD system uses the off-road travel percentage (distance), on-road travel percentage (distance), off-road idle hours (time) and auxiliary equipment hours (time) that has been calculated within the system. The Report can only be processed once fuel acquisition data has been entered into the system. The EROAD Depot system produces the Report in English. 43. The Report provides the following information for the selected period: Commissioner of Taxation 11 September 2019 Is apportionment a requirement to work out the entitlement to a fuel tax credit? 44. Subsection 41-5(1) provides that an entity is entitled to a fuel tax credit for taxable fuel [2] they acquire or manufacture in, or import into, Australia to the extent that they do so for use in carrying on their enterprise. 45. However, under subsection 41-5(2), the entity is only entitled to the fuel tax credit if they are registered for goods and services tax purposes at the time they acquire, manufacture or import the fuel. 46. Section 43-5 provides that the amount of an entity's fuel tax credit is the amount of effective fuel tax that is paid on the fuel. Subsection 43-10(3) provides that to the extent an entity acquires taxable fuel to use, in a vehicle, for travelling on a public road, the amount of its fuel tax credit for the fuel is reduced by the road user charge for the fuel. 47. Subdivision 41-B contains the disentitlement rules for fuel tax credits and includes at section 41-20 the following disentitlement: 48. The use of the phrase 'to the extent' in section 41-5, section 41-20 and subsection 43-10(3) contemplates apportionment between fuel acquired for an eligible use and fuel acquired for an ineligible use, or uses which may give rise to different rates of fuel tax credit entitlement. The implications of this phrase for the purposes of entitlement has been considered in paragraph 5 of Fuel Tax Determination FTD 2010/1 Fuel tax: is apportionment used when determining total fuel tax credits in calculating the net fuel amount under section 60-5 of the Fuel Tax Act 2006? 49. At paragraph 5 of FTD 2010/1 the Commissioner relevantly states: 50. To determine the extent of the fuel tax credit, an entity that acquires taxable fuel will need to apportion the fuel between: What are the principles for apportioning fuel used in a vehicle? 51. The FTA does not prescribe how to apportion fuel between different uses. The Commissioner has explained in FTD 2010/1 that methods that are fair and reasonable are acceptable. 52. Specifically paragraph 33 of FTD 2010/1 says: 53. Apportionment of fuel for the purpose of working out an entitlement, and calculating the amount of the entitlement, are distinct phases. Specifically, an entity can either: 54. The amount of the entitlement calculated should be the same whether a single step process or a discrete step calculation is performed. 55. To apportion the taxable fuel an entity has acquired to the different activities for which the fuel was used, a measure can be used as part of an apportionment methodology. The Commissioner accepts that an entity can use any appropriate reliable measure as the basis for calculating the amount of taxable fuel that it acquires for use in an eligible activity. 56. Examples of known reliable measures include: 57. Although these are commonly used measures, because of the diverse range of eligible activities, this is not an exhaustive list and there may be other measures that are appropriate to an entity's circumstances. Does the Product provide a step in the apportionment of fuel? 58. The Product apportions the fuel used by each vehicle by first calculating fuel for use in off-road idling and (where applicable) auxiliary equipment by multiplying hours of operation by the hourly consumption rate. It deducts this fuel from the total fuel dispensed for each vehicle. Then it apportions remaining fuel dispensed for each vehicle using a percentage of the travel (public road or off-road) against total travel undertaken by the vehicle. 59. The Product then reconciles the total fuel allocated to each activity with total fuel dispensed within the period to make sure it matches the fuel usage with on-road, off-road, idle off-road and auxiliary equipment usage over the same period. The report also contains information on vehicle type, fuel type and auxiliary equipment type. 60. The Product provides a step in the apportionment of fuel based on categorisation of use. Is the Report a record? 61. Subsection 382-5(1) of Schedule 1 to the TAA provides that you must keep records that record and explain all transactions and other acts you engage in that are relevant to an entitlement to a fuel tax credit. 62. You must retain these records for at least five years after the completion of the transactions or acts to which they relate. 63. Subsection 382-5(8) of Schedule 1 to the TAA provides that the records must be in English, or easily translated into English, and enable an entitlement under an indirect tax law, that is, a fuel tax law to be ascertained. 64. Clients using the Product can undertake a vehicle analysis of the fuel used when those vehicles are travelling on public roads, off public roads, idling and in auxiliary equipment for a tax period. 