Edited version of private ruling

Authorisation Number: 1011632463803

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: Fuel tax credits - travel on public and private roads

Question 1:

Are you entitled to a fuel tax credit at the full rate less road user charge (RUC), for taxable fuel acquired and used in vehicles that have a gross vehicle mass (GVM) of less than 4.5 tonnes when travelling on public roads?

Answer:

No.

Question 2:

Are you entitled to claim a fuel tax credit at the full rate less road user charge (RUC), for taxable fuel acquired and used in vehicles that have a GVM greater than 4.5 tonnes when travelling on public roads?

Answer:

Yes. Provided relevant diesel vehicles can satisfy one of the environmental criteria.

Question 3:

Are you entitled to claim a fuel tax credit at the half rate, for taxable fuel acquired and used in vehicles that have a GVM of greater than 4.5 tonnes but less than 20 tonnes, when travelling within a restricted area?

Answer:

Yes.

Question 4:

Are you entitled to claim a fuel tax credit at the half rate, for taxable fuel acquired and used in vehicles that have a GVM less than 4.5 tonnes when travelling within a restricted area?

Answer:

Yes.

This ruling applies for the following period:

2008 - 2009 income year

2009 - 2010 income year

The scheme commences on:

1 July 2008

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are registered for goods and services tax (GST) and are the representative entity for a GST group.

You operate at a site that contains a restricted area.

You use the site to conduct tours, operate hotel accommodation, a health retreat and to provide meals, entertainment and functions.

In undertaking these activities, you operate a series of vehicles on site that include, but are not limited to:

§ buses, with a GVM greater than 4.5 tonnes but less than 20 tonnes, and

§ several smaller buses, passenger vehicles and light commercials that have a GVM of less than 4.5 tonnes.

All vehicles are registered. You state that registration of the vehicles is required as the vehicles travel on public roads off the site solely to purchase fuel, for maintenance, and for registration purposes.

The vehicles are owned or leased by you, and are not provided to staff via salary packaging.

You acquire the diesel and petrol used in these vehicles.

You contend that you are entitled to claim a fuel tax credit at the half rate, for the taxable fuel you acquire and use in your vehicles within the restricted area as you would not have been entitled to an on-road or off-road credit under the Energy Grants (Credits) Scheme Act 2003.

To support your contention, you have stated that to your knowledge the roads within the restricted area have not been declared or dedicated as a public road under Commonwealth or State Government statute.

Further, you state the roads have never been given an official name nor have they been referred to in any statue, government reports or legal contracts under an unofficial or colloquial name, nor have they been vested in a government authority having statutory responsibly for the control and management of public road infrastructure.

You also contend the roads have been constructed and maintained under a series of statutory regimes by Commonwealth and State public authorities that were not authorities responsible for the provision of road transport infrastructure, and in circumstances where the statutory regimes provided that any public use of, or access to, the road is subordinate to the primary objects of the statutory regimes, that is border protection and national parks respectively.

Further, you state the roads have not been dedicated as a public road at common law. Rather, those roads have never been available for unrestricted use by the public generally and can only be travelled upon for agreed function with express permission of the occupants of the site. The restricted area falls within a particular local government area. The local government has confirmed that it does not have any responsibilities for construction or maintenance of roads on the site.

You also assert that most street directories show the boundaries of the site and make reference that it is a restricted area.

You also provided extracts from the lease and an access and monitoring programme

The extracts covers:

§ grant of lease in relation to the objectives of the landlord

§ use of premises, in particular movement of vehicles and public access; and

§ road base access.

In particular, vehicle access to the premises must be managed by an entrance boom gate that only opens when triggered by staff or contractors.

The barrier delineating the extent of vehicle access within the premises must be provided. It specifies the area where the barrier is to be placed.

Further, that there must not be vehicle access beyond the barriers described except for certain circumstances such as transporting disabled visitors, emergency vehicles, and other form of low scale public transport.

The restricted area is within a metropolitan area.

Relevant legislative provisions

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 subdivision 41-B

Fuel Tax Act 2006 section 41-20

Fuel Tax Act 2006 section 41-25

Fuel Tax Act 2006 section 41-25(a)

Fuel Tax Act 2006 section 41-25(b)

Fuel Tax Act 2006 section 41-25(c)

Fuel Tax Act 2006 section 41-25(d)

Fuel Tax Act 2006 subsection 43-10(3)

Fuel Tax Act 2006 section 70-5

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

Energy Grant (Credits) Scheme Act 2003 section 43

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

Energy Grant (Credits) Scheme Act 2003 paragraph 43(2)(i)

Energy Grant (Credits) Scheme Act 2003 paragraph 43(2)(ii)

Energy Grant (Credits) Scheme Act 2003 paragraph 43(2)(iii)

Energy Grant (Credits) Scheme Act 2003 paragraph 43(2)(iv)

Energy Grant (Credits) Scheme Act 2003 section 53

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 or manufacture in, or import into Australia to the extent that you do so for use in carrying on your enterprise and are registered for goods and services tax (GST). 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 and continues the previous entitlement provisions of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) for the period 1 July 2008 to 30 June 2012.

