ATO Interpretative Decision

ATO ID 2007/152 (Withdrawn)

Excise

• This ATO ID is withdrawn as the issue is now covered by Fuel Tax Ruling FTR 2007/1, which issued on 12 September 2007.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Does a fisher acquire fuel for the purposes of subsection 41-5(1) of the Fuel Tax Act 2006 (FTA), where the fisher receives a share of the value of the catch less an amount to cover part of the costs of the fishing expedition?

Decision

No. A fisher does not acquire fuel for the purposes of subsection 41-5(1) of the FTA where the fisher receives a share of the value of the catch less an amount to cover part of the costs of the fishing expedition.

Facts

An entity (the fisher) has agreed to provide their services to the owner of a fishing vessel.

The owner conducts a fishing enterprise.

Under the terms of the agreement, the fisher will assist the owner of the vessel in undertaking the vessel's fishing operations.

In return for their services, the fisher will be paid a share of the value of the catch less an amount for a portion of the operating expenses of the vessel including the cost of fuel.

The owner pays for the fuel used in the fishing vessel.

The fisher does not have the ability to remove any of the fuel from the fishing vessel, or on-sell any of the fuel. The fuel is only available for use in propelling the vessel.

Reasons for Decision

Under subsection 41-5(1) of the FTA, an entity is entitled to a fuel tax credit for fuel that they acquire in, import into or manufacture in Australia for use in carrying on the entity's enterprise.

The term 'acquire' is not defined in the FTA. It therefore takes its ordinary meaning. In the context of the FTA, the Commissioner considers that the term 'acquire' does not mean merely 'to come into possession of'. To 'acquire' something means to 'obtain it as one's own' from someone else through one's actions or efforts.

To obtain something as one's own implies gaining ownership or proprietary rights in respect of the taxable fuel. This will mean either that property in the taxable fuel passes from one entity to another or that proprietary rights or ownership are conferred by the act of obtaining the taxable fuel by other means. Therefore, an entity typically 'acquires' taxable fuel upon a change in ownership of, or a transfer of proprietary rights in, the fuel from one entity to another. This would mean that an entity acquires taxable fuel if:

•

they purchase the fuel

•

the fuel is gifted to them, or

•

the entity obtains ownership of the fuel by any other means (other than manufacture or import).

If an entity acquires a right or licence to use the taxable fuel of another entity in the absence of acquiring a proprietary interest in or ownership of the fuel, the entity will not be taken to have acquired the taxable fuel. The acquisition of a right or licence to use the fuel is not the same as the acquisition of the fuel. This is because the mere grant of a right or licence to use another entity's taxable fuel is not within the meaning of 'acquire' as that term is used in the FTA.

In this case, the owner of the fishing vessel, in the course of carrying on an enterprise, engages the services of a fisher. The owner provides taxable fuel for use by the fisher in carrying out that activity. However, ownership in the fuel does not transfer to the fisher. The fisher does not have the right to remove the fuel from the vessel or on-sell it. The fisher does not obtain the fuel as their own. Rather the fisher merely has the right to use the fuel in propelling the owner's vessel. Therefore the fisher has not acquired the fuel for the purposes of subsection 41-5(1) of the FTA.

Legislative References:
Fuel Tax Act 2006
   subsection 41-5(1)

Keywords
Fuel tax credits
FTC purchase
FTC Fuel
FTC primary production
FTC fishing operations

Siebel/TDMS Reference Number:  5539704

Business Line:  Indirect Tax

Date of publication:  13 July 2007

ISSN: 1445-2782