Edited version of private ruling

Authorisation Number: 1011659974287

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Ruling

Subject: Fuel tax credits - Unsealed public roads

Question 1:

Are you entitled to a fuel tax credit at the full rate less road user charge (RUC) for diesel fuel acquired and used in vehicles greater than 4.5 tonnes gross vehicle mass (GVM) for travel on unsealed public roads?

Answer:

Yes, provided your vehicles can satisfy one of the environmental criteria.

Question 2:

Are you entitled to a fuel tax credit at the full rate less RUC for diesel fuel acquired and used in vehicles greater than 4.5 tonnes GVM for travel on unsealed private roads?

Answer:

Yes, provided your vehicles can satisfy one of the environmental criteria.

This ruling applies for the following periods:

2008-09 income year

2009-10 income year

2010-11 income year

The scheme commences on:

1 July 2008

Relevant facts and circumstances

You are a transport company that travels from to outlying communities to deliver various goods.

You have stated that this ruling request will only apply to your following vehicles that have a GVM of greater than 4.5 tonnes, but less than 20 tonnes.

You acquire diesel fuel for use in all of these vehicles.

You state that the roads which are travelled on are used exclusively by the surrounding communities. Other main users are companies such as yourself.

The roads require permits from the governing body depending on which region you are travelling to.

The roads are managed under councils and shires in those regions.

You advised that the roads travelled on are largely unsealed and in some circumstances are the only way to reach communities.

You confirmed that we could use information from two websites in completing your private ruling request. Information from these websites indicated some of the roads on which you travel are public roads and vested in a government authority responsible for road works, road restrictions etc.

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

Relevant legislative provisions

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 section 41-B

Fuel Tax Act 2006 section 41-20

Fuel Tax Act 2006 section 41-25

Fuel Tax Act 2006 paragraph 41-25(a)

Fuel Tax Act 2006 paragraph 41-25(b)

Fuel Tax Act 2006 paragraph 41-25(c)

Fuel Tax Act 2006 paragraph 41-25(d)

Fuel Tax Act 2006 section 43-10

Fuel Tax Act 2006 subsection 43-10 (3)

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

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

Fuel Tax (Consequential and Transitional) Provisions Act 2006 subitem 11(4) of Part 3 of Schedule 3

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

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

Energy Grants (Credits) Scheme Act 2003 section 43

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

Energy Grants (Credits) Scheme Act 2003 paragraph 43(1)(a)

Energy Grants (Credits) Scheme Act 2003 paragraph 43(1)(b)

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

Energy Grants (Credits) Scheme Act 2003 paragraph 43(2)(a)

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).

Subitem 11(1) of Schedule 3 to the FTCTPA provides that an entitlement arises under section 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 diesel fuel for use in vehicles that have a gross vehicle mass (GVM) of more than 4.5 tonnes but less than 20 tonnes. These vehicles travel on roads that include unsealed public roads and unsealed roads used exclusively by the surrounding communities as well as companies such as yourself. The roads require permits depending on which region you are travelling to.

"Public road" is not defined in the FTA. However, the explanatory memorandum to the Fuel Tax Bill 2006 (EM) states:

2.50 A road is a public road if:

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

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

· It is 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 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;

· forestry road;

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

· road that has been dedicated as a public road over privately owned land.

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.

Information from two websites to which you gave us permission to use in making our decision, indicate some of the roads you travel on are indeed public roads. Further, a government authority is responsible for a number of road works, road restrictions etc. In other words, this government authority is responsible for the public road infrastructure of some of the roads in which you travel.

As such, you travel on roads that would be considered public roads for the purposes of the FTA and those not considered to be public roads.

A road can be considered a "public" road irrespective of whether or not it is an unsealed road.

Fuel tax credits: travel on a public road

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

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

You acquire diesel fuel for use in a number of vehicles that you use in undertaking the delivery of various goods to outlying communities. These vehicles travel on public roads, including unsealed public roads.

Accordingly, you satisfy subparagraph 11(1)(b)(i) of Schedule 3 to the FTCTPA which provides an entitlement to a fuel tax credit under section 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 following 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 state that your vehicles all have a GVM of greater than 4.5 tonnes.

