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This edited version has been archived due to the length of time since original publication.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 written advice

Authorisation Number: 1012713611140

Ruling

Subject: Fuel Tax Credits - acquisition

Question 1

Are you entitled to a fuel tax credit for the taxable fuel you acquired in performance of services that you provided under a contractual arrangement?

Answer

Yes. You acquired taxable fuel for use in carrying on your enterprise and did not dispose of that fuel under the contractual arrangement.

This ruling applies for the following periods:

Year end 30 June 2013.

The scheme commences on:

The scheme has commenced

Relevant facts and circumstances

You were engaged under contract to provide specified services.

You imported into, and purchased in Australia taxable fuel in carrying out these services.

A dispute arose between you and the contractor. The contractor and you entered into an agreement in settlement of the dispute.

Relevant legislative provisions

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 Division 44

Reasons for decision

Section 41-5 of the FTA provides that:

You must be registered for GST at the time of acquisition, importation or manufacture of the fuel.

If, however, the fuel is subsequently used in different circumstances, or you make a taxable supply of the fuel, then a fuel tax adjustment for the fuel tax credit arises under Division 44 of the FTA.

The Commissioner of Taxation (Commissioner) discusses the meaning of 'acquire' in the context of the FTA in Fuel Taxation Ruling FTR 2007/1, Fuel tax: the meaning of 'acquire', 'manufacture' and 'import' in the expression 'taxable fuel that you acquire or manufacture in, or import into, Australia to the extent that you do so for use in carrying on your enterprise' in the Fuel Tax Act 2006 (FTR 2007/1).

At paragraph 19 of FTR 2007/1 the Commissioner states that the term 'acquire' has the ordinary meaning of to 'get as one's own'. Paragraph 20 explains that:

Paragraphs 21 and 22 of FTR 2007/1 explain that fuel is acquired if:

At paragraph 144 of FTR 2007/1 the Commissioner reiterates his view that:

You can substantiate that you imported into, and purchased in Australia, taxable fuel in carrying out your services, however it must be determined if you disposed of this fuel.

When reading the contract in conjunction with and the agreement in settlement of the dispute it is not clear as to whether or not you disposed of the fuel. In interpreting the effect of clauses in a contract that could have more than on interpretation, the courts have given weight to the common intention of the parties to the contract, as drawn from the available evidence.

When reading the contract and the settlement agreement together, and taking into account the commonly held view and actions of the parties it is reasonable to conclude that you did not dispose of the fuel.


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).