Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012354281851

This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.

Ruling

Subject: Fuel tax credits - liquefied petroleum gas

Question 1:

Are you entitled to fuel tax credits at the rate of 2.5 cents per litre for the duty paid liquefied petroleum gas (LPG) you acquired and used in the distribution of 45 kilogram (kg) containers of LPG to the general public from 1 January 2012 to 30 June 2012?

Answer:

Yes.

Question 2:

Are you entitled to fuel tax credits at the rate of 1.32 cents per litre for the duty paid LPG you acquire and use in the distribution of 45kg containers of LPG to the general public from 1 July 2012 to 30 June 2013?

Answer:

Yes.

Question 3:

Are you entitled to fuel tax credits at the rate of 3.636 cents per litre for the duty paid LPG you acquire and use in the distribution of 45kg containers of LPG to the general public from
1 July 2013 to 30 June 2014?

Answer:

Yes.

Question 4:

Are you entitled to fuel tax credits for the LPG you acquire and use in your vehicles for travelling on public roads?

Answer:

No.

This ruling applies for the following periods:

2011- 12 income year

2012-13 income year

2013-14 income year

The scheme commences on:

1 July 2011

Relevant facts and circumstances

You are registered for goods and services tax (GST).

You acquire liquefied petroleum gas (LPG) in bulk and this is delivered and stored in your bulk tank, which holds 20,000 litres.

You purchase the LPG from a gas distributor and because you have a LPG bowser attached to your bulk tank and do use a portion of that LPG in your vehicles, you are currently charged 5 cents per litre excise on that fuel by that LPG supplier.

You also use the LPG from your bulk tank to fill 45 kilogram cylinders on your site which you sell to the domestic market for use in heating and cooking.

You state the breakdown of the product used is about 7% auto gas and the remainder is used as domestic. You have stated that the domestic gas supply is not subject to excise.

Relevant legislative provisions

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 subdivision 41-B

Fuel Tax Act 2006 subsection 41-10(3)

Fuel Tax Act 2006 paragraph 41-10(3)(c)

Fuel Tax Act 2006 section 43-5

Fuel Tax Act 2006 section 43-8

Fuel Tax Act 2006 subsection 43-8(4)

Fuel Tax Act 2006 subsection 43-10(3)

Fuel Tax Act 2006 section 60-5

Fuel Tax Act 2006 section 110-5

Excise Act 1901

Excise Tariff Act 1921

Clean Energy (Fuel Tax Legislation Amendment) Act 2011

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

Taxable fuel is defined in section 110-5 of the FTA as fuel on which duty is payable under the Excise Act 1901 and the Excise Tariff Act 1921(Excise Tariff Act). For the period 1 July 2012 to 30 June 2013, the rate of excise duty that applies to LPG is provided for under item 10.19A of The Schedule to the Excise Tariff Act at 5 cents per litre. For the period 1 December 2011 to 30 June 2012 the rate was 2.5 cents per litre.

Subsection 41-10(3) of the FTA relevantly provides that you are entitled to a fuel tax credit for LPG that you acquire to the extent that:

However, paragraph 41-10(3)(c) of the FTA provides that this entitlement to fuel tax credits does not extend to where the tank is used in a system which supplies fuel to an internal combustion engine of either a motor vehicle or a tank connected to such an engine.

Calculating fuel tax credits

In accordance with section 43-5 of the FTA, the amount of the fuel tax credit for taxable fuel is the amount of effective fuel tax that is payable on the fuel. However, your fuel tax credit entitlement can also be affected by:

Also, from 1 July 2012, there were changes to the FTA resulting from the Clean Energy (Fuel Tax Legislation Amendment) Act 2011. As a result of these changes the amount of your fuel tax credit for taxable fuel can also be affected by the amount of carbon reduction.

Carbon reduction

Section 43-8 of the FTA sets out the rules for working out the amount of the carbon reduction to fuel tax credit calculations from 1 July 2012.

