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Edited version of private ruling
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Ruling
Subject: Fuel tax credits - Mining & Marine
Question:
Are you entitled to fuel tax credits for the use of marine diesel fuel in your activities related to the development of a gasfield?
Answer:
Yes.
This ruling applies for the following period/s:
2008-09 income year
2009-10 income year
The scheme commences on:
1 July 2008
Relevant facts and circumstances
You are an Australian company who carried on an enterprise in the oil and gas industry.
You are registered for goods and services tax (GST).
You were contracted to provide services in the development of a gasfield.
Specific activities you undertook included drilling and completion of subsea wells, the installation and testing of subsea trees and the installation of pipelines.
To carry out these activities you chartered a number of diving and installation support vessels.
Other activities undertaken by the vessels included
· the loading, unloading and transportation of construction materials during the development of the field,
· transport of staff to and from the gasfield,
· using equipment based on the vessels to enable people to board or disembark from the vessels,
· transporting the vessels for repairs, improvements and maintenance, and
· operating equipment for air conditioning, heating, lighting or other uses incidental to the operations of the vessels
You acquired or imported marine diesel fuel for the operation of these vessels.
Relevant legislative provisions
Fuel Tax Act 2006 section 41-5
Fuel Tax (Consequential and Transitional Provisions) Act 2006 Division 2 of Schedule 3
Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 11(5) of Schedule 3
Energy Grants (Credits) Scheme Act 2003 section 53
Energy Grants (Credits) Scheme Act 2003 subsection 53(2)
Energy Grants (Credits) Scheme Act 2003 subsection 53(3)
Energy Grants (Credits) Scheme Act 2003 section 11
Energy Grants (Credits) Scheme Act 2003 subsection 11(1)
Energy Grants (Credits) Scheme Act 2003 paragraph 11(1)(a)
Energy Grants (Credits) Scheme Act 2003 section 36
Energy Grants (Credits) Scheme Act 2003 subsection 36(2)
Energy Grants (Credits) Scheme Act 2003 subsection 36(4)
Energy Grants (Credits) Scheme Act 2003 subsection 36(5)
Energy Grants (Credits) Scheme Act 2003 subsection 36(6)
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, or import into, Australia to the extent you do so for use in carrying on your enterprise, if you are registered for GST. 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 purchased between 1 July 2008 and 30 June 2012.
Subitem 11(5) of Schedule 3 to the FTCTPA provides that you are entitled to a fuel tax credit if you would have been entitled to an off-road credit under the Energy Grants (Credits) Scheme Act 2003 (EGCSA).
Subsection 53(2) of the EGCSA provides that use of diesel fuel in mining operations is a use that qualifies and subsection 53(3) of the EGCSA provides that use in marine transport is a use that qualifies. Each will be considered in turn.
Mining
Paragraph 11(1)(a) of the EGCSA provides that mining operations means:
· exploration or prospecting for minerals, or the removal of overburden and other activities undertaken in the preparation of a site to enable mining for minerals to commence; or
· …
The mining of oil or gas reserves involves drilling wells and installation of trees to allow for the extraction of the oil or gas. These activities are done in preparation for the mining of minerals commence.
You used marine diesel in vessels to undertake drilling and completion of subsea wells, the installation and testing of subsea trees and the installation of pipelines for the development of a gasfield. Accordingly, you are undertaking mining operations for the purposes of the EGCSA and you would be entitled to an off-road credit.
Marine
Subsection 36(2) of the EGCSA states that use in a vessel in marine transport is use in marine transport.
You used marine diesel in vessels in the transport of construction materials and staff to and from the field. This is use in marine transport and you would be entitled to an off-road credit.
Use in marine transport includes use in a vessel or in equipment in or on a vessel, while the vessel is in or on the sea or fresh water for any of the purposes mentioned in subsection 36(4) of the EGCSA.
Subsection 36(4) of the EGCSA relevantly specifies the following purposes:
· loading anything onto the vessel, or enabling persons to board the vessel, for the purpose of being transported by the vessel;
· unloading anything from the vessel, or enabling persons to disembark from the vessel, after being transported by the vessel;
· …
You undertook the loading and unloading of material transported by the vessel, and used equipment based on the vessels to enable people to board or disembark from the vessels. This is use in marine transport and you would be entitled to an off-road credit.
Subsection 36(5) of the EGCSA relevantly provides that use in a vessel to transport it to or from a person undertaking repairs or improvements or maintenance of the vessel is use in marine transport.
You used marine diesel in transporting the vessels for repairs, improvements and maintenance. This is use in marine transport and you would be entitled to an off-road credit.
Subsection 36(6) relevantly provides that use in equipment in or on the vessel for air-conditioning, heating, lighting or any other purpose incidental to the use of the vessel in use in marine transport.
You used fuel in operating equipment for air conditioning, heating, lighting or other uses incidental to the operations of the vessels. This is use in marine transport and you would be entitled to an off-road credit.
As you would have been entitled to an off-road credit under the EGCSA for your activities, you are entitled to a fuel tax credit for the use of marine diesel fuel in your activities related to the development of a gasfield.