Edited version of private ruling

Authorisation Number: 1011594816288

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Ruling

Subject: Fuel tax credits

Questions:

1. Are you entitled to a fuel tax credit for the diesel and petrol you acquire and use in your vehicles that have a gross vehicle mass of less than 4.5 tonnes, when travelling on public roads for your seed collecting activities?

Answer: No.

2. Are you entitled to claim a fuel tax credit at the full rate, for the diesel and petrol you acquire and use in your vehicles when they do not travel on public roads for your seed collecting activities?

Answer: No.

3. Are you entitled to claim a fuel tax credit, at the full rate, for the petrol you acquire and use in your chainsaw for your seed collecting activities?

Answer: No.

4. Are you entitled to a fuel tax credit at the half rate, for the diesel and petrol you acquire and use in your vehicles when they do not travel on public roads for your seed collecting activities?

Answer: Yes.

5. Are you entitled to claim a fuel tax credit, at the half rate, for the petrol you acquire and use in your chainsaw for your seed collecting activities?

Answer: Yes.

This ruling applies for the following period:

2009-10 income year

The scheme commences on:

1 July 2009

Relevant facts and circumstances

You are contracted as a seed collector.

You collect seeds from logging coupes, which you can enter into at any stage of the logging cycle.

The collected seeds are sold/delivered to the entity that contracts you.

To undertake your seed collecting activities, you use a road registered light truck and another vehicle, that each have a gross vehicle mass (GVM) of less than 4.5 tonnes, and a chainsaw.

Your light truck operates on diesel and your other vehicle on unleaded petrol.

The vehicles travel on a variety of roads that range from:

· bitumen and gravel public roads; to

· forestry roads and tracks, some of which have restricted public access

You advised that the vehicles do not go off-road, they remain on the roads and forestry tracks.

You use your chainsaw to lop branches for easier collection of the seeds as well as to clear access path to collect the seeds. It operates on unleaded petrol.

You acquire the fuel used in your vehicles and equipment, and are not reimbursed.

You have advised that you intend to register for goods and services tax (GST) for the ruling period.

Assumption

You have registered for goods and services tax for the ruling period.

Relevant legislative provisions

Energy Grants (Credits) Scheme Act 2003 section 35

Energy Grants (Credits) Scheme Act 2003 paragraph 35(a)

Energy Grants (Credits) Scheme Act 2003 paragraph 35(b)

Energy Grants (Credits) Scheme Act 2003 paragraph 35(c)

Energy Grants (Credits) Scheme Act 2003 paragraph 35(d)

Energy Grants (Credits) Scheme Act 2003 paragraph 35(e)

Energy Grants (Credits) Scheme Act 2003 paragraph 35(f)

Energy Grants (Credits) Scheme Act 2003 section 53

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 section subdivision 41-B

Fuel Tax Act 2006 section 41-20

Fuel Tax (Consequential and Transitional Provisions) Act 2006 Division 2 in Part 3 of Schedule 3

Fuel Tax (Consequential and Transitional Provisions) Act 2006 paragraph 11(1)(b) 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 subparagraph 11(1)(b)(ii) of Schedule 3

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

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

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

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

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

Summary

Provided you are registered for goods and services tax (GST), you are entitled to claim a fuel tax credit at the half rate* for that portion of fuel you acquire and use in your:

· vehicles when they do not travel on public roads; and

· your chainsaw.

You are not entitled to claim a fuel tax credit for the portion of fuel you acquire and use in your vehicles when you are travelling on public roads.

Please note that you will need to check with your local forestry authority to determine which forestry roads and tracks you travel along are still under their responsibility.

* For the ruling period, the fuel tax credit at the half rate was at $0.190715 per litre.

Detailed reasoning

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, if you are registered for GST. However, this entitlement is affected by Division 2 in Part 3 of Schedule 3 to the Fuel Tax (Consequential and Transitional Provisions) Act 2006 (FTCTPA) that operates to restrict this entitlement to specific activities for fuel acquired between 1 July 2008 and 30 June 2012, whilst retaining entitlements under the Energy Grant (Credits) Scheme Act 2003 (EGCSA).

The specific activities for which an entitlement exists under section 41-5 of the FTA are listed within paragraph 11(1)(b) of Schedule 3 to the FTCTPA. They are:

(i) for use in a vehicle travelling on a public road; or

(ii) for incidental use (within the meaning of section 8 of the Energy Grants Act) in relation to a vehicle covered by subparagraph (i); or

(iii) generation of electricity

(iv) use other than as a fuel

(v) burner fuel

(vi) for use as heating oil.

You are contracted as a seed collector and collect seeds from logging coupes. To undertake your seed collecting activities, you use a road registered light truck and another vehicle that travel on a variety of roads that range from bitumen and gravel public roads to forestry roads and tracks, some of which have restricted public access.

Vehicles: travel on a public road

Travel on a public road is a specific activity listed at subparagraph 11(1)(b)(i) of Schedule 3 to the FTCTPA.

A road is a public road if it is:

· opened, declared or dedicated as a public road under a statute;

· vested in a government authority having statutory responsibility for the control and management of public road infrastructure; or

· dedicated as a public road at common law.

The following are not considered public roads for the purposes fuel tax credits:

· a road constructed or maintained under a statutory regime by a public authority that is not an authority responsible for the provision of road transport infrastructure, in circumstances where the statutory regime provides that public use of, or access to, the road is subordinate to the primary objects of the statutory regime;

· a forestry road; or

· a road that has not been dedicated as a public road over privately owned land.

A forestry road is a road within a forest or plantation which is constructed and maintained primarily and principally for the purposes of providing access to an area to facilitate forestry activities (for example, to facilitate trees to be planted or tended in the area, or timber felled in the area to be removed) and for related forestry management activities.