Subitem 11(1) of Schedule 3 to the FTCTPA provides that an entitlement arises under 41-5 of the FTA if you are undertaking:

§ travel on a public road

§ incidental use in relation to travel on a public road

§ generation of electricity

§ use other than as a fuel

§ burner fuel

§ for use as heating oil.

You acquire petrol and diesel for use in a number of vehicles, some with a GVM or more than 4.5 tonnes and some with a GVM less than 4.5 tonnes. These vehicles operate in association with your operations and travel on public roads as well as roads within a restricted area.

You contend that the roads within the restricted area are not public roads.

'Public road' is not defined in the FTA.

However, the Explanatory Memorandum to the Fuel Tax Bill 2006 states:

2.50 A road is a public road if it is:


§ opened, declared or dedicated as a public road under 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.

2.51 A road is not a public road if it is a:


§ road constructed or maintained under a statutory regime by a public 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 subordinated to the primary objects of the statutory regime;

§ forestry road;

§ private access road for use in a mining operation; or

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

Opened, declared or dedicated as public road under a statute

You have stated that the roads within the restricted area have not been opened, declared or dedicated as public roads under a statute.

This is a question of fact that cannot be easily evidenced in the negative, that is, if a statute exists it can be proved - it can't be proved that a statute doesn't exist.

It is accepted that the roads within the restricted area have not been opened, declared or dedicated as public roads under a statute.

Vested in a government authority having statutory authority for public roads.

You contend that the roads within the restricted area have not been vested in a government authority having statutory responsibility for the control and management of public road infrastructure.

Further, you state that you have confirmed with the local government authority that they do not have any responsibilities for construction or maintenance of roads within the restricted area.

Therefore it is accepted that responsibility for the roads within the restricted area are not vested in a government authority having statutory authority for public roads.

Dedicated as a public road at common law

If a road is not under the control and management of a state or territory authority which is responsible for the provision of road infrastructure to the public, then whether the road is a 'public road' under the common law is a question of fact.

In order to establish that a road has been dedicated as a public road at common law, there must be established an 'unequivocal indication of the intention of the owner of the land to dedicate it to the public as a road'.

To establish whether a land owner has dedicated a road as a public road under the common law, some of the matters to be considered are:

§ whether there has been a declaration of an intention to dedicate;

§ delineation on maps or plans of roads set apart for public use;

§ use by the public;

§ whether vehicles must be registered to use the road and state or territory traffic laws are applicable while the vehicles use the road; or

§ the expenditure of money by public bodies in forming or maintaining the land as a road.

You have advised that most street directories show the boundaries of the site and make reference that it is a restricted area.

Further, extracts provided from the lease and the access and monitoring programme highlight that vehicle access to the premises must be managed by an entrance boom gate, that it opens when triggered by staff or contractors, and that there must not be vehicle access beyond the barriers except for certain situations.

As the restricted area is delineated by street directories, that vehicle movement is restricted by a barrier gate which can be passed in limited circumstances, it indicates that the intention of the owner of the land is that the roads are not intend to be dedicated to the public as a road.

Therefore, the roads are not dedicated as public roads at common law, nor are the roads vested in a government authority having statutory authority for public roads nor are they opened, declared or dedicated as public road under a statue.

Accordingly, the roads within the restricted area are not public roads for the purposes of the FTA.

Fuel tax credits: public roads

As discussed previously, subitem 11(1) of Schedule 3 to the FTCTPA outlines the specific activities that an entitlement arises under section 41-5 of the FTA.

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

You acquire diesel and petrol for use in a number of vehicles associated with your operations at the restricted area. The GVM of these vehicles vary from greater than 4.5 tonnes to smaller vehicles with a GVM less than 4.5 tonnes (smaller buses, passenger vehicles and light commercials).

Your vehicles travel on public roads out of the restricted area to purchase the fuel, for maintenance, and for registration purposes.

Accordingly, you satisfy subparagraph 11(1)(b)(i) of Schedule 3 to the FTCTPA which provides an entitlement to a fuel tax credit under 41-5 of the FTA for use of taxable fuel in a vehicle travelling on a public road.

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 provides 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.

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.