As such, your vehicles satisfy section 41-20 of the FTA. Subject to your vehicles meeting one of the four environmental criteria above, you will satisfy all requirements.

Further, subsection 43-10(3) of the FTA states that to the extent that you acquire taxable fuel to use, in a vehicle, for travelling on a public road, the amount of your fuel tax credit for the fuel 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 RUC for diesel fuel acquired and used in vehicles greater than 4.5 tonnes GVM for travel on unsealed public roads.

Fuel tax credits: travel on non-public roads

As discussed previously, you deliver various goods to outlying communities using vehicles with a GVM or more than 4.5 tonnes. You state that the roads you travel on are used exclusively by the surrounding communities and companies such as yourself and depending on what region you are travelling to, permits are required.

Travel on a road that is not 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 subitems 11(3), 11(5) or 11(6) of Part 3 in Schedule 3 to the FTCTPA.

Subitem 11(3) of Part 3 in Schedule 3 to the FTCTPA provides that an entitlement to a fuel tax credit under section 41-5 of the FTA will arise if you would have been entitled to an on-road credit under the EGCSA.

Subsection 43(1) of the EGCSA provides that you are entitled to an on-road credit if you purchase on-road diesel for:

(a) use in a registered vehicle that has a gross vehicle mass of 4.5 tonnes or more, but less than 20 tonnes, where the vehicle is a vehicle for transporting passengers or goods; or

(b) incidental use in relation to such a vehicle

However, paragraph 43(2)(a) of the EGCSA limits the entitlement to the on-road credit to the extent that the proposed use of the on-road diesel fuel is in carrying on your enterprise in operating the vehicle on a road in Australia on a journey.

This is subject to the metropolitan boundaries which state that the journey must take place between:

· points inside a metropolitan area and points outside a metropolitan area, and vice versa; or

· between a point outside the metropolitan area and another point outside the metropolitan area; or

· between different metropolitan areas

Further, the term 'road' is not defined in the EGCSA. Its relevant ordinary meanings are:

1. a way, usually open to the public for the passage of vehicles, persons and animals. 2. any street so called.

3. the track on which vehicles, etc., pass, as opposed to the pavement.

The Diesel and Alternative Fuels Grants Scheme Act 1999 (repealed), which was the precursor to the EGCSA restricted entitlement to an on-road grant to activities conducted on a public road, as defined. However, with the shift to an energy grants (credits) scheme, entitlement was broadened to the more general 'road'. As stated in the Explanatory Memorandum to the Energy Grants (Credits) Scheme Bill 2003 at paragraph 2.9, the reason for the change was:

2.9 The requirement under DAFGS that activities be conducted on a public road for them to be eligible has been removed for the on-road credit. The construction of the DAFGS public road definition precluded certain activities that were part of normal transport operations, such as those conducted on private access roads to mine sites and primary production properties, to transport depots and in the depots themselves, from being eligible for an on-road grant. This situation will be rectified in the on-road credit by removing the public road definition, and instead allowing that transport operations on any road will be eligible, provided they are conducted by a vehicle registered for use on a public road.

The general broadening of the definition of 'road' for the purposes of the EGCSA clearly indicates that access restrictions, such as those commonly associated with roads that are not generally open to the public should not be taken into consideration when determining whether or not a vehicle is carrying out its transport operations on a 'road'.

Therefore, whilst not all of these roads are dedicated public roads, they would still be considered a "road" for the purposes of the EGCSA.

You operate a number of registered vehicles that have a GVM of greater than 4.5 tonnes. These vehicles operate on roads to outlying communities for the purpose of transporting goods and therefore satisfy the journey requirements.

Accordingly, you would have been entitled to an on-road credit under the EGCSA. As such, you have satisfied the requirements of subitem 11(3) of Schedule 3 to the FTCTPA.

However, subitem 11(4) of Part 3 in Schedule 3 to the FTCTPA states that if subitem 11(3) applies to you, you are taken for the purposes of section 43-10 of the FTA to have acquired, manufactured or imported fuel to use, in a vehicle, for travelling on a public road.

Therefore, you are entitled to a fuel tax credit at the full rate less RUC for diesel fuel acquired and used in vehicles greater than 4.5 tonnes gross GVM for travel on unsealed private roads.