It provides that the amount of carbon reduction that applies to a particular quantity of taxable fuel is worked out by using the following formula:

Further, subsection 43-8(4) of the FTA provides for those circumstances where the amount of carbon reduction is nil. That is, where the fuel is acquired for use in:

The amount of carbon reduction that applies to the fuel will also be nil if covered by the Opt-in-Scheme from 1 July 2013.

Where LPG has been acquired subject to the full excise duty and you use the fuel in certain non-transport activities, you can claim fuel tax credits at the following rates:

Fuel type

From 1 July 2012

From 1 July 2013

LPG (cents per litre)

1.32

(5.00 - 3.68)

3.636

(7.50 - 3.864)

Your supply of LPG

You acquire LPG predominantly for the purpose of supplying containers with a maximum capacity of 45 kilograms to domestic users. The excise paid on this fuel during the period 1 January 2012 to 30 June 2012 was 2.5 cents and the excise paid on the fuel during the period 1 July 2012 to 30 June 2013 is 5 cents per litre.

Consequently, from 1 January 2012 to 30 June 2012, the fuel tax credit applying to the LPG you acquire and supply to domestic users for heating and cooking would be equal to the excise you have paid on that fuel - 2.5 cents per litre.

However, from 1 July 2012, as the LPG you acquire and supply is to be ultimately combusted by your customers for heating and cooking, there is no exemption from the imposition of the carbon reduction. Consequently, this fuel would attract fuel tax credits at the rate of 1.32 cents per litre, which as outlined above provides for the amount of effective fuel tax (excise duty payable) less amount of carbon reduction.

Further, from 1 July 2013 the amount of effective fuel tax (excise duty) on LPG increases from 5 cents per litre to 7.5 cents per litre. Consequently, from this date this fuel would attract fuel tax credits at the rate of 3.636 cents per litre.

Accordingly, for the duty paid LPG you acquire and use in the distribution of 45 kilogram containers of LPG to the general public for the purposes of heating and cooking you are entitled to the following rate of fuel tax credits:

LPG used in your vehicles

However, some of the LPG in your bulk tank is used by you in your vehicles on public roads. If these vehicles have a GVM of less than 4.5 tonnes, you would not be entitled to fuel tax credit for that fuel under subdivision 41-B of the FTA. If these vehicles were greater than 4.5 tonnes, the imposition of the road user charge (RUC) currently exceeds the rate for LPG and as such would produce a fuel tax credit rate of less than zero for that portion of the LPG you acquire and use in those vehicles.

Accordingly, you are not entitled to fuel tax credits for the LPG you acquire and use in your vehicles for travelling on public roads.

Apportionment

Of the bulk LPG you acquire and use in your business a portion is acquired and used by you for supply to domestic consumers in 45 kilogram containers and a portion is used by you to propel vehicles on public roads.

Section 60-5 of the FTA provides that in working out your net fuel amount your total fuel tax credits is the sum of all fuel tax credits to which you are entitled in a tax period.

In Fuel Tax Determination FTD 2010/1 Fuel tax: is apportionment used when determining total fuel tax credits in calculating the net fuel amount under section 60-5 of the Fuel Tax Act 2006? the Commissioner sets out his views on the methods claimants can use when calculating their fuel tax credit entitlements in circumstances such as yours.

The use of the phrase 'to the extent that' in the FTA contemplates the apportionment of fuel between a use that entitles you to a fuel tax credit and one that does not and between uses that give rise to different rates of fuel tax credit.

Therefore, you would need to calculate:

A claimant can use any apportionment method that is fair and reasonable in their circumstances to determine the fuel tax credit that is available for the taxable fuel that they acquire.

Where there is more than one fair and reasonable way of apportioning, claimants may choose any method as long as it is fair and reasonable in their circumstances.

Your fuel tax credit entitlements are recorded at Label 7D on your business activity statement (BAS).

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).