Pauline Zdjelar raised the following issues regarding current compliance issues being encountered:
Road user charge rate changes
- The two increases in the road user charge rates over the past 12 months may lead to confusion although data suggests most entities have got this right. Most of the Excise compliance approach is education based through direct mailouts and articles in relevant magazines. Audits will however focus on the rate changes for the 2009-10 year.
Incorrect entities making claims
These were noted to have arisen in a variety of circumstances as follows:
Entities that have been used as procurement agents are making claims in their own right rather than the principal entity for whom they act. This is despite that fact that the principal to the transaction was a resident entity. Where the principal is a resident entity they need to make the claim not the agent who arranged the acquisition on their behalf.
Where entities are part of a corporate group but are not GST grouped entities, the claims are occasionally going through the representative member.
Where sub contracted entity agreements are not clear on the fuel acquisition arrangements, arguably the wrong entity is sometimes claiming. Even if claims are correct much effort needs to be applied to confirming the correct arrangements which can be costly for business and the Tax Office. While some see the matter as revenue neutral, provided both entities are not claiming for the same fuel, the claim by the wrong entity does not extinguish the right to claim by the correct party. As a consequence the Tax Office will determine its view and unwind transactions where it considers the wrong entity has claimed at first instance.
Environmental criteria not being met
The following issues have been noted regarding the requirements to meet environmental criteria:
Environmental criteria is not being met for some of the vehicles in which the fuel is used on occasion.
Diesel vehicles used on road not being serviced as per the standard.
Lack of understanding by some claimants that only one environmental criteria needs to be met not all criteria.
Where an entity is claiming for fuel tax credits but the use of the fuel is by a third party, there have been issues with the environmental criteria not being satisfied for the vehicles in which the fuel is used. The claiming entity sometimes does not know the environmental criteria are not being met.
In relation to the requirement to satisfy only one of the environmental criteria, Pauline advised that based on target sampling this did not appear to be an issue any longer. The Department of Infrastructure, Transport, Regional Development and Local Government changed their guides to make the information clearer and also issued a mailout of a flyer that advised clients that they only needed to meet one criterion.
Rob Howse (NatRoads) advised that they received calls regarding the environmental criteria but that these calls were decreasing which they took as a good indicator that the message was getting across.
Fuel not suitable for use in an internal combustion engine
Where fuel is produced which is not suitable for use in an internal combustion engine (most commonly through blending diesel and recycled waste oil to produce a burner fuel), it is not subject to excise. As such the fuel is not a taxable fuel for fuel tax credit purposes and no credit can be claimed by the user. Some entities producing these blends have mistakenly treated the fuel as excisable and advised their clients to make the fuel tax credit claim. This treatment is not correct.
In these circumstances the inputs to the blend, as opposed to the blend itself, will in most cases be subject to excise. It is the entity that undertakes the blending that is entitled to the fuel tax credit on the inputs to the blending process, to the extent that those inputs have been subject to excise.
The Tax Office will continue to focus on this issue for the 2009-10 year and unwind transactions that have been treated incorrectly.
Other comments
Brett Reed raised an issue for Transport Workers Union (TWU) members in relation to contract arrangements where the subcontractors are being asked to maximise their entitlement. Brett advised that to clear up this issue the TWU were happy to provide promotional material to its members.
Andrew confirmed that the Tax Office had received calls from claimants with these types of issues. In one case a head entity engaged a subcontractor to undertake work on their behalf. The head entity reimbursed the subcontractor for the net fuel cost (that is, after reduction in fuel tax credit claim). It was noted that the head entity was directing the subcontractor to maximise their fuel tax credit. The head entity provided incorrect information to the subcontractor which may have caused to the subcontractor to over claim their entitlements.
Pauline advised that the Tax Office is happy to do that and was also interested in any issues or Intelligence from TWU members.
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Last Modified: Wednesday, 27 June 2012