Edited version of private ruling

Authorisation Number: 1011769197236

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 - agriculture - road transport and agricultural properties

Question 1:

Are you entitled to fuel tax credits at the full rate for diesel fuel you acquire and use in a truck to transport animals reared for specified purpose on agricultural properties?

Answer:

No.

Question 2:

Are you entitled to fuel tax credits at the half rate for diesel fuel you acquire and use in a truck to transport animals reared for specified purpose on agricultural properties from 1 July 2008 to 30 June 2010?

Answer:

Yes.

Question 3:

Are you entitled to fuel tax credits at the full rate less road user charge (RUC) for diesel fuel you acquire and use in a truck to transport animals reared for specified purpose on a public road?

Answer:

Yes.

Period the ruling applies to:

2006-07 income year

2007-08 income year

2008-09 income year

2009-10 income year

The scheme commences on:

1 July 2006

Relevant facts and circumstances

You transport animals on agricultural properties and on-road between properties.

You use a truck with a gross vehicle mass (GVM) of greater than 4.5 tonnes to transport the animals.

You acquire diesel fuel for use in your truck.

You have estimated that the majority of your fuel use takes place on-road and less occurs on agricultural properties.

You state that you are contracted to undertake the transport of animals for an entity that is undertaking business to obtain produce for sale.

You state that the animals are being transported for specified purposes.

You provided a list of properties and confirmed that we could use any relevant information from internet websites to action your ruling request.

Due to the size of the properties, trucks can spend numerous hours moving animals on the properties.

We advised that from research undertaken, most of the listed properties appeared to be for specified purposes and as such this ruling would address the transport of animals other than livestock.

You believe that you may have an entitlement to fuel tax credits at the full rate for transporting animals on agricultural properties and at the full rate less RUC for travel on-road.

It is believed that your entitlement to fuel tax credits may have been calculated incorrectly.

Relevant legislative provisions

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 subsection 43-10(3)

Fuel Tax (Consequential and Transitional Provisions) Act 2006 Division 1 of Schedule 3

Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 10(1) of Schedule 3

Fuel Tax (Consequential and Transitional Provisions) Act 2006 subitem 10(5) of Schedule 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 subitem 11(5) of Schedule 3

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

Energy Grants (Credits) Scheme Act 2003 subsection 22(1)

Energy Grants (Credits) Scheme Act 2003 subsection 22(2)

Energy Grants (Credits) Scheme Act 2003 section 23

Energy Grants (Credits) Scheme Act 2003 subsection 23

Energy Grants (Credits) Scheme Act 2003 subsection 53(2)

Energy Grants (Credits) Scheme Act 2003 subsection 56(1)

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 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 Divisions 1 and 2 of Part 3 of Schedule 3 to the Fuel Tax (Consequential and Transitional Provisions) Act 2006 (FTCTPA) which operate to restrict this entitlement to specific activities for fuel purchased between 1 July 2006 and 30 June 2012 whilst retaining entitlements under the Energy Grants (Credits) Scheme Act 2003 (EGCSA).

The specific activities for which an entitlement may exist are relevantly listed with subitems 10(1) and 11(1) of Schedule 3 to the FTCTPA.

The items listed within subitems 10(1) and 11(1) of Schedule 3 to the FTCTPA are:

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

(ii) for incidental use in relation to a vehicle covered by subparagraph (i); or

(iii) for use by you in generating electricity; or

(iv) for use other than as a fuel; or

(v) for use other than as a fuel in an internal combustion engine; or

(vi) for use as heating oil

You use diesel fuel in your truck to transport animals on large agricultural properties. This is not an eligible use of fuel under subitems 10(1) or 11(1) of Schedule 3 to the FTCTPA. Therefore, it is necessary to consider whether your activities qualify under subitems 10(5) and 11(5) of Schedule 3 to the FTCTPA.

Subitems 10(5) and 11(5) of Schedule 3 to the FTCTPA provide that you are entitled to a fuel tax credit if you would have been entitled to an off-road credit under the EGCSA.

Subsection 56(1) of the EGCSA states that if you are entitled to an on-road credit or an off-road credit, you are entitled to an energy grant.

Subsection 53(2) of the EGCSA provides for an entitlement to an off-road credit when fuel is used in 'mining operations' or 'primary production'. Primary production includes agriculture.

'Agriculture' is relevantly defined in subsection 22(1) of the EGCSA to mean:

…

(c) the rearing of live-stock; or

…

and includes:

…

(e) a live stock activity

In order to be entitled to claim for fuel used in the above-mentioned activities, none of the exclusions at section 22(2) of the EGCSA should apply. Subsection 22(2) of the EGCSA states the following:

The expression agriculture does not include:

(a) …or

(b) an activity referred to in subsection (1) (other than hunting or trapping that is carried on for the purposes of a business, including the storage of any carcasses or skins obtained from the hunting or trapping) unless the activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

You state that you are contracted to undertake the transport of animals for an entity that is undertaking business to obtain produce for sale. It is necessary to determine whether this is the rearing of live-stock and/or a live-stock activity. Each will now be considered in turn.

Rearing of live-stock

Rearing of live-stock includes all activities required to breed, raise and care for the animals for the specified purposes in accordance with accepted commercial animal husbandry and management practices. The feeding of animals and the basic milling of stock feed by a farmer for their own use and any off-road transport of the live-stock for agistment during the rearing process are activities in the rearing of live-stock.

Subsection 23(2) of the EGCSA defines live-stock as being any animal reared for the production of food, fibres, skins, furs, feathers or for its use in farming of the land.

Therefore, the term live-stock includes animals such as sheep dogs, stock animals and other working animals as well as animals bred on agricultural stud farms. This is because the animals are reared for the ultimate production of food, fibres, skins, furs or feathers.

Animals that are not reared for the production of food, fibres, skins, furs or feathers, or for their use in farming of the land are not within the meaning of live-stock. This means that that the rearing of race animals or show jumping animals, or animals bred as pets are not live-stock as defined in subsection 23(2) of the EGCSA.

The rearing of live-stock does not include the loading and transportation to an abattoir, a slaughtering point or to a port for export, nor does it include the transport of live-stock to a sale yard for auction, sale or other disposal.

Live-stock activity

A live-stock activity is defined in section 23 of the EGCSA. Activities that constitute live-stock activities can broadly be described as:

· shearing or cutting of hair or fleece

· the transport of live-stock top an agricultural property for the purpose of rearing or agistment

· the return journey after transporting live-stock, or

· mustering of live-stock.

You were contracted by an entity to transport animals on large agricultural properties. For the transport of live-stock to be a live stock activity, the off-road transportation must be to an agricultural property and it must be for the purpose of either rearing or agistment of the live-stock.

As the animals are being reared for a specified purpose other than as livestock, they are not considered to be live-stock for the purposes of section 23 of the EGCSA.

Accordingly, you are not undertaking a live-stock activity, which falls within the meaning of 'agriculture'.

Therefore, you are not entitled to fuel tax credits at the full rate for diesel fuel you acquire and use in a truck to transport animals reared for a specified purpose on agricultural properties.

Entitlement to the half rate

However, subitem 11(6) of Schedule 3 to the FTCTPA provides that from 1 July 2008, an entitlement to a fuel tax credit will arise under section 41-5 of the FTA if you were not entitled to an on-road or an off-road credit previously. 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 the credit;

· for fuel used in vehicles with a gross vehicle mass (GVM) of less than 4.5 tonnes travelling on public roads;

· for fuel used in motor vehicles that do not meet environmental criteria, and

· for fuel used in aircraft.

As you were not entitled to an off-road credit previously for the transport of animals reared for the specified purpose, subitem 11(6) of Schedule 3 to the FTCTPA applies.

Accordingly, you are entitled to fuel tax credits at the half rate for diesel fuel you acquire and use in a truck to transport animals reared for the specified purpose on agricultural properties from 1 July 2008 to 30 June 2010.

Travel on a public road

You have stated that the majority of your use of diesel fuel in your truck takes place in transporting animals on a public road. Your truck has a GVM of greater than 4.5 tonnes and you have acquired diesel fuel for use in your truck.

Subsection 43-10(3) of the FTA provides that to the extent you acquire, manufacture or import 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 RUC for the fuel.

Accordingly, you are entitled to fuel tax credits at the full rate less RUC for diesel fuel you acquire and use in a truck to transport animals reared for the specified purpose on a public road.

Making adjustments or correcting mistakes

You have stated that your entitlement to fuel tax credits may have been calculated incorrectly. For further information on how to rectify mistakes or to make adjustments to amounts that have been claimed, please refer to the publication Fuel tax credits - making adjustments and correcting mistakes.