65. The portal allows the client using the Product in their enterprise to generate the Report after fuel acquisition information has been entered. The following information is available to the client on the Report for the selected period: 66. The Report is produced in English and allows users to export information showing litres allocated according to travel into a pdf document or csv format (Microsoft Excel file) for a specific period. 67. The Report is a record that can be used in determining apportionment, noting that this Ruling does not extend to the underlying assumptions, client entered data and the accuracy of determining public roads for fuel tax credit purposes. As such, the report is a document that is a record for the purposes of subsection 382-5(8) of Schedule 1 to the TAA. However, it will not be the only record that is used in determining apportionment for fuel tax credit purposes. Other reports although not limited to, may include data input information reports and, reports showing accuracy of fuel consumption rates used for vehicles etc. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft

Class of entities or scheme: 10. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. Note: Certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. 11. EROAD (Australia) Pty Ltd has developed the Product. This system has a means of electronically recording and reporting information relevant to fuel tax credits. 12. The Product system consists of: 13. The central piece of equipment is the IVEDR. The IVEDR gathers a range of data relating to the location and operation of the vehicle it is installed in. This is a hard-wired installation that draws information on the vehicle system's activities from the electrical system. 14. At the start of a journey when ignition is switched on, the following information is collected: 15. At the end of each vehicle journey the following information is collected: 16. Vehicle travel related information on each journey is sent as encrypted data via the mobile network from the IVEDR and stored in an Amazon Web Services data centre (a third-party central data store and application server) where it is accessed via the Depot portal. All Depot portal users are given an individual user name and a password for access to the web portal. 17. If the mobile network is not available, all data is stored on the IVEDR until such time as the network becomes available again. Each IVEDR has an inbuilt battery unit that will continue to record and provide a signal in the event of vehicle battery failure. 18. All information sent via the mobile network is encrypted to ensure secure transmission, and backed up to ensure safety of the information in the event of a disaster. 19. The EROAD back office system called 'Depot' is used to create vehicle and auxiliary equipment master data. Vehicles are classified as heavy or light based on their gross vehicle mass (GVM) entered into Depot. The following vehicle and auxiliary equipment data must be entered by the clients using Depot: 20. EROAD's Depot is used for entering fuel acquisitions data: 21. The fuel purchases must record, within Depot, the following details: Fuel dispense data is sourced from the client's fuel acquisition or purchase records. 22. The Product requires clients to create their vehicles and auxiliary equipment master data (vehicle make, model, year and fuel type combination) along with the vehicle idle consumption rates and auxiliary consumption rates. 23. Clients can enter idling consumption rates using the following methods: 24. Clients can enter auxiliary equipment consumption rates using one of the following methods: 25. Clients can set geo-fenced areas on a temporary basis to exclude areas from automatically being determined as public roads. When this overlaps with the public roads network, there will be warnings within the system and an explanation is required and will be included in the off-road trip detail report. A review date is input for assurance purposes. Examples include a temporary construction zone, a depot or factory sitting flush with the road and within the automated geotunnel for the road identified by the mapping data tool. 26. The client can extract the off-road trip extract (in csv format) listing all off-road trips per vehicle for the selected period. The client can review this report and where the client finds an invalid geo-fence or off-road journeys they can re-apportion the distance travelled off-road to on-road and disregard idling duration in the invalid geo-fence. 27. The Product provides a summary and detailed fuel apportionment reports for clients to review and use that data to submit a fuel tax credit claim for a specified period. Clients can search for a particular vehicle activity or can filter by business department activity. 28. The Report (organisation level data) shows the following information: 29. The Report (vehicle level data) shows the following information for a selected period: | Fuel apportionment calculation methods - idling: 30. Idling time is based on a stationary heavy vehicle and engine turned on because the device connects to 'true ignition', which records the actual time the engine is operating. Only idle time used off public roads is apportioned within the system. 