However, conversion of a forestry road to a public road can occur on occasions where the responsibility for a forestry road is formally passed from the forestry authority to a local government authority or to a state or territory authority having responsibility for highways and main roads. In such cases, the affected road will, thereafter, be a public road even if, after the transfer, it is formally declared to be a 'forest road'. The transfer of control and management of the road to the authority having responsibility for highways and main roads results in the road being declared or dedicated as a public road.

You use a light truck and another vehicle, that each have a gross vehicle mass (GVM) of less than 4.5 tonnes, in your seed collecting activities. Your vehicles travel on a variety of roads that range from bitumen and gravel public roads to forestry roads and tracks, some of which have restricted public access.

Therefore, some of the travel for your seed collecting activities is on public roads. As such, you satisfy subparagraph 11(1)(b)(i) of Schedule 3 to the FTCTPA which provides an entitlement to fuel tax credits under section 41-5 of the FTA.

However, section 41-5 of the FTA is subject to a number of disentitlement rules outlined at subdivision 41-B of the FTA.

Section 41-20 of the FTA states that you are not entitled to a fuel tax credit for the use of fuel in a vehicle with a GVM of 4.5 tonnes or less travelling on a public road.

Whilst you acquire taxable fuel (petrol and diesel) for use in vehicles that travel on public roads, your vehicles each have a GVM of less than 4.5 tonnes. Therefore, section 41-20 of the FTA applies.

Accordingly, you are not entitled to a fuel tax credit for the diesel and petrol you acquire and use in your vehicles that have a GVM less than 4.5 tonnes, when travelling on public roads for your seed collecting activities.

Vehicles: not on a public road

In your seed collecting activities, you travel on a variety of roads, including forestry roads and tracks, some of which have restricted public access.

As stated above, forestry roads and tracks are generally not considered public roads unless the responsibility for them have been formally passed from the forestry authority to a local government authority or to a state or territory authority having responsibility for highways and main roads.

Travel on a road that is not on a public road is not a specified activity under paragraph 11(1)(b) of Schedule 3 to the FTCTPA. As such, we need to examine if you would have an entitlement to a fuel tax credit under either subitems 11(3) or 11(5) of Schedule 3 to the FTCTPA.

Subitems 11(3) and 11(5) of Schedule 3 to the FTCTPA provide for an entitlement to a fuel tax credit if you would have been entitled to an on-road or off-road credit under the EGCSA.

On-road

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

There was no entitlement under the EGCSA for vehicles with a GVM of less than 4.5 tonnes. Accordingly you would not have been entitled to an on-road credit under the EGCSA.

As such, you do not have an entitlement to a fuel tax credit under subitem 11(3) of Schedule 3 to the FTCTPA.

Off-road

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 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. Use in primary production (otherwise than for the purpose of propelling a road vehicle on a public road), is a use that qualifies. Primary production includes forestry.

Forestry activities for the purposes of the EGCSA are outlined in section 35. They are:

(a) the planting or tending, in a forest or plantation, of trees intended for felling; or

(b) the thinning or felling, in a forest or plantation, of standing timber;

and includes:

(c) the transporting, milling or processing, in a forest or plantation, of timber felled in the forest or plantation; or

(d) the milling of timber at a sawmill or chipmill that is not situated in the forest or plantation in which the timber was felled; or

(e) where timber is milled at a sawmill or chipmill that is not situated in the forest or plantation in which the timber was felled- the transporting of the timber from the forest or plantation in which it was felled to the sawmill or chipmill; or

(f) the making and maintaining in a forest or plantation of a road that is integral to the activities referred to in paragraph (a), (b) or (c).

You are contracted as a seed collector and collect seeds from logging coupes. You lop branches for easier collection of the seeds as well as to clear access path to collect the seeds.

Your seed collection activities, although related to forestry, are not one of the qualifying forestry activities under section 35 of the EGCSA. Therefore, you are not entitled to an off-road credit under the EGCSA. As such, you do not have an entitlement to a fuel tax credit under subitem 11(5) of Schedule 3 to the FTCTPA.

Accordingly, you are not entitled to a fuel tax credit at the full rate, for the diesel and petrol you acquire and use in your vehicles when they do not travel on public roads for your seed collecting activities.

Chainsaw

You use your unleaded petrol chainsaw in your seed collecting activities. You use it to lop branches for easier collection of the seeds as well as to clear access path to collect the seeds.

The use of a chainsaw in your seed collecting activities is not a specified activity listed in paragraph 11(1)(b) of Schedule 3 to the FTCTPA.

Further, as mentioned above, your seed collecting activities do not qualify for an off-road credit under the EGCSA as it is not one of the defined forestry activities under section 35 of the EGCSA. Therefore, the use of your chainsaw in your seed collecting activities does do qualify under subitem 11(5) of Schedule 3 to the FTCTPA.

Accordingly, you are not entitled to claim a fuel tax credit at the full rate, for the petrol you acquire and use in your chainsaw for your seed collecting activities.

Half rate

Subitem 11(6) of Schedule 3 to the FTCTPA provides that from 1 July 2008, an entitlement to a fuel tax credit arises under the FTA, if you were not previously entitled to an on-road or an off-road credit. 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.

Therefore, you are entitled to a fuel tax credit at the half rate for the acquisition and use of fuel in the above activities which were not previously eligible for the period 1 July 2009 to 30 June 2010.

As discussed above, the activities that you were previously not eligible for fuel tax credits included:

· fuel used in your vehicles when not travelling on a public road; and

· fuel used in your chainsaw.

Subitem 11(6) of Schedule 3 in the FTCTPA does not apply to your use of fuel in any vehicles 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.

Please note that you will need to check with your local forestry authority to determine which forestry roads and tracks you travel along are still under their responsibility.