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Edited version of private ruling
Authorisation Number: 1011586089906
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Subject: Fuel tax credits - use other than in an internal combustion engine
Question
Are you entitled to claim a fuel tax credit at the full rate for the diesel fuel you acquire for use in fire simulation exercises to test a facility?
Answer
Yes.
This ruling applies for the following period:
2010-11 income year
The scheme commences on:
1 July 2010
Relevant facts and circumstances
You assisted in the construction of a facility.
The facility will be tested before final hand over to ensure it satisfies contract specifications.
You were required to purchase fuel for the testing of the facility as part of your contract.
You acquired diesel fuel for the fire simulation exercises that will test the facility.
You have advised that all diesel fuel will be burned in the fire simulation exercises and that no diesel will be on-sold.
You contend that you are entitled to a fuel tax credit at the full rate based on the activity that the diesel was used for a non-fuel use, being fuel used for burning.
You are registered for goods and services tax (GST).
Relevant legislative provisions
Fuel Tax Act 2006 section 41-5
Fuel Tax (Consequential and Transitional Provisions) Act 2006 Division 2 in Part 3 of Schedule 3
Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(1) in Part 3 of Schedule 3
Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(iv) in Part 3 of Schedule 3
Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(v) in Part 3 of Schedule 3
Reasons for decision
Section 41-5 of the Fuel Tax Act 2006 (FTA) provides that you are entitled to a fuel tax credit for taxable fuel that you acquire for use in carrying on your enterprise if you are registered for GST. However, this entitlement is affected by Division 2 in Part 3 of Schedule 3 to the Fuel Tax (Consequential and Transitional Provisions) Act 2006 (FTCTPA) which operates to restrict this entitlement to specific activities for fuel purchased between 1 July 2008 and 30 June 2012.
The specific activities for which an entitlement exists are listed within subitem 11(1) in Part 3 of Schedule 3 to the FTCTPA.
Use other than as a fuel
Subparagraph 11(1)(b)(iv) in Part 3 of Schedule 3 to the FTCTPA provides that you are entitled to claim a fuel tax credit under section 41-5 of the FTA for fuel acquired for 'use other than as a fuel'.
The meaning of 'fuel' in the phrase 'other than as a fuel' is not defined in the FTA or the FTCTPA. Therefore, the ordinary meaning of the word 'fuel' must apply.
The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW defines fuel as:
1. combustible matter used to maintain fire, as coal, wood, oil etc. 2. material used to feed an engine, as petrol, diesel, etc.
You acquired diesel fuel that you will burn in fire simulation exercises.
The burning of the diesel for the fire simulation exercises to test the facility does not satisfy subparagraph 11(1)(b)(iv) in Part 3 of Schedule 3 to the FTCTPA as the diesel is used as a fuel.
As such, you are not entitled to claim a fuel tax credit for the diesel fuel you acquired and used in fire simulation exercises under this provision i.e. as a use other than as a fuel.
Use other than as a fuel in an internal combustion engine
Subparagraph 11(1)(b)(v) in Part 3 of Schedule 3 to the FTCTPA provides that you are entitled to claim a fuel tax credit under section 41-5 of the FTA for fuel acquired for use other than as a fuel in an internal combustion engine.
You assisted in the construction of a facility. Prior to final hand over, fire simulation exercises will be conducted to ensure the facility satisfies contract specifications. Under the contract you were required to purchase the diesel fuel that will be burnt in the fire simulation exercises.
Since you acquired diesel fuel and used it for a purpose other than in an internal combustion engine, you satisfy subparagraph 11(1)(b)(v) in Part 3 of Schedule 3 to the FTCTPA.
Accordingly, you are entitled to claim a fuel tax credit at the full rate for the diesel fuel you acquire and use in fire simulation exercises to test a facility.
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