31. In heavy vehicles the system can attach to true idle and record when the engine is operating, this is not the case for all light vehicles, which fall into these categories: Only push-button ignition light vehicles where these vehicles operate in On or Off mode will have off-road idling time recorded for the purposes of fuel tax credits for this system. | Fuel apportionment calculation methods for vehicles without auxiliary equipment: 32. For vehicles without auxiliary equipment, the Product apportions the fuel used by each vehicle by each activity as: 33. Fuel dispensed for a vehicle is first reduced by the fuel calculated for off-road idling. The remaining fuel is allocated between the percentage of on-road travel and percentage of off-road travel on a distance basis. | Fuel apportionment calculation methods for vehicles with auxiliary equipment: 34. Where the client does not enter an hourly consumption rate for the auxiliary equipment, the calculation method will be the same as for vehicles without auxiliary equipment set out in paragraphs 32 and 33 of this Ruling. 35. Where the client enters the hourly consumption rate for the auxiliary equipment, the apportionment of fuel for that vehicle will be calculated as: 36. If the vehicle idles while operating auxiliary equipment it will be necessary to ensure that there is no double counting of fuel. For instance, you cannot use an hourly consumption rate for idling as well as an hourly consumption rate for auxiliary equipment that includes fuel used when idling. 37. Fuel dispensed for a vehicle is first reduced by the fuel calculated for off-road idling and for auxiliary equipment. The remaining fuel is allocated between the percentage of on-road travel and percentage of off-road travel on a distance basis. | Fuel apportionment - reconciliation: 38. The Product reconciles the total fuel allocated to each activity with total fuel dispensed within the period to make sure it matches the fuel usage with on-road, off-road, idle off-road and auxiliary equipment usage (where entered) over the same period. 39. The Report contains other information on vehicle type, fuel type and auxiliary equipment type. The type of auxiliary equipment of a vehicle is not included in the Report if the client has not named and identified it. 40. Should any record details be incomplete the administrator will be alerted of these omissions through a scheduled exception report and will be able to take the appropriate action to correct. 41. The Fuel Exception Report for a period shows details of the transaction date, odometer reading, distance (kilometres), the fuel quantity (litres), cost (dollars), site location, the exception details and the driver (where applicable). | The Report: 42. The EROAD system uses the off-road travel percentage (distance), on-road travel percentage (distance), off-road idle hours (time) and auxiliary equipment hours (time) that has been calculated within the system. The Report can only be processed once fuel acquisition data has been entered into the system. The EROAD Depot system produces the Report in English. 43. The Report provides the following information for the selected period: Commissioner of Taxation 11 September 2019

Ruling: 1. This Ruling sets out when the EROAD Fuel Tax Credits product report (the Report) generated from EROAD (Australia) Pty Ltd's EROAD Fuel Tax Credits product (the Product) can be used as a record (but not the only record) for record-keeping purposes as part of the process for calculating fuel usage. 2. Full details of the EROAD Fuel Tax Credits product are set out in paragraphs 10 to 43 of this Ruling. 3. The Commissioner makes this Ruling based on the precise scheme identified in the Ruling and does not rule on whether particular roads are public roads for the purposes of the Fuel Tax Act 2006 (FTA). [1] Nor does this Ruling extend to determining entitlement to claim and calculation of fuel tax credits. It does not extend to determining whether or not the road user charge is correctly applied in the apportionment methodology. For example, this Ruling does not rule on whether the methodology or processes used to determine location, the nature of the activity taking place at that location or other inputs such as fuel consumption rates are correct. Note: By issuing this Ruling, the ATO is not endorsing the EROAD Fuel Tax Credits product. Potential purchasers/users must form their own view about this product. | Who this Ruling applies to: 4. This Ruling applies to you if you are a client of EROAD (Australia) Pty Ltd registered for goods and services tax purposes and use measurements from the EROAD Fuel Tax Credits product (including the EROAD telematics system and associated reports) for apportioning fuel usage between activities for fuel tax credit purposes. | When this Ruling applies: 5. This Ruling applies from 21 January 2019 to 30 June 2020. 6. EROAD (Australia) Pty Ltd's EROAD Fuel Tax Credits product (the Product) is a Global Positioning System (GPS) technology based reporting tool which generates a report named the EROAD Fuel Tax Credits product report (the Report). The Report provides information on the litres used based on categorisation of the travel, the idle litres and auxiliary equipment litres used for a tax period. 