Edited version of private ruling

Authorisation Number: 1011791766141

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Ruling

Subject: Energy grants credits and Fuel tax credits - Four year rule and Later attribution

Question 1:

Are you entitled to a decreasing fuel tax adjustment for on-road diesel fuel purchased between 1 July 2003 and 30 June 2006 for which you have an entitlement under the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Answer:

Yes

Question 2:

Are you entitled to a fuel tax credit for taxable fuel acquired between 1 July 2006 and 28 February 2007 for use in eligible activities in carrying on your enterprise?

Answers:

No

This ruling applies for the following period

2003-04 income year

2003-05 income year

2006-07 income year

2007-08 income year

The scheme commenced on

1 July 2003

Relevant facts

You have enquired about the time limits on entitlements to fuel tax credits and your entitlement to an on-road credit or a fuel tax credit is not at issue for this ruling.

You purchased an amount of on-road diesel fuel between 1 July 2003 and 30 June 2006 for which you state you are entitled to an on-road credit under the EGCSA.

You have not claimed an energy grant in relation to this credit.

You choose to attribute the amount of the credit as a decreasing fuel tax adjustment to its fuel tax return period ending 30 June 2009.

You will be lodging an amendment to your business activity statement (BAS) for the period ended 30 June 2009.

You have not claimed all of your fuel tax entitlement for fuel acquired during the period 1 July 2006 to 28 February 2007.

You are registered for goods and services tax (GST) and submit BAS on a monthly basis.

Relevant legislative provisions

Fuel Tax (Consequential and Transitional Provisions) Act 2006 item 9

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 section 47-5

Fuel Tax Act 2006 subsection 65-5(1)

Fuel Tax Act 2006 subsection 65-5(2)

Fuel Tax Act 2006 subsection 65-5(3)

Fuel Tax Act 2006 subsection 65-5(4)

A New Tax System (Goods and Services Tax) Act 1999

Explanatory Memorandum to Tax Laws Amendment (2009 GST Administration Measures) Bill 2009

Reasons for Decision

Energy Grants Credits

Item 9 of the Fuel Tax (Consequential and Transitional Provisions) Act 2006 (FTCTPA) provides that you have a decreasing fuel tax adjustment if you purchased fuel between 1 July 2003 and

30 June 2006 and you were entitled to an on-road or an off-road credit in respect of the fuel and you have not made a claim for a payment of an energy grant in respect of the credit. The adjustment is attributable to a tax period that you choose that ends before 1 July 2009.

You purchased an amount of on-road diesel fuel between 1 July 2003 and 30 June 2006 for which you state you are entitled to an on-road credit under the EGCSA.

Your entitlement to an on-road credit or a fuel tax credit is not at issue for this ruling.

You have not claimed an energy grant in relation to this credit.

You choose to attribute the amount of the credit as a decreasing fuel tax adjustment to its fuel tax return period ending 30 June 2009.

You will be lodging an amendment to your BAS for the period ended 30 June 2009.

All of the conditions in item 9 of the FTCTPA have been met. Accordingly you are entitled to a decreasing fuel tax adjustment for on-road diesel fuel purchased between 1 July 2003 and 30 June 2006 for which you have an entitlement under the EGCSA.

Fuel Tax Credits

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 in Australia to the extent that you do so for use in carrying on your enterprise if you are registered for GST.

However section 47-5 of the FTA provides that:

You cease to be entitled to a fuel tax credit to the extent that you have not taken it into account in working out your *net fuel amount for:

(a) the *tax period or *fuel tax return period to which the fuel tax credit would be attributable under subsection 65-5(1), (2) or (3); or

(b) any other tax period, or fuel tax return period, for which you give to the Commissioner a return under section 61-15 during the period of 4 years after the day on which you were required to give to the Commissioner such a return for the tax period or fuel tax return period referred to in paragraph (a).

Subsection 65-5(1) of the FTA provides that for fuel that you acquire or import, the fuel tax credit is attributable to the same tax period that your input tax credit for the fuel is attributable under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). You are registered for GST and this is relevant to your situation.

