Edited version of private ruling

Authorisation Number: 1011619505282

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Ruling

Subject: Fuel tax credits - council - road transport activities

Question 1:

Are you entitled to a fuel tax credit at the full rate less road user charge (RUC) for diesel fuel you acquire and use in a truck with a gross vehicle mass (GVM) of more than 4.5 tonnes for travel on a public road?

Answer:

Yes, provided you can satisfy one of the environmental criteria.

Question 2:

Are you entitled to a fuel tax credit rate at the full rate less RUC for diesel fuel you acquire and use in a truck to unload aggregate at a road construction site?

Answer:

Yes, provided you can satisfy one of the environmental criteria.

Question 3:

Are you entitled to a fuel tax credit at the half rate from 1 July 2008 for diesel fuel you acquire and use in a truck for undertaking dust suppression activities on a road construction site?

Answer:

Yes.

Question 4:

Are you entitled to use any method that is fair and reasonable in your circumstances to calculate your fuel tax credit entitlement?

Answer:

Yes.

This ruling applies for the following period:

2008-09 income year

2009-10 income year

2010-11 income year

2011-12 income year

The scheme commences on:

1 July 2008

Relevant facts and circumstances

You have a truck with a gross vehicle mass (GVM) of greater than 4.5 tonnes.

You use diesel fuel in the truck and you acquire this fuel.

The truck travels to and from a road construction site on a public road carrying aggregate and water in a tank mounted on the back of the truck.

The truck sometimes leaves the public road to unload and/or act as a water tanker in dust suppression at the road construction site.

You state the truck either tips the aggregate at the road construction site where a grader then spreads it out or is used as a dust suppression water tanker at the road construction site.

You state that on occasions the truck carries out some of its duties in travelling on a public road and some of its duties working at the road construction site but that this does occur in varying degrees.

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

Relevant legislative provisions

Energy Grants (Credits) Scheme Act 2003 section 8

Energy Grants (Credits) Scheme Act 2003 paragraph 8(a)

Energy Grants (Credits) Scheme Act 2003 subparagraph 8(a)(i)

Energy Grants (Credits) Scheme Act 2003 subparagraph 8(a)(ii)

Energy Grants (Credits) Scheme Act 2003 subparagraph 8(a)(iii)

Energy Grants (Credits) Scheme Act 2003 section 43

Energy Grants (Credits) Scheme Act 2003 subsection 43(1)

Energy Grants (Credits) Scheme Act 2003 subsection 43(2)

Energy Grants (Credits) Scheme Act 2003 section 53

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 section 41-20

Fuel Tax Act 2006 section 41-25

Fuel Tax Act 2006 subsection 41-25(1)

Fuel Tax Act 2006 paragraph 41-25(1)(a)

Fuel Tax Act 2006 paragraph 41-25(1)(b)

Fuel Tax Act 2006 paragraph 41-25(1)(c)

Fuel Tax Act 2006 paragraph 41-25(1)(d)

Fuel Tax Act 2006 subsection 43-10(3)

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

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 subparagraph 11(1)(b)(ii) 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

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 of Part 3 in 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, whilst retaining entitlements under the Energy Grants (Credits) Scheme Act 2003 (EGCSA).

The specific activities for which an entitlement exists are listed within subitem 11(1) of Schedule 3 to the FTCTPA.

Travel on a public road

Subparagraph 11(1)(b)(i) of Schedule 3 to the FTCTPA provides an entitlement to a fuel tax credit arises under section 41-5 of the FTA for taxable fuel acquired for use in a vehicle travelling on a public road.

However, section 41-20 limits this entitlement to a vehicle with a gross vehicle mass (GVM) of more than 4.5 tonnes travelling on a public road.

Further, section 41-25 of the FTA provides that the vehicle must meet one of the four environmental criteria:

a) it is manufactured on or after 1 January 1996

b) it is registered in an audited maintenance program accredited by the Transport Secretary;

c) it meets Rule 147A of the Australian Vehicle Standards Rules 1999; or

d) it complies with a maintenance schedule that is endorsed by the Transport Secretary.

You acquire and use diesel fuel in a truck which has a GVM of greater than 4.5 tonnes for travel on a public road to and from a road construction site. Therefore, provided you can meet one of the four environmental criteria above, you will satisfy all requirements.

Subsection 43-10(3) of the FTA provides that the amount of your fuel tax credit for use of fuel in a vehicle travelling on a public road is reduced by the amount of the road user charge (RUC).

Accordingly, you are entitled to a fuel tax credit at the full rate less road user charge (RUC) for diesel fuel you acquire and use in a truck with a gross vehicle mass (GVM) of more than 4.5 tonnes for travel on a public road.

Incidental use

Subparagraph 11(1)(b)(ii) of Schedule 3 to the FTCTPA provides that you are entitled to a fuel tax credit for incidental use (within the meaning of section 8 of the EGCSA) in relation to a vehicle covered by subparagraph (i).