7. The Report is in English. 8. The Report is a document that is a record for the purposes of subsection 382-5(8) of Schedule 1 to the Taxation Administration Act 1953 (TAA). 9. Provided the Report is retained for 5 years, or in accordance within the specific requirements of section 382-5 of Schedule 1 of the TAA, it can be used as a record (but not the only record) for record-keeping purposes as part of the process for calculating fuel usage to the extent that it shows details of the: 10. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. Note: Certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. 11. EROAD (Australia) Pty Ltd has developed the Product. This system has a means of electronically recording and reporting information relevant to fuel tax credits. 12. The Product system consists of: 13. The central piece of equipment is the IVEDR. The IVEDR gathers a range of data relating to the location and operation of the vehicle it is installed in. This is a hard-wired installation that draws information on the vehicle system's activities from the electrical system. 14. At the start of a journey when ignition is switched on, the following information is collected: 15. At the end of each vehicle journey the following information is collected: 16. Vehicle travel related information on each journey is sent as encrypted data via the mobile network from the IVEDR and stored in an Amazon Web Services data centre (a third-party central data store and application server) where it is accessed via the Depot portal. All Depot portal users are given an individual user name and a password for access to the web portal. 17. If the mobile network is not available, all data is stored on the IVEDR until such time as the network becomes available again. Each IVEDR has an inbuilt battery unit that will continue to record and provide a signal in the event of vehicle battery failure. 18. All information sent via the mobile network is encrypted to ensure secure transmission, and backed up to ensure safety of the information in the event of a disaster. 19. The EROAD back office system called 'Depot' is used to create vehicle and auxiliary equipment master data. Vehicles are classified as heavy or light based on their gross vehicle mass (GVM) entered into Depot. The following vehicle and auxiliary equipment data must be entered by the clients using Depot: 20. EROAD's Depot is used for entering fuel acquisitions data: 21. The fuel purchases must record, within Depot, the following details: Fuel dispense data is sourced from the client's fuel acquisition or purchase records. 22. The Product requires clients to create their vehicles and auxiliary equipment master data (vehicle make, model, year and fuel type combination) along with the vehicle idle consumption rates and auxiliary consumption rates. 23. Clients can enter idling consumption rates using the following methods: 24. Clients can enter auxiliary equipment consumption rates using one of the following methods: 25. Clients can set geo-fenced areas on a temporary basis to exclude areas from automatically being determined as public roads. When this overlaps with the public roads network, there will be warnings within the system and an explanation is required and will be included in the off-road trip detail report. A review date is input for assurance purposes. Examples include a temporary construction zone, a depot or factory sitting flush with the road and within the automated geotunnel for the road identified by the mapping data tool. 26. The client can extract the off-road trip extract (in csv format) listing all off-road trips per vehicle for the selected period. The client can review this report and where the client finds an invalid geo-fence or off-road journeys they can re-apportion the distance travelled off-road to on-road and disregard idling duration in the invalid geo-fence. 27. The Product provides a summary and detailed fuel apportionment reports for clients to review and use that data to submit a fuel tax credit claim for a specified period. Clients can search for a particular vehicle activity or can filter by business department activity. 28. The Report (organisation level data) shows the following information: 29. The Report (vehicle level data) shows the following information for a selected period: | Fuel apportionment calculation methods - idling: 30. Idling time is based on a stationary heavy vehicle and engine turned on because the device connects to 'true ignition', which records the actual time the engine is operating. Only idle time used off public roads is apportioned within the system. 