As such, section 41-20 of the FTA applies to your smaller buses, passenger vehicles and light commercials as they do not have a GVM greater than 4.5 tonnes.

Therefore, 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.

However, your buses that have a GVM greater than 4.5 tonnes satisfy section 41-20 of the FTA. Subject to the vehicles meeting one of the four environmental criteria above, you will satisfy all requirements.

Subsection 43-10(3) of the FTA provides that an entity's fuel tax credit is reduced by the RUC if they acquire taxable fuel for use in a vehicle travelling on a public road.

As such, you are entitled to a fuel tax credit at the full rate less the RUC for the fuel acquired and used in your vehicles that have a GVM greater than 4.5 tonnes when travelling on public roads for the period 1 July 2008 to 30 June 2010.

Fuel tax credits: travel not on public roads

As stated above, the roads within the restricted area are not public roads.

Travel on a road that is not on a public road is not a specified activity under subitem 11(1) 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.

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. On-road credits were available to certain vehicles operating on roads in Australia.

Section 43 of the EGCSA provides an entitlement to an on-road credit for vehicles with a GVM of 4.5 tonnes or more, but less than 20 tonnes, where the vehicle is a vehicle for transporting passengers or goods.

However, subsection 43(2) of the EGCSA states you are only entitled to an on-road credit to the extent that it is used in a journey that is:

…

(i) between a point outside the metropolitan areas and another point outside the metropolitan areas; or

(ii) between a point outside a metropolitan areas and a point inside a metropolitan area; or

(iii) between a point inside a metropolitan area to a point outside metropolitan areas; or

(iv) between different metropolitan areas

…

You operate a number of registered vehicles that include (but are not limited to) buses that have a GVM greater than 4.5 tonnes but less than 20 tonnes, and several smaller buses, passenger vehicles and light commercials that have GVMs less than 4.5 tonnes.

The vehicles operate within the restricted area which is in a metropolitan area. The vehicles only leave the restricted area to purchase fuel, for maintenance, and for registration purposes.

Accordingly, all of your vehicles that operate within the restricted area not have been entitled to claim an on-road credit under the EGCSA as:

§ your smaller buses, passenger vehicles and light commercials have GVM's less than 4.5 tonnes, and

§ your buses that have a GVM greater than 4.5 tonnes but less than 20 tonnes do no undertake a qualifying journey.

Therefore, subitem 11(3) of Schedule 3 to the FTCTPA does not apply.

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 states that you are entitled to an off-road credit if you purchase fuel for a use by you that qualifies.

You conduct tours, operate hotel accommodation, a health retreat and provide meals, entertainment and functions within a restricted area. To undertake these activities you use a variety of vehicles with varying GVM's. These activities are not qualifying activities under section 53 of the EGCSA.

Therefore, subitem 11(5) of Schedule 3 to the FTCTPA does not apply.

As your activities within the restricted area do not meet any of the provisions under subitems 11(1), 11(3) or 11(5) of Schedule 3 to the FTCTPA, you are not entitled to a fuel tax credit at the full rate or a fuel tax credit at the full rate less the RUC for the taxable fuel acquired for use in operating your vehicles.

Half credit

However, subitem 11(6) of Schedule 3 to the FTCTPA provides that an entitlement to a fuel tax credit under section 41-5 of the FTA arises 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.

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 the credit;

§ for fuel used in vehicles with a GVM of less than 4.5 tonnes travelling on public roads;

§ for fuel used in motor vehicles that do not meet environmental criteria; or

§ for fuel used in aircraft.

Section 41-20 of the FTA, one of the disentitlement rules provides 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. As it has been determined above that the roads within the restricted area are not public roads, then section 41-20 of the FTA does not apply.

Therefore, you are entitled to a fuel tax credit at the half rate for the acquisition and use of petrol and diesel in the above activities which were previously not eligible. As discussed, the activities that you were not eligible for fuel tax credits included vehicles with:

§ a GVM of less than 4.5 tonnes when travelling within the restricted area and

§ a GVM greater than 4.5 tonnes but less than 20 tonnes when travelling within the restricted area.

Application of fuel tax law to GST Groups

Section 70-5 of the FTA provides for the application of fuel tax law to GST Groups and joint ventures. Item 1 of column 1 to the table under section 70-5 of the FTA states that the members of a GST Group are treated as a single entity for the purposes of fuel tax law.

Further, item 1 of column 2 to the table under section 70-5 of the FTA provides that the representative member of the group is that entity which has all the rights, powers and obligations of the single entity under the fuel tax law.

You are the GST representative member for a number of entities. As such, the representative member of the GST group you have all the rights, powers and obligations under the fuel tax law.