Edited version of private ruling

Authorisation Number: 1011273936896

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Subject: Fuel tax credits - vehicle less than 4.5 tonnes

Ruling

Question 1:

Are you entitled to a fuel tax credit for diesel fuel you acquired for use in your utility and chipper with a gross vehicle mass (GVM) of less than 4.5 tonnes travelling on public roads?

Answer :

No.

Question 2:

Are you entitled to a fuel tax credit for diesel fuel you acquired for use in your chipper in public and private gardens?

Answer:

Yes.

This ruling applies for the following period(s):

2009-10 income year

2010-11 income year

2011-12 income year

The scheme commences on:

1 July 2009

Relevant facts and circumstances

You provide services solutions for public and private gardens such as:

· Pruning;

· shaping;

· tree removals; and

· mulching.

You use fuel powered plant and equipment in your business including chainsaws, a utility and a tow around chipper:

The utility and chipper are each registered separately by a road traffic authority for travel on public roads.

While both the utility and chipper are light vehicles with a gross vehicle mass (GVM) of less than 4.5 tonnes, the utility is used to tow the chipper and together they have a combined mass of greater than 4.5 tonnes.

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

Relevant legislative provisions

Energy Grants (Credits) Scheme Act 2003 section 53

Fuel Tax Act 2006 subdivision 41-B

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 section 41-20

Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(1) of schedule 3

Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(i) of schedule 3

Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(5) of schedule 3

Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(6) of schedule 3

Reasons for Decision

If you are registered for GST, 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. However, this entitlement is affected by Division 2 of 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 acquired between 1 July 2008 and 30 June 2012.

The specific activities are listed within subitem 11(1) of Schedule 3 of the FTCTPA.

You acquire diesel fuel for use in your utility travelling on public roads and also in your chipper in undertaking work in public and private gardens.

Each will be considered below.

Travel on public roads

Subparagraph 11(1)(b)(i) of Schedule 3 of the FTCTPA provides that an entitlement to a fuel tax credit arises under the FTA if you acquire taxable fuel for use in a vehicle travelling on a public road.

However, section 41-20 of the FTA states that you are not entitled to a fuel tax credit for taxable fuel used in vehicles with a gross vehicle mass of 4.5 tonnes or less travelling on a public road.

The term 'gross vehicle mass' takes on its ordinary meaning as the gross vehicle mass accepted by the authority that registered the vehicle.

In the context of the FTA, the Commissioner considers that the term 'vehicle' includes any vehicle that is capable of being authorised to travel on a public road by a relevant road traffic authority, whether or not the vehicle is designed for road travel or ordinarily travels on a public road.

Your utility and chipper are each registered separately by a road traffic authority for travel on public roads. Accordingly, they are each vehicles for the purposes of the FTA.

As the utility and chipper each have a GVM of less than 4.5 tonnes, you are not entitled to a fuel tax credit for diesel fuel you acquire for use in them travelling on public roads.

There is no discretion in the fuel tax legislation that allows the Commissioner to allow fuel tax credits for a vehicle with a GVM of less than 4.5 tonnes travelling on a public road.

Use of chipper in public and private gardens

Subitem 11(5) of Schedule 3 to the FTCTPA provides that you are entitled to a fuel tax credit under the FTA if you would have been entitled to an off-road credit under the EGCSA.

Section 53 of the EGCSA provides that you are entitled to an off-road credit if you purchase fuel for a use by you that qualifies. Uses that qualify include use of fuel in mining operations, primary production (including agriculture, forestry, fishing), marine transport, rail transport, electricity generation, use at certain premises and various other uses.

As the use of diesel fuel in your chipper doing work in public and private gardens does not fall within any of the qualifying uses under section 53 of the EGCSA, you would not have been entitled to an off-road credit for that fuel.

However, subitem 11(6) of Schedule 3 of the FTCTPA provides that from 1 July 2008, an entitlement to a fuel tax credit arises under the FTA, if you would not have been entitled to a credit previously. The amount of the credit is half of the amount of the full rate.

This provision is subject to the disentitlement rules of subdivision 41-B of the FTA, which disallows a fuel tax credit:

· if another entity was previously entitled to a credit,

· for fuel used in light vehicles travelling on public roads,

· for fuel used in motor vehicles that do not meet environmental criteria, or

· for fuel used in aircraft.

It was determined above that you were not entitled to a credit previously for the use of diesel fuel in your chipper. Furthermore, the fuel used in the chipper is not subject to the disentitlement rules when it is undertaking work in public and private gardens. Therefore, you are entitled to a fuel tax credit at the half rate for the use of fuel in the chipper in undertaking work in public and private gardens, from 1 July 2008.

Note that subitem 11(6) of Schedule 3 of the FTCTPA does not apply to your use of fuel in vehicles (utility and chipper) with a GVM of less than 4.5 tonnes travelling on public roads as they are subject to the disentitlement rules of subdivision 41-B of the FTA as discussed above.