31. In heavy vehicles the system can attach to true idle and record when the engine is operating, this is not the case for all light vehicles, which fall into these categories: Only push-button ignition light vehicles where these vehicles operate in On or Off mode will have off-road idling time recorded for the purposes of fuel tax credits for this system. | Fuel apportionment calculation methods for vehicles without auxiliary equipment: 32. For vehicles without auxiliary equipment, the Product apportions the fuel used by each vehicle by each activity as: 33. Fuel dispensed for a vehicle is first reduced by the fuel calculated for off-road idling. The remaining fuel is allocated between the percentage of on-road travel and percentage of off-road travel on a distance basis. | Fuel apportionment calculation methods for vehicles with auxiliary equipment: 34. Where the client does not enter an hourly consumption rate for the auxiliary equipment, the calculation method will be the same as for vehicles without auxiliary equipment set out in paragraphs 32 and 33 of this Ruling. 35. Where the client enters the hourly consumption rate for the auxiliary equipment, the apportionment of fuel for that vehicle will be calculated as: 36. If the vehicle idles while operating auxiliary equipment it will be necessary to ensure that there is no double counting of fuel. For instance, you cannot use an hourly consumption rate for idling as well as an hourly consumption rate for auxiliary equipment that includes fuel used when idling. 37. Fuel dispensed for a vehicle is first reduced by the fuel calculated for off-road idling and for auxiliary equipment. The remaining fuel is allocated between the percentage of on-road travel and percentage of off-road travel on a distance basis. | Fuel apportionment - reconciliation: 38. The Product reconciles the total fuel allocated to each activity with total fuel dispensed within the period to make sure it matches the fuel usage with on-road, off-road, idle off-road and auxiliary equipment usage (where entered) over the same period. 39. The Report contains other information on vehicle type, fuel type and auxiliary equipment type. The type of auxiliary equipment of a vehicle is not included in the Report if the client has not named and identified it. 40. Should any record details be incomplete the administrator will be alerted of these omissions through a scheduled exception report and will be able to take the appropriate action to correct. 41. The Fuel Exception Report for a period shows details of the transaction date, odometer reading, distance (kilometres), the fuel quantity (litres), cost (dollars), site location, the exception details and the driver (where applicable). | The Report: 42. The EROAD system uses the off-road travel percentage (distance), on-road travel percentage (distance), off-road idle hours (time) and auxiliary equipment hours (time) that has been calculated within the system. The Report can only be processed once fuel acquisition data has been entered into the system. The EROAD Depot system produces the Report in English. 43. The Report provides the following information for the selected period: Commissioner of Taxation 11 September 2019 | Is apportionment a requirement to work out the entitlement to a fuel tax credit?: 44. Subsection 41-5(1) provides that an entity is entitled to a fuel tax credit for taxable fuel [2] they acquire or manufacture in, or import into, Australia to the extent that they do so for use in carrying on their enterprise. 45. However, under subsection 41-5(2), the entity is only entitled to the fuel tax credit if they are registered for goods and services tax purposes at the time they acquire, manufacture or import the fuel. 46. Section 43-5 provides that the amount of an entity's fuel tax credit is the amount of effective fuel tax that is paid on the fuel. Subsection 43-10(3) provides that to the extent an entity acquires taxable fuel to use, in a vehicle, for travelling on a public road, the amount of its fuel tax credit for the fuel is reduced by the road user charge for the fuel. 47. Subdivision 41-B contains the disentitlement rules for fuel tax credits and includes at section 41-20 the following disentitlement: 48. The use of the phrase 'to the extent' in section 41-5, section 41-20 and subsection 43-10(3) contemplates apportionment between fuel acquired for an eligible use and fuel acquired for an ineligible use, or uses which may give rise to different rates of fuel tax credit entitlement. The implications of this phrase for the purposes of entitlement has been considered in paragraph 5 of Fuel Tax Determination FTD 2010/1 Fuel tax: is apportionment used when determining total fuel tax credits in calculating the net fuel amount under section 60-5 of the Fuel Tax Act 2006? 49. At paragraph 5 of FTD 2010/1 the Commissioner relevantly states: 50. To determine the extent of the fuel tax credit, an entity that acquires taxable fuel will need to apportion the fuel between: | What are the principles for apportioning fuel used in a vehicle?: 51. The FTA does not prescribe how to apportion fuel between different uses. The Commissioner has explained in FTD 2010/1 that methods that are fair and reasonable are acceptable. 52. Specifically paragraph 33 of FTD 2010/1 says: 53. Apportionment of fuel for the purpose of working out an entitlement, and calculating the amount of the entitlement, are distinct phases. Specifically, an entity can either: 54. The amount of the entitlement calculated should be the same whether a single step process or a discrete step calculation is performed. 