ATO Interpretative Decision

ATO ID 2007/191 (Withdrawn)

Excise

• This ATO ID is withdrawn from the database because it deals with a provision that no longer has application. Despite its withdrawal from the database, this ATO Interpretative Decision continues to be a precedential view in respect of an entitlement to an early payment of fuel tax credit for taxable fuel acquired, manufactured or imported between 1 July 2006 to 30 June 2008 pursuant to Item 12A of Schedule 3 of the Fuel Tax (Consequential and Transitional Provisions) Act 2006.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Does a family partnership continue to meet the requirements for eligibility for early payments of fuel tax credits under paragraphs 12A(1)(a) and 12A(1)(c) of Schedule 3 to the Fuel Tax (Consequential and Transitional Provisions) Act 2006 (Fuel Tax Transitional Act), if one of the partners dies and the remaining partners continue the partnership's enterprise?

Decision

Yes. A family partnership continue to meet the requirements for eligibility for early payments of fuel tax credits under paragraphs 12A(1)(a) and 12A(1)(c) of Schedule 3 to the Fuel Tax Transitional Act, where one of the partners dies and the remaining partners continue the partnership's enterprise.

Facts

A family partnership of three family members carried on an enterprise (the partnership).

The partnership was eligible for, and claimed and received early payments of fuel tax credits under item 12A of Schedule 3 to the Fuel Tax Transitional Act.

A member of the partnership died.

The remaining family members continued to carry on the partnership enterprise (the continuing partnership).

The nature of the enterprise and the business name remained unchanged.

The continuing partnership acquired taxable fuel after 1 July 2006 (but before 30-June 2008) for which it is entitled to a fuel tax credit under section 41-5 of the Fuel Tax Act 2006.

The continuing partnership has claimed an early payment of the fuel tax credit under item 12A of Schedule 3 of the Fuel Tax Transitional Act in the approved form.

The continuing partnership has not previously received an early payment of the credit for the fuel.

Reasons for Decision

Item 12A of Schedule 3 to the Fuel Tax Transitional Act provides for the early payment of fuel tax credits to eligible entities, in relation to taxable fuel acquired, manufactured or imported between 1 July 2006 and 30 June 2008.

Subitem 12A(1) of Schedule 3 to the Fuel Tax Transitional Act requires the Commissioner to make an early payment of a fuel tax credit to entities that meet specific requirements.

In this case, the family partnership of three family members was eligible for, and claimed and received early payments under item 12A of Schedule 3 to the Fuel Tax Transitional Act.

The issue to be determined is whether the partnership comprising the remaining members continues to meet the requirements for eligibility for early payments under item 12A of Schedule 3 to the Fuel Tax Transitional Act.

The Commissioner has previously considered the consequences of a reconstitution of a general law partnership in a GST context in Goods and Services Tax Ruling GSTR 2003/13 'Goods and services tax: general law partnerships'.

In the Ruling, the Commissioner explains that he considers that there can be continuity of a partnership for GST purposes where there is a technical dissolution of a partnership, and the ensuing partnership is treated as a reconstituted partnership.

A technical dissolution occurs where there is a change in the membership of a partnership due to the departure of a partner, but the remaining partners continue to conduct the partnership business without any break in its continuity, with or without new partners.

The treatment of a partnership as a reconstituted partnership depends on the intention and/or conduct of the parties.

In the absence of a written agreement providing for the continuation of the partnership business in the event of a change in the membership of the partnership, such a clause may be implied by the conduct of the partners following the retirement or death of a partner, or introduction of a new partner.

Paragraph 168 of GSTR 2003/13 provides that:

Indicators of continuity of the enterprise or the firm include:

•

substantially all of the partnership assets remain with the continuing partnership;

•

the nature of the enterprise remains substantially unchanged;

•

the client or customer base remains substantially unchanged; and

•

the business name or name of the firm remains unchanged.

The Commissioner has adopted this approach as otherwise the old partnership would be considered to have been wound up, and a new partnership created. This in turn would have led to administrative and compliance difficulties for the partnership and its partners.

We consider the approach taken for GST purposes is equally appropriate in determining the consequences of a reconstitution of a general law partnership in an early payment of fuel tax credit context.

Consequently, there can be continuity of a partnership for early payments purposes where there is a technical dissolution of a partnership, and the ensuing partnership is treated as a reconstituted partnership. As a result, a reconstituted partnership would continue to meet the requirements for eligibility for early payments, where the previous partnership met the requirements for eligibility for early payments under item 12A of Schedule 3 to the Fuel Tax Transitional Act.

In this case, the continuing partnership will be treated as a reconstituted partnership as the remaining partners are continuing to carry on the partnership's enterprise and the business name has remained unchanged.

Accordingly, the continuing partnership would continue to meet the requirements for eligibility for early payments of fuel tax credits under paragraphs 12A(1)(a) and 12A(1)(c) of Schedule 3 of the Fuel Tax Transitional Act.

Legislative References:
Fuel Tax (Consequential and Transitional Provisions) Act 2006
   Schedule 3, item 12A

Related Public Rulings (including Determinations)
Goods and Services Tax Ruling GSTR 2003/13

Keywords
Excise
Fuel tax credits
Partnerships

Business Line:  Indirect Tax

Date of publication:  26 October 2007

ISSN: 1445-2782