Incidental use is defined as follows in section 8 of the EGCSA:

Each of the following, whether or not it takes place on a road, is an incidental use in relation to a vehicle:

(a) powering the vehicle, or auxiliary equipment in or on the vehicle, while:

i) goods to be transported in or on the vehicle are loaded or goods that have been so transported are unloaded; or

ii) passengers who are to be transported in or on the vehicle board or passengers who have been so transported alight; or

iii) the vehicle is moved to a place where anything in subparagraph (i) or (ii) is to happen or from a place where any such thing has happened;

…

Your truck carries aggregate to the road construction site, where it is unloaded for use by other plant and equipment in undertaking road construction activities. This satisfies the meaning of subparagraph 8(a)(i) of the EGCSA.

Therefore, provided your vehicle satisfies one of the four environmental criteria, you are entitled to a fuel tax credit at the full rate less RUC for diesel fuel you acquire and use in a truck to unload aggregate at a road construction site.

Activities at the road construction site

You also use diesel fuel in the truck for dust suppression activities on the road construction site. This is not an activity that falls within the activities listed in subitem 11(1) of Schedule 3 to the FTCTPA.

However, 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 either an on-road or off-road credit under the EGCSA respectively.

On-road

Section 43 of the EGCSA provides for entitlement to an on-road credit for vehicles with a GVM of 4.5 tonnes or more but less than 20 tonnes.

Subsection 43(1) provides that you are entitled to an on-road credit for diesel fuel used in a registered vehicle that has a GVM of 4.5 tonnes or more but less than 20 tonnes, where the vehicle is a vehicle for transporting passengers or goods, or incidental use in relation to such a vehicle.

However, this entitlement is affected by subsection 43(2) of the EGCSA which provides that you will only be entitled if the proposed use of the diesel fuel is in carrying on your enterprise in operating a vehicle on a road in Australia on a journey between:

· a point outside the metropolitan area and another point outside the metropolitan area,

· a point inside a metropolitan area and a point outside a metropolitan area,

· a point outside a metropolitan area and a point inside a metropolitan area, or

· between different metropolitan areas.

Diesel fuel used in a truck on a road construction site in undertaking dust suppression activities is neither being used in operating the vehicle on a road in Australia (that is the road is under construction) nor is it being used on a journey, therefore, subsection 43(2) is not satisfied.

Therefore, section 43 of the EGCSA is not satisfied and you would not have been entitled to an on-road credit for the use of diesel fuel in a truck for activities on a road construction site. Accordingly, you do not satisfy subitem 11(3) of the FTCTPA.

Off-road

Section 53 of the EGCSA provides that you are entitled to an off-road credit if you purchase off-road diesel fuel for a use by you that qualifies.

Uses that qualify include use in mining operations, primary production, rail transport, marine transport, use at certain premises and use in certain industrial processes.

Use of diesel fuel in a truck on a road construction site in dust suppression activities is not a use that qualifies.

Therefore, section 53 of the EGCSA is not satisfied and you would not have been entitled to an off-road credit for the use of diesel fuel in a truck undertaking activities on a road construction site. Accordingly, you do not satisfy subitem 11(5) of the FTCTPA.

Fuel tax credit at half rate

From 1 July 2008, subitem 11(6) of Schedule 3 to the FTCTPA provides that an entitlement to a fuel tax credit will arise under the FTA if you would not have been entitled to a credit previously. That is, if you acquire taxable fuel for use in carrying on your enterprise, and were not entitled to a credit previously, then you are entitled to half of the amount of the fuel tax credit.

You use diesel fuel in a truck in undertaking activities on a road construction site. This is not an activity that falls within the activities listed in either subitems 11(1), 11(3) and 11(5) of Schedule 3 to the FTCTPA.

Accordingly, you are entitled to a fuel tax credit at the half rate from 1 July 2008 for diesel fuel you acquire and use in a truck on a road construction site undertaking dust suppression activities.

Calculating your fuel tax credit entitlement

To calculate your fuel tax credit entitlement accurately and to support your claims, you must keep records that show the amount of fuel you buy for your business and how you use this fuel. Some of these records may include:

· Log books

· Odometer readings

· Route distances

· Vehicle and equipment use and maintenance records

· Any other relevant records.

Fuel Tax Determination FTD 2010/1 provides that you can use any method that is fair and reasonable in your circumstances to determine the fuel tax credit that is available for the taxable fuel that you acquire.

You state that on occasions the truck carries out some of its duties in travelling on a public road and some of its duties working at the road construction site but that this does occur in varying degrees.

In this situation, you would still need to calculate the amount of eligible litres of fuel used in each of these activities, and then apply the relevant fuel tax credit rate to determine the amount of your fuel tax credit entitlement.

Therefore, you are entitled to use any method that is fair and reasonable in your circumstances to calculate your fuel tax credit entitlement.