55. To apportion the taxable fuel an entity has acquired to the different activities for which the fuel was used, a measure can be used as part of an apportionment methodology. The Commissioner accepts that an entity can use any appropriate reliable measure as the basis for calculating the amount of taxable fuel that it acquires for use in an eligible activity. 56. Examples of known reliable measures include: 57. Although these are commonly used measures, because of the diverse range of eligible activities, this is not an exhaustive list and there may be other measures that are appropriate to an entity's circumstances. | Does the Product provide a step in the apportionment of fuel?: 58. The Product apportions the fuel used by each vehicle by first calculating fuel for use in off-road idling and (where applicable) auxiliary equipment by multiplying hours of operation by the hourly consumption rate. It deducts this fuel from the total fuel dispensed for each vehicle. Then it apportions remaining fuel dispensed for each vehicle using a percentage of the travel (public road or off-road) against total travel undertaken by the vehicle. 59. The Product then reconciles the total fuel allocated to each activity with total fuel dispensed within the period to make sure it matches the fuel usage with on-road, off-road, idle off-road and auxiliary equipment usage over the same period. The report also contains information on vehicle type, fuel type and auxiliary equipment type. 60. The Product provides a step in the apportionment of fuel based on categorisation of use. | Is the Report a record?: 61. Subsection 382-5(1) of Schedule 1 to the TAA provides that you must keep records that record and explain all transactions and other acts you engage in that are relevant to an entitlement to a fuel tax credit. 62. You must retain these records for at least five years after the completion of the transactions or acts to which they relate. 63. Subsection 382-5(8) of Schedule 1 to the TAA provides that the records must be in English, or easily translated into English, and enable an entitlement under an indirect tax law, that is, a fuel tax law to be ascertained. 64. Clients using the Product can undertake a vehicle analysis of the fuel used when those vehicles are travelling on public roads, off public roads, idling and in auxiliary equipment for a tax period. 65. The portal allows the client using the Product in their enterprise to generate the Report after fuel acquisition information has been entered. The following information is available to the client on the Report for the selected period: 66. The Report is produced in English and allows users to export information showing litres allocated according to travel into a pdf document or csv format (Microsoft Excel file) for a specific period. 67. The Report is a record that can be used in determining apportionment, noting that this Ruling does not extend to the underlying assumptions, client entered data and the accuracy of determining public roads for fuel tax credit purposes. As such, the report is a document that is a record for the purposes of subsection 382-5(8) of Schedule 1 to the TAA. However, it will not be the only record that is used in determining apportionment for fuel tax credit purposes. Other reports although not limited to, may include data input information reports and, reports showing accuracy of fuel consumption rates used for vehicles etc. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft


Appendix: Is apportionment a requirement to work out the entitlement to a fuel tax credit?: 44. Subsection 41-5(1) provides that an entity is entitled to a fuel tax credit for taxable fuel [2] they acquire or manufacture in, or import into, Australia to the extent that they do so for use in carrying on their enterprise. 45. However, under subsection 41-5(2), the entity is only entitled to the fuel tax credit if they are registered for goods and services tax purposes at the time they acquire, manufacture or import the fuel. 46. Section 43-5 provides that the amount of an entity's fuel tax credit is the amount of effective fuel tax that is paid on the fuel. Subsection 43-10(3) provides that to the extent an entity acquires taxable fuel to use, in a vehicle, for travelling on a public road, the amount of its fuel tax credit for the fuel is reduced by the road user charge for the fuel. 47. Subdivision 41-B contains the disentitlement rules for fuel tax credits and includes at section 41-20 the following disentitlement: 48. The use of the phrase 'to the extent' in section 41-5, section 41-20 and subsection 43-10(3) contemplates apportionment between fuel acquired for an eligible use and fuel acquired for an ineligible use, or uses which may give rise to different rates of fuel tax credit entitlement. The implications of this phrase for the purposes of entitlement has been considered in paragraph 5 of Fuel Tax Determination FTD 2010/1 Fuel tax: is apportionment used when determining total fuel tax credits in calculating the net fuel amount under section 60-5 of the Fuel Tax Act 2006? 