Edited version of your private ruling

Authorisation Number: 1012451627908

Ruling

Subject: Fuel tax credits - aviation

Question 1:

Are you entitled to a fuel tax credit for taxable fuel acquired for use in your aircraft as part of your business for the tax period 1 April 2009 to 30 June 2012?

Answer:

Yes. Please note that you will need to register for fuel tax credits.

Question 2:

Are you entitled to a fuel tax credit for taxable fuel acquired for use in your aircraft as part of your business for the tax period 1 July 2008 to 31 March 2009?

Answer:

No. There is a four year time limit on fuel tax credits and for this period you have ceased to be entitled.

This ruling applies for the following periods:

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 are an Australian company registered for goods and services tax (GST)

You are not currently registered for fuel tax credits.

You operate an aircraft business.

All fuel used in your light aircraft is used as part of your commercial business and not for personal recreation activities.

You acquire premium unleaded petrol (PULP) for use in your aircraft from a fuel supplier. This fuel is acquired at the normal commercial price with excise paid.

Assumption:

The PULP you acquire for use in your aircraft is not fuel that was entered into home consumption for that use.

Relevant legislative provisions

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 section 41-30

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 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 subparagraph 11(1)(b)(iii) of Schedule 3

Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(iv) of Schedule 3

Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(v) of Schedule 3

Fuel Tax (Consequential and Transitional Provisions) Act 2006 subparagraph 11(1)(b)(vi) 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 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, this entitlement is affected by Division 2 of Part 3 of 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 fuel purchased between 1 July 2008 and 30 June 2012.

The specific activities are listed within subitem 11(1) of Schedule 3 to the FTCTPA. Subitem 11(1) of the FTCTPA will apply if you acquire taxable fuel for:

(i) use in a vehicle travelling on a public road

(ii) incidental use in relation to a vehicle travelling on a public road

(iii) use in generating electricity

(iv) use other than as a fuel

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

(vi) use as heating oil.

Section 41-30 of the FTA provides that there will be no entitlement to fuel tax credits for any taxable fuel acquired for use as fuel in an aircraft if the fuel was entered for home consumption for that use.

You use premium unleaded petrol in aircraft as part of your business. You acquire this fuel from your fuel supplier at a rate inclusive of excise duty. The premium unleaded petrol is not a fuel that has been entered for the specific purpose of operating aircraft and is hence not captured by section 41-30 of the FTA. Note: gasoline entered for use in aircraft has a different excise duty rate under the Schedule to the Excise Tariff Act 1921.

Acquiring premium unleaded petrol for use in aircraft is not a specific activity listed under subitem 11(1) of the FTCTPA as outlined above. Therefore, it is necessary to consider if an entitlement exists under subitem 11