Show download pdf controls
  • Fuel Schemes Stakeholder Group record of meeting 7 June 2018

    Discussion summary

    Disclaimer

    The Fuel Schemes Stakeholder Group agendas, minutes and related papers are not binding on the ATO or the other bodies referred to in these papers. While every effort is made to accurately record views expressed, the wording necessarily represents a summary of statements of general position only, and care should be taken in interpreting those statements. These papers reflect the position at the date of release (unless otherwise noted) and readers should note that the position on any issue may subsequently change.

    Agenda Item 1 – Welcome

    Introductions, review of action items and previous minutes - Raj Srikhanta

    Outcome: It was noted that the minutes of the meeting of 13 July 2017 were provided on 4 October and that all action items had been completed.

    There were no conflicts of interest advised by members

    Agenda Item 2 – Compliance focus areas

    • Results from 2017/18 and focus areas for 2018/19

    Outcome: Members noted the summary by Michael Hughes regarding compliance results for 2017/18.

    The ATO had focused on backclaims, analysing those that stood out due to the size of the claim compared to previous claims.

    The majority of large backclaims related to heavy vehicles particularly where fuel was used off-road or to power auxiliary equipment. It was noted that 2017/18 claims showed an increase in cases where adjustments were made as a result of ATO reviews. Common errors or issues have included:

    • claimants claiming an industry average for fuel consumed where there was no specific evidence;
    • claimants being unable to substantiate burn rates for fuel used in refrigerated trailers as there seemed to be an extreme variability in the consumption rate for these units. The rates ranged from 0.5 litres per hour when the motor was on low to 5 - 5.5 litres when the trailer was in its pre-cool phase.

      The ATO sought advice from major manufacturers as to whether an "average rate" could be used. They have advised that there is no universal average furl burn rate due to the variability in conditions and the units themselves. Issues that were found to impact on the rate used was the age of the unit; whether short haul or long haul whether carrying frozen goods or fresh goods; climatic influencers; the colour of the unit, etc. From a compliance perspective, the ATO are looking at the rationale of evidence used to substantiate the rate claimed.

    The ATO confirmed that where a separate tank is used to fuel the refrigeration units and this is monitored, the issues above will not impact.

    Complexity in claims can occur for many reasons, including:

    • in some fleets, there were as many as 500 – 600 vehicles – prime movers, vans etc which have to be accounted for;
    • use of numerous spreadsheets which introduces the possibility for error;
    • failing to reconcile calculations for fuel used in refrigeration units against total fuel used in the heavy vehicle. In some cases, the ATO has seen heavy vehicles that have supposedly used less fuel on road than a small SUV based on the calculations used to support the off road use of fuel.

    There are currently five reviews / visits to tax agents to discuss higher than average rates of amendments to FTC claims as a result of compliance activity. One has been finalised and the feedback has been that the agent will change the way they review FTC claims and will be adding more rigour regarding completion. At the next FSSG meeting, more information will be provided about the outcomes of these reviews.

    As part of our large claimant assurance work we have found a high level of compliance. In fact, often these clients may be underclaiming and issues may go back four years. Common errors in these cases were:

    • changes in fuelling arrangements and failing to account for previous fuel purchases;
    • specialised account codes for particular projects not being included in general fuel tax credit calculations; and
    • incorrectly coded equipment being omitted from calculations etc.

    When overclaims were found, the issues tended to be around:

    • claim calculation errors due to reliance on manual systems;
    • failing to account for fuel that had been sold to contractors.

    The ATO's overall approach was still targeted at prevention rather than correction. We continue to see a high reliance on the FTC calculator and eligibility tool, as well as use of the safe harbours published in 2017.

    Communication was still an important aspect of our interactions with clients and the ATO continues to utilise digital options, including via social media, regarding important messages such as the indexation rate in February 2018.

    In 2018/19, the ATO will again primarily focus on large backclaims. Reviews are showing some FTC claims submitted based on use of GPS technology. Use of GPS provides opportunities for clients to claim small amounts, however it also adds a potential risk in how the GPS system classifies roads (public / private) and depends on assumptions that may have been made in the software. Most still require some type of manual intervention. The ATO will undertake targeted work based on GPS systems currently in use.

    Compliance work will continue on large client assurance and the ATO will continue to clarify guidance products and will be updating record keeping guidelines on the ATO website. When these are finalised, communications will advise FSSG members.

    Where clients / intermediaries are seeking early engagement, they can contact the EPL technical area. Participants discussed whether certainty could be provided in ATO advice on “fair and reasonable”. A private ruling will provide certainly and ATO are happy to provide advice early, however general advice would not be binding.

    Action Item 07062018-2-1 – The ATO to provide contact details for the EPL Technical Advice team for early engagement on FTC issues.