49. At paragraph 5 of FTD 2010/1 the Commissioner relevantly states: 50. To determine the extent of the fuel tax credit, an entity that acquires taxable fuel will need to apportion the fuel between: | What are the principles for apportioning fuel used in a vehicle?: 51. The FTA does not prescribe how to apportion fuel between different uses. The Commissioner has explained in FTD 2010/1 that methods that are fair and reasonable are acceptable. 52. Specifically paragraph 33 of FTD 2010/1 says: 53. Apportionment of fuel for the purpose of working out an entitlement, and calculating the amount of the entitlement, are distinct phases. Specifically, an entity can either: 54. The amount of the entitlement calculated should be the same whether a single step process or a discrete step calculation is performed. 55. To apportion the taxable fuel an entity has acquired to the different activities for which the fuel was used, a measure can be used as part of an apportionment methodology. The Commissioner accepts that an entity can use any appropriate reliable measure as the basis for calculating the amount of taxable fuel that it acquires for use in an eligible activity. 56. Examples of known reliable measures include: 57. Although these are commonly used measures, because of the diverse range of eligible activities, this is not an exhaustive list and there may be other measures that are appropriate to an entity's circumstances. | Does the Product provide a step in the apportionment of fuel?: 58. The Product apportions the fuel used by each vehicle by first calculating fuel for use in off-road idling and (where applicable) auxiliary equipment by multiplying hours of operation by the hourly consumption rate. It deducts this fuel from the total fuel dispensed for each vehicle. Then it apportions remaining fuel dispensed for each vehicle using a percentage of the travel (public road or off-road) against total travel undertaken by the vehicle. 59. The Product then reconciles the total fuel allocated to each activity with total fuel dispensed within the period to make sure it matches the fuel usage with on-road, off-road, idle off-road and auxiliary equipment usage over the same period. The report also contains information on vehicle type, fuel type and auxiliary equipment type. 60. The Product provides a step in the apportionment of fuel based on categorisation of use. | Is the Report a record?: 61. Subsection 382-5(1) of Schedule 1 to the TAA provides that you must keep records that record and explain all transactions and other acts you engage in that are relevant to an entitlement to a fuel tax credit. 62. You must retain these records for at least five years after the completion of the transactions or acts to which they relate. 63. Subsection 382-5(8) of Schedule 1 to the TAA provides that the records must be in English, or easily translated into English, and enable an entitlement under an indirect tax law, that is, a fuel tax law to be ascertained. 64. Clients using the Product can undertake a vehicle analysis of the fuel used when those vehicles are travelling on public roads, off public roads, idling and in auxiliary equipment for a tax period. 65. The portal allows the client using the Product in their enterprise to generate the Report after fuel acquisition information has been entered. The following information is available to the client on the Report for the selected period: 66. The Report is produced in English and allows users to export information showing litres allocated according to travel into a pdf document or csv format (Microsoft Excel file) for a specific period. 67. The Report is a record that can be used in determining apportionment, noting that this Ruling does not extend to the underlying assumptions, client entered data and the accuracy of determining public roads for fuel tax credit purposes. As such, the report is a document that is a record for the purposes of subsection 382-5(8) of Schedule 1 to the TAA. However, it will not be the only record that is used in determining apportionment for fuel tax credit purposes. Other reports although not limited to, may include data input information reports and, reports showing accuracy of fuel consumption rates used for vehicles etc. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft


What this Ruling is about | If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. | Further, if we think that this Ruling disadvantages you, we may apply the law in a way that is more favourable to you. | No fuel tax credit for fuel to be used in light vehicles on a public road | You are not entitled to a fuel tax credit for taxable fuel to the extent that you acquire, manufacture or import the fuel for use in a vehicle with a gross vehicle mass of 4.5 tonnes or less travelling on a public road. | It is not necessary for an apportionment method to track the intended use of every last drop of fuel. A method may be fair and reasonable without doing so provided that the application of the method reasonably reflects the extent to which taxable fuel is acquired for an eligible activity.


Related rulings: CR 2018/37 FTD 2010/1
Legislative references: FTA 2006 FTA 2006 41-5 FTA 2006 41-5(1) FTA 2006 41-5(2) FTA 2006 Subdiv 41-B FTA 2006 41-20 FTA 2006 43-5 FTA 2006 43-10(3) FTA 2006 110-5 TAA 1953 TAA 1953 Sch 1 382-5 TAA 1953 Sch 1 382-5(1) TAA 1953 Sch 1 382-5(8)