ATO Interpretative Decision

ATO ID 2007/53 (Withdrawn)

Excise

• This ATO ID is withdrawn as it is a restatement of the law and does not contain an interpretative decision.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is fuel used for domestic heating for the purposes of subsection 41-10(1) of the Fuel Tax Act 2006 (FTA) when it is used in a household to fuel a stove or a hot water system?

Decision

Yes. Fuel is used for domestic heating for the purposes of subsection 41-10(1) of the FTA when it is used in a household to fuel a stove or a hot water system.

Facts

An entity makes taxable supplies of kerosene to a household.

The kerosene is used by the household to fuel a stove and a hot water system.

Reasons for decision

Subsection 41-10(1) of the FTA provides that:

You are entitled to a fuel tax credit for taxable fuel that you acquire or manufacture in, or import into, Australia to the extent that:

(a)

you do so to make a taxable supply of the fuel to an entity; and

(b)

the fuel is kerosene, heating oil or any other fuel prescribed by the regulations; and

(c)

you have a reasonable belief that the entity:

(i)

will not use the fuel in carrying on an enterprise; but

(ii)

will use the fuel for domestic heating.

The key issue is whether the use of the kerosene as fuel in a stove and hot water system falls within the scope of 'domestic heating' for the purposes of subsection 41-10(1) of the FTA.

The expression 'domestic heating' is not defined in the FTA. Accordingly, it is necessary to consider the ordinary meaning of the phrase.

The Australian Oxford Dictionary, 1999, Oxford University Press, Melbourne, relevantly defines 'domestic' as:

of the home, household

'Heating' is defined in The Australian Oxford Dictionary as:

the imparting or generation of heat.

Based on this ordinary meaning, it is arguable that the expression 'domestic heating' in subsection 41-10(1) of the FTA encompasses both the actual heating of a home, and the generation of heat for other domestic purposes within the home.

The Revised Explanatory Memorandum to the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006 (the Explanatory Memorandum) provides support for this view. Paragraph 1.23 of the Explanatory Memorandum states:

All fuels acquired or manufactured in, or imported into, Australia for use other than in an internal combustion engine will be effectively fuel tax-free from 1 July 2006. Use of fuel other than in an internal combustion engine includes:

•

fuel used in burner applications such as heating (use as a fuel);

Paragraph 1.27 of the Explanatory Memorandum further provides that:

In order that private users ... will not have to enter the fuel tax credit system, a fuel tax credit will apply further up the supply chain with the benefit passed on in the price of the product, ensuring that the product is effectively fuel tax-free for these users. For products used as burner fuels, such as kerosene and heating oil, the distributor will be entitled to claim a fuel tax credit for fuel sold to a private household [emphasis added] ...

We consider the Explanatory Memorandum supports the conclusion that the term 'domestic heating' should be interpreted in a broad manner, so that households enjoy relief from the burden of excise on kerosene, heating oil or any other prescribed fuel that will be used within the household as a burner fuel (and will not be used in an internal combustion engine).

Therefore the Commissioner's view is that fuel is used for domestic heating for the purposes of subsection 41-10(1) of the FTA when it is used in a household to fuel a stove or a hot water system.

Legislative References:
Fuel Tax Act 2006
   subsection 41-10(1)

Other References:
Revised Explanatory Memorandum to Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006
The Australian Oxford Dictionary, 1999, Oxford University Press, Melbourne

Keywords
FTC Domestic heating
FTC burner fuel

Siebel/TDMS Reference Number:  5502736

Business Line:  Indirect Tax

Date of publication:  16 March 2007

ISSN: 1445-2782