    Agenda Item 3 - ATO updates

    • Online BAS - Michael Hughes

    Outcome: Members noted the update provided by Michael about the BAS Online Project.

    The Online BAS project is still being worked through and may include an FTC aspect. Every year, 7.5m BAS returns were lodged and every year 23,000 returns were stopped due to potential issues being found for GST or FTC. Analysis has shown that in those cases, approximately 40% are due to inadvertent errors.

    The ATO are looking at how to prompt clients to reassess information prior to lodgement where inconsistent figures are supplied. For example, this may be in cases where the claim amount is not consistent with previous claims. It is envisaged that the prompt will save clients time in having refunds stopped pending further information being provided, as well as ATO staff time in processing reviews.

    The ATO is currently in a consultation phase, talking with different groups and has carried out some user design around the type of messaging. It is hoped that this initiative may be implemented in July 2019.

    • ATO Communications

    Outcome: Raj Srikhanta advised members of the various social media channels that the ATO uses to communicate with clients, including Twitter, LinkedIn and Facebook, with Deborah Jenkins, Deputy Commissioner of Small Business and Raj Srikhanta having accounts on LinkedIn to communicate with ATO clients.

    Claudia Bianco from ATO Marketing and Communications encouraged association representatives to cascade messages to their members and that the ATO was happy to provide information that could be included in association communications.

    Action Item 07062018-3-1 – The ATO to provide details of various social media channels used to engage with clients to FSSG members.

    Agenda Item 4 - Industry / member updates

    Outcome: Members raised various issues for discussion.

    Darryl Daisley (AMEC) referred to the safe harbour for the incidental use of prescribed vehicles on public roads and inquired whether there may be an opportunity to look at the treatment of claiming FTCs for light vehicles in the mining sector. A mining client might claim 98% of fuel used by heavy vehicles for off road use and only a small amount requires apportionment. The amount of time that goes into a calculation for “fair and reasonable” can be onerous. Darryl referred to potential categories of ‘Gold’, ‘Silver’ and ‘Bronze’ for mine sites depending on such issues as proximity to towns, airstrips, the type of travel etc. He advised that GPS technology can be a significant cost for mining companies to use just to calculate FTCs, however he noted that some companies may also use the technology to assist in maintenance.

    Action Item 07062018-4-1 – FSSG members to advise Rowena Troth if they wish to be involved in discussions about the treatment of claiming FTCs for light vehicles in the mining industry.

    Action Item 07062018-4-2 – Darryl Daisley to provide paper on treatment of FTCs in the mining industry to Michael Hughes of EPL Branch.

    David Johns requested an update on the toll roads issue that had been reported in the media recently. Raj Srikhanta advised members that the ATO doesn’t comment on matters before the courts. Where outcomes of litigation have an impact on the treatment of FTCs, the ATO would advise FSSG members. Raj confirmed that the matter had yet to be heard.

    Sam Mohammed raised the issue of the use of “stop the clock” for back claims by lodging an objection.  He requested further detail on the ATO requirements for this practice.  Raj advised that the ‘stop the clock’ practice was relevant under a sales tax and a self-actuating indirect tax system.  Under a self-assessment system, credit claims are made by taking the credits into account within the relevant statutory time period by claiming on a BAS or by an RBAS. The ATO is considering how the time limits in Division 47 interact with the objection provisions. Our position will be communicated once finalised. The ATO is encouraging claimants to shift from thinking in terms of ‘stop the clock’ to making real time claims that they are entitled to.

    Action Item 07062018-4-3 – FSSG members to provide feedback to Rowena Troth regarding the use of telepresence facilities for the annual meetings rather than face-to-face.

    Agenda Item 5 - Other Business

    There was no other business.

    The meeting concluded at 3.10pm.

    Meeting details

    Venue: Various ATO Offices - Docklands, Brisbane, Adelaide, Sydney, Canberra and Perth

    Date: 7 June 2018

    Start: 2.00pm Finish: 3.10pm

    Chair: Rajitha Srikhanta

    Secretariat: Rowena Troth

    Attendees:

    Rajitha Srikhanta

    ATO

    Michael Hughes

    ATO

    Michelle Scott

    ATO

    Siau Goh

    ATO

    Claudia Bianco

    ATO

    Robyn McManus

    ATO

    Wendee Mundy

    ATO

    Laura O'Brien

    Deloitte

    Sam Mohammad

    KPMG

    Kylie Norman

    EY

    Peter Quattrocchi

    Pitcher Partners Advisory Pty Ltd

    David Johns

    NatRoad Limited

    Darryl Daisley

    AMEC

    Susannah Rowley

    Maritime Industry Australia Ltd

    Grace Leung

    Caltex Australia Petroleum Pty Ltd

    David Wilson

    ShineWing Australia Pty Ltd

    Rowena Troth

    ATO - Secretariat

      Last modified: 26 Nov 2018QC 57479