Subsection 65-5(2) of the FTA applies to entities that are not required to be registered for GST and is not applicable to your situation.

Subsection 65-5(3) applies to entities that manufacture fuel and is not relevant to your situation.

Subsection 65-5(4) provides that you can attribute a credit to a later tax period for which you give the Commissioner a return that does take it into account.

However, later attribution under subsection 65-5(4) of the FTA cannot be applied where entitlement has ceased under section 47-5. That is, later attribution cannot be used when this is over four years from the date on which a return should have been given to the Commissioner under subsection 65-5(1).

The Explanatory Memorandum to Tax Laws Amendment (2009 GST Administration Measures) Bill 2009, which amended GST and fuel tax legislation, states,

…

1.3 Under the GST Act, input tax credits (including reduced input tax credits) are attributable to the first tax period in which either any consideration is provided by the recipient, or an invoice is issued. If the taxpayer accounts on a cash basis, input tax credits will only be attributable when and to the extent that the recipient provides consideration.

1.4 Two exceptions exist to this basic rule. Firstly, input tax credits cannot be attributed to a tax period unless a relevant tax invoice is held by the taxpayer in that tax period. Such input tax credits will instead be attributable to the first tax period in which the taxpayer holds a tax invoice (see subsection 29-10(3) of the GST Act). Secondly, if the GST return for a tax period does not take into account an otherwise attributable input tax credit, the input tax credit is not attributable to that tax period. Such credits are attributable to the first period in which a return is provided taking the credit into account (see subsection 29-10(4) of the GST Act).

1.5 Similar provisions exist for fuel tax credits (see section 65-5 of the Fuel Tax Act).

1.6 The TAA 1953 * establishes a four-year limitation period for indirect tax liabilities and entitlements, including input tax credits (subject to special rules in situations involving fraud and evasion or where notice of the liability or entitlement has been provided). The four-year period for claiming input tax credits and fuel tax credits starts from the end of the tax period to which the relevant credit is attributable (see section 105-55 of Schedule 1 to the TAA 1953).

1.7 As outlined above, the four-year period is imposed by reference to the tax period or fuel tax return period to which the credit was attributable. However, the attribution rules permit taxpayers to defer the attribution of credits until a later tax period. As a consequence there is no effective limitation period for claiming input tax credits and fuel tax credits.

1.8 Flexibility in attributing input tax credits and fuel tax credits benefits taxpayers and the Commissioner of Taxation (Commissioner) by minimising the need for revisions to prior returns. Removing this flexibility would increase compliance costs. However, it is also important to balance certainty and consistency generally for GST and fuel tax credits by limiting the time for revising liabilities and entitlements. Flexibility in attributing credits should not result in input tax and fuel tax credit entitlements existing indefinitely, including where the entity's liabilities for the same period are no longer due and payable because of the four-year limitation period.

1.9 Schedule 1 amends the GST Act, Fuel Tax Act and TAA 1953 to provide that a taxpayer will cease to be entitled to an input tax credit (including a reduced input tax credit) or fuel tax credit if the credit has not been claimed within four years. The four-year period starts from the date to which it would be attributable under the basic attribution rules in subsections 29-10(1) and (2) of the GST Act for input tax credits and subsections 65-5(1) to (3) of the Fuel Tax Act for fuel tax credits.

* Taxation Administration Act 1953

Therefore it is clear that the intention of Parliament was that the later attribution rules could not be used to override the four year limit imposed under the TAA and it was introducing section 47-5 of the FTA to achieve this.

You have not claimed all of your fuel tax entitlement for fuel acquired during the period 1 July 2006 to 28 February 2007.

As you lodge your BAS monthly these would have been due 21 days after the end of the period. That is, for the period stated above, monthly for the period 21 August 2006 to 21 March 2007. The four year period under section 47-5 of the FTA ends 21 August 2010 to 21 March 2011. Therefore your entitlement to a fuel tax credit has ceased.

Accordingly, you are not entitled to a fuel tax credit for taxable fuel acquired between 1 July 2006 and 28 February 2007 for use in eligible activities in carrying on your enterprise.

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