ATO Interpretative Decision

ATO ID 2007/121 (Withdrawn)

Excise

Fuel Tax Credits: graders travelling on a public road and the application of the road user charge
FOI status: may be released

This ATO ID is withdrawn from the database as it is superseded by Fuel Tax Ruling FTR 2008/1 Fuel tax: vehicle's travel on a public road that is incidental to the vehicle's main use and the road user charge.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is an entity's entitlement to a fuel tax credit for fuel used in a grader for travelling to and from a work site on a public road reduced by the road user charge pursuant to subsection 43-10(3) of the Fuel Tax Act 2006 (FTA)?

Decision

Yes. An entity's entitlement to a fuel tax credit for fuel used in a grader for travelling to and from a work site on a public road is reduced by the road user charge pursuant to subsection 43-10(3) of the FTA.

Facts

The entity is registered for goods and services tax (GST) and is contracted to conduct road maintenance activities using a diesel powered grader.

The entity acquires the diesel fuel to conduct these activities.

The grader has a gross vehicle mass (GVM) of greater than 4.5 tonnes.

The grader travels to and from a work site along a public road.

The entity is entitled to a fuel tax credit in respect of this travel.

Reasons for Decision

Subsection 43-10(3) of the FTA provides that the amount of a fuel tax credit for fuel used in a vehicle travelling on a public road is reduced by the amount of the road user charge, for the fuel. However, subsection 43-10(4) of the FTA provides that the fuel tax credit is not reduced by the road use charge if the vehicle's travel on a public road is incidental to the vehicle's main use.

However, subsection 43-10(4) of the FTA provides that the fuel tax credit is not reduced by the road use charge if the vehicle's travel on a public road is incidental to the vehicle's main use.

The term 'incidental' is not defined in the FTA, and therefore takes its ordinary meaning. The Macquarie Dictionary, 2001, rev 3^rd edn, The Macquarie Library Pty Ltd, NSW provides the following definition of 'incidental':

1. happening or likely to happen in fortuitous or subordinate conjunction with something else.

2. incurred casually and in addition to the regular or main amount: incidental expenses.

3. something incidental, as a circumstance.

4. (plural) minor expenses.

5. incidental to , liable to happen in connection with; naturally appertaining to.

Paragraph 2.80 of the Explanatory Memorandum to the Fuel Tax Bill 2006 (EM) reflects the ordinary meaning of the term 'incidental'.

2.80 The amount of a taxpayer's fuel tax credit is not reduced by the amount of the road-user charge if their vehicle's travel on a public road is incidental to its main use. Incidental use of fuel may occur when a vehicle that is used almost exclusively off a public road, is moved a short distance from one off-road location to another via a public road or is operating incidentally on a public road. [emphasis added]

Example 2.9

Phil is a farmer. In order to move between parts of his property when he is harvesting crops he has to drive his combine harvester on a public road. As the main use of the combine harvester is off-road, the travel that occurs on a public road is considered incidental and Phil does not have to reduce the amount of fuel tax credit by the amount of the road-user charge for part of the use of fuel for travelling on a public road.

The example demonstrates that merely crossing a public road between the farmer's properties in the course of harvesting activities is incidental to the harvesting activities.

In contrast, the grader is moving to and from the site where it conducts its grading activities. It is not travelling along the public road in the course of its actual grading work. Accordingly, the movement along the public road is not occurring as an incidental part of the grader's grading activities.

On this basis, the road user charge applies to reduce the fuel tax credit otherwise available to the entity for fuel used in the grader for travelling to and from a work site on a public road.

Date of decision: 5 June 2007

Legislative References:
Fuel Tax Act 2006
subsection 43-10(3)
subsection 43-10(4)

Keywords
Excise
FTC gross vehicle mass
FTC heavy vehicle
FTC incidental use
FTC Partial Credit
FTC public road
FTC road user charge
Fuel tax credits

Business Line: Excise Centre of Expertise

Date of publication: 15 June 2007

ISSN: 1445-2782

history

	Date:	Version:
	5 June 2007	Original statement
You are here	8 February 2010	Archived

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