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This edited version has been archived due to the length of time since original publication.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

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Edited version of your written advice

Authorisation Number: 1051312546272

Date of advice: 24 November 2017

Ruling

Subject: Fuel tax credits

Question 1

Are you entitled to a fuel tax credit at the full rate for taxable fuel acquired for use in vehicles exceeding 4.5 tonnes gross vehicle mass (GVM) at a quarry for the purpose of transporting road construction, repair or maintenance materials?

Answer

Yes.

Question 2

Are you entitled to a fuel tax credit at the full rate for taxable fuel acquired for use in vehicles exceeding 4.5 tonnes GVM at the section of roads that are under construction or repair and are not open to the public, for the purpose of transporting road construction and maintenance materials and spreading it along the part of the roads under construction?

Answer

Yes

Question 3

Are you entitled to a fuel tax credit at the full rate for taxable fuel acquired and used in water trucks to travel on roads that are under construction or maintenance, and not open to the public, for the purposes of dust suppression?

Answer

Yes

This ruling applies for the following period:

2016 - 17 income year

The scheme commences on:

1 July 2016

Relevant facts and circumstances

You are registered for Goods and Services Tax.

You use vehicles exceeding 4.5 tonnes GVM (heavy vehicles) to transport quarried material for use in the construction, repair and maintenance of roads.

The heavy vehicles begin their trip at the quarry whereby they are loaded with the quarried material.

The heavy vehicles leave the quarry and travel along a public road to the road construction site.

The vehicles travel along the road construction or maintenance site to a designated location where it unloads the quarried material, spreading it along the road under construction.

After unloading the materials, the heavy vehicles travel on public roads to return to the quarry to repeat the trip.

Your heavy vehicles can also operate as water trucks.

The quarry

Large signs are posted at the entrance to the quarry stating that the site is a private property and prohibiting the entry of unauthorised persons.

The roads under construction and maintenance

The construction sites are roads that are under construction, repair or maintenance, and are not open to the public for travel. The roads that are closed to the public have signs posted at each end of the road under construction, or, should only one lane of the entire road be closed, have "witches hats" delineating that part of the road that is closed.

Relevant legislative provisions

Fuel Tax Act 2006 section 41-5,

Fuel Tax Act 2006 subsection 43-10(3)

Fuel Tax Act 2006 subsection 43-10(4)

Reasons for decision

Section 41-5 of the Fuel Tax Act 2006 (FTA) provides that if you are registered for goods and services tax at the time you acquire the fuel, you are entitled to a fuel tax credit for taxable fuel that you acquire or manufacture in, or import into, the indirect tax zone to the extent that you do so for use in carrying on your enterprise.

Subsection 43-10(3) of the FTA provides that your fuel tax credit is reduced by the amount of the Road User Charge (RUC) in relation to taxable fuel acquired to use, in a heavy vehicle, for travelling on a public road.

A heavy vehicle means a vehicle with gross vehicle mass (GVM) of more than 4.5 tonnes.

Travelling

Fuel Tax Ruling FTR 2008/1: vehicle’s travel on a public road that is incidental to the vehicle’s main use and the road user charge, provides the Commissioner’s views regarding the term ‘travel’ for the purposes of subsections 43-10(3) and (4) of the FTA and states at paragraphs 14 and 15 that:

Relevantly, the Commissioner’s consideration of the movement by a vehicle engaged in road construction, repair or maintenance is detailed in FTR 2008/1 at paragraphs 21 to 23 and provides that:

This exception to the meaning of travel is further elaborated in paragraphs 117 to 119 in FTR 2008/1 and states that, in the context of a vehicle engaged in road construction, repair or maintenance, the vehicle’s movement on a public road is not considered ‘travel’ as its purpose of moving is to benefit the road and not relocate the vehicle. However, if such a vehicle is driven to a new location to carry out road construction, repair or maintenance, its movement would satisfy the term ‘travel’ for the purposes of the FTA.

Heavy vehicles travelling in the quarry

The term ‘public road’ is not defined in the FTA; however, the Commissioner’s view of what constitutes a public road is discussed in FTR 2008/1. Paragraph 43D of FTR 2008/1 explains the meaning of a public road and paragraph 44 provides examples of roads that are public roads.

Paragraph 121 of FTR 2008/1 further explained that:

Your heavy vehicles collect materials for the construction, repair or maintenance of roads from the quarry. These materials are loaded onto the heavy vehicles at the quarry. To allow access to these activities, roads are constructed within the quarry that lead from the entrance to the material loading point and back to the exit. These roads within the quarry are not used for transport of the public from one point to another; and are not for use by the public, and as such they not ‘public roads’ for the purposes of subsections 43-10(3) and 43-10(4) of the FTA.

As your heavy vehicles are not travelling on a public road at the quarry, your fuel tax credit entitlement for the taxable fuel used at the quarry is not reduced by the road user charge under subsection 43-10(3) of the FTA.

Heavy vehicles travelling in construction site

Your heavy vehicles transport quarried materials from the quarry to the roads that are under construction, repair or maintenance.

At these construction sites, your vehicles may idle for an extended period while waiting to distribute the quarried materials. Your vehicles then distribute the materials, spreading them along various areas of the roads that are under construction or repair. Your vehicles are engaged in the construction, repair or maintenance of the road and as such are not travelling for the purpose of subsection 43-10(3) of the FTA.

As a result, the fuel tax credit for the taxable fuel used in your heavy vehicles while idling and spreading the quarried material is at the full rate.

Water Trucks used for suppression of dust

As discussed above, the Commissioner considers that vehicles engaged in the activity of road construction, repair and maintenance are not travelling.

Paragraph 23 of FTR 2008/1 specifically refers to water carts, and similarly water trucks, and relevantly states:

Example 16 in FTR 2008/1 further discusses the use of water carts to spray water within the construction site for dust suppressions:

Your water trucks are engaged in the construction, repair or maintenance of roads because they spray water to suppress dust that result from other activities relevant to the construction, repair or maintenance of the road. The water trucks’ travel on roads or portions of roads that are under construction, repair or maintenance to suppress the dust is therefore not ‘travelling’ for the purposes of section 43-10(3) of the FTA.

As a result, the taxable fuel used in your water trucks that spray water to suppress dust whilst travelling on roads that are under construction, repair or maintenance is eligible for fuel tax credits at the full rate.

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