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  • Fuel tax credits

    Bunker fuel acquired or imported for use in marine transport is eligible for fuel tax credits.

    Find out about:

    Registering for fuel tax credits

    To register for fuel tax credits, you must first be registered for GST. You must be registered for GST if you are a:

    • resident agent acting on behalf of a non-resident shipping operator, even if the non-resident shipping operator is already registered or must be registered for GST.
    • non-resident shipping operator  
      • if the revenue from business transactions in Australia (one-off or cumulative) exceeds the relevant GST turnover threshold
      • needing to claim fuel tax credits on bunkers not acquired through a resident agent.
       
    • resident shipping operator where the business turnover is in excess of the GST turnover threshold. You must account for all GST transactions (and fuel tax credit claims) on your own BAS even if you conduct transactions through a resident agent.

    Agency rules for non-resident operators and their resident agents do not apply to resident shipping operators.

    Next step:

    Agency rules for non-resident shipping operators

    Specific GST rules apply to non-resident shipping operator transactions made through a resident agent. Where a resident agent makes a creditable acquisition or importation of bunker fuel on behalf of a non-resident shipping operator:

    • only the resident agent is entitled to the input tax credit or fuel tax credits on the fuel acquisition or importation
    • the non-resident shipping operator is not entitled to any input tax credit or fuel tax credits on the fuel acquisition or importation.

    A resident agent must include on their BAS all GST supplies they make on behalf of non-resident shipping operators, even where the operator is registered or must be registered for GST.

    The resident agent is:

    • liable for GST arising from all transactions
    • entitled to any fuel tax credits and input tax credits for bunker fuel acquisitions made by them on behalf of the non-resident shipping operator.

    Agency rules do not apply to a non-resident shipping operator if they are a member of a GST group. In this case, the rules apply to the group's resident representative member.

    Fuel tax credit entitlements

    Find out about:

    Resident shipping agent

    A resident shipping agent is a resident agent who provides shipping operators with a comprehensive package of supporting and complimentary goods and services, often including the provision of bunker fuel.

    For a resident shipping agent to be entitled to claim fuel tax credits, the fuel transaction must be conducted through them on behalf of a non-resident shipping operator.

    A resident shipping agent cannot claim fuel tax credits for transactions conducted on behalf of resident shipping operators.

    Example

    Australian Shipping Agency arranges for the acquisition of duty-paid bunker fuel for APL Hong Kong, a foreign ship owned by Yang Shipping Lines. Yang Shipping Lines is invoiced directly by the fuel supplier for the fuel acquired.

    Under the GST non-resident agency rules, Australian Shipping Agency is exclusively entitled to claim the fuel tax credits on the fuel that Yang Shipping Lines acquired through them. The payment for the fuel is incidental to the acquisition of the fuel if Australian Shipping Agency can demonstrate the acquisition was arranged through them.

    End of example

    Non-resident shipping operator

    GST agency rules for non-resident enterprises allow the GST requirements (and fuel tax credit entitlements) of Australian transactions conducted through their resident shipping agent, to pass to that agent. A non-resident shipping operator is not entitled to fuel tax credits on duty-paid fuel bunkers acquired or imported through their resident agent.

    However, if non-resident shipping operators acquire fuel bunkers directly:

    • only they can claim fuel tax credits by lodging a BAS
    • they must be registered for both GST and fuel tax credits
    • if they are not registered or required to be registered for GST, then a refund of the excise duty would be payable.

    Agency rules do not apply to a non-resident shipping operator if they are a member of a GST group. In this case, the rules apply to the group's resident representative member.

    Example

    JZ Shipping is a non-resident shipping operator. They arrange the supply and payment of duty-paid bunker fuel to be used by their ship, APL Hong Sang, during the domestic legs of its voyage. Australasian Shipping Services, a local shipping agent makes arrangements on their behalf for the supply of other ship's stores (eg alcohol and cigarettes).

    Australasian Shipping Services cannot claim fuel tax credits as the bunker fuel acquisition was not made through them. JZ Shipping must be registered for GST and fuel tax credits to be entitled to claim any associated credit on their BAS.

    End of example

    Resident shipping operator

    Resident shipping operators must:

    • be registered for GST if their turnover is in excess of the GST turnover threshold
    • account for all GST transactions (and fuel tax credit claims) on their own BAS even if they conduct transactions through a resident agent.

    If the resident shipping operator is a member of a GST group, the rules apply to the group's resident representative member.

    Example

    Holiday Shipping Services is the resident shipping agent for Bass Shipping Lines, an Australian shipping operator. They provide a range of shipping services, including arranging the supply of duty-paid bunker fuel for consumption in Bass ships.

    The GST agency rules do not apply to transactions conducted by Holiday Shipping Services on behalf of Bass Shipping Lines. Bass Shipping Lines is solely responsible for all GST and fuel tax credits regardless of Holiday Shipping Services involvement in those transactions.

    End of example

    Fuel supplier

    A fuel supplier:

    • cannot claim fuel tax credits for duty-paid bunker fuel on-sold free of duty – the on-selling of fuel to another entity is not fuel used in an enterprise for fuel tax credit purposes
    • can claim an excise refund for duty-paid bunker fuel that is on-sold free of duty only if no other entity is entitled to claim the fuel tax credits.

    Example

    Australora Oil sources duty paid fuel from a major fuel manufacturer and supplies it as bunker fuel directly to Argut Shipping Services, a non-resident shipping operator, for use in its cargo ship the MV Augusta. The fuel is supplied at a duty-free price.

    Australora Oil cannot claim fuel tax credits for the fuel on-sold as the transaction is not an eligible use of the fuel and they are not engaged as a resident agent for Argut Shipping Services. Australora Oil can only claim a refund of duty paid if Argut Shipping Services have no entitlement to fuel tax credits.

    End of example

    Next step:

    Customs broker

    If a non-resident shipping operator makes a taxable importation of bunker fuel through a resident shipping agent:

    • the agent is entered as 'owner' on the customs entry
    • the agent (not the non-resident shipping operator) is liable to pay the GST and customs duty on the taxable importation
    • the agent is entitled to claim an input tax credit and fuel tax credits for those fuel transactions.

    A resident agent may include a licensed customs broker appointed by the non-resident shipping operator to enter the goods as an 'owner' on their behalf. In that case, a creditable importation is made through a customs broker in the capacity of resident agent.

    Generally, a customs broker only facilitates the customs entry on behalf of the 'owner' and the customs broker is not shown as 'owner' on the customs entry. The customs broker prepares and lodges the customs entry on behalf of the non-resident shipping operator or their appointed shipping agent who is named as the owner on the entry. In that case, a creditable importation is not made through the customs broker.

    Example

    Sanka Shipping Line, a non-resident shipping operator, engages Terrier Shipping Agency to act on their behalf in Australia. Lacking in-house licensed customs brokers, Terrier Shipping Agency engages Acute Customs Brokerage to prepare and lodge a customs entry on their behalf for fuel used by Sanka Shipping Line to transport domestic cargo.

    Under the non-resident agency rules, only Terrier Shipping Agency is entitled to claim fuel tax credits on the deemed importation of bunker fuel used in Sanka Shipping Line's domestic operations. Acute Customs Brokerage only facilitates the lodging of the relevant customs entry.

    End of example

    See also:

    • GSTR 2003/15 Goods and services tax: importation of goods into Australia.
      Last modified: 03 Apr 2017QC 22910