Edited version of private ruling

Authorisation Number: 1011822058954

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Ruling

Subject: Fuel tax credits - fishing operations

Question 1:

Are you entitled to claim fuel tax credits at the full rate for the use of petrol in your outboard motors whilst conducting fishing operations during the period until 30 June 2012?

Answer:

Yes.

Question 2:

Are you entitled to claim fuel tax credits at the full rate for the use of petrol in your outboard motors whilst conducting fishing operations during the period after 1 July 2012?

Answer:

Yes.

Period the ruling applies to:

2011-12 income year

2012-13 income year

2013-14 income year

The scheme commences on:

1 July 2008

Relevant facts and circumstances

You carry on an enterprise of fishing operations.

You have a licensed fishing boat, powered by two outboard motors.

You acquire petrol for use in the outboard motors.

The outboard motors are used on your fishing boat where you travel on the ocean, take fish from the ocean floor by diving, and then process them on board.

The outboard motors are used on your fishing boat where you travel on the ocean.

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

Relevant legislative provisions

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 subdivision 41-B

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 item 23 of Part 7 to Schedule 3

Energy Grants (Credits) Scheme Act 2003 section 34

Energy Grants (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 for use in carrying on your enterprise if you are registered for GST. However, Division 2 of Schedule 3 to the Fuel Tax (Consequential and Transitional Provisions) Act 2006 (FTCTPA) operates to restrict this entitlement to specific activities, whilst maintaining entitlement that existed under the previous Energy Grants (Credits) Scheme Act 2003 (EGCSA) for the period from 1 July 2008 to 30 June 2012.

Fuel acquired from 1 July 2008 to 30 June 2012

From 1 July 2008, the specific activities are listed in subitem 11(1) of Schedule 3 to the FTCTPA. Further, subitem 11(5) provides that you are entitled to a fuel tax credit under the FTA 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 is a qualifying use. Primary production includes fishing operations.

'Fishing operations' is defined in section 34 of the EGCSA and includes, among other things, the taking, catching or capturing of fish and the processing of fish on board vessels. 'Fish' is defined in section 34 to include crustacean, molluscs or any other living resources of the sea.

You travel on the ocean, dive for fish and then process the fish on board your boat. Accordingly, you are conducting fishing operations and therefore, you would have been entitled to an off-road credit under the EGCSA. As such, you are entitled to a fuel tax credit under the FTA.

However, you must acquire 'taxable fuel' for use in your operations. Under subitem 11(5) of the FTCTPA, petrol is considered a taxable fuel from 1 July 2008.

Accordingly, you are entitled to claim fuel tax credits at the full rate for the use of petrol in your outboard motors whilst conducting fishing operations during the period until 30 June 2012.

Fuel acquired from 1 July 2012 to 30 June 2014

As outlined previously, entitlement to fuel tax credits was affected by Division 2 of Part 3 of Schedule 3 to the FTCTPA, which operated to restrict the entitlement to specific activities and continued the previous entitlement provisions of the EGCSA for the period 1 July 2008 to 30 June 2012.

As this phased implementation of the fuel tax credit system to particular uses of fuel is fully implemented on 1 July 2012, item 23 of Part 7 to Schedule 3 to the FTCTPA repeals the EGCSA on 1 July 2012. Consequently, from 1 July 2012, entitlement for fuel tax credits on all activities is considered under Division 41 of the FTA.

Section 41-5 of the FTA provides that you are entitled to a fuel tax credit for taxable fuel that you acquire for use in carrying on your enterprise if you are registered for GST. However, this is subject to the disentitlement rules under subdivision 41-B, which provides that you are not entitled in the following situations:

· if another entity has previously been entitled to a fuel tax credit, or

· for fuel used in vehicles with a gross vehicle mass (GVM) of 4.5 tonnes, or less, travelling on a public road, or

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

· for fuel used in aircraft if the fuel was entered into home consumption for that use.

You have acquired and used taxable fuel in undertaking your business activities, and you are not subject to any of the disentitlement rules mentioned above.

Accordingly, you are entitled to claim fuel tax credits at the full rate for the use of petrol in your outboard motors whilst conducting fishing operations during the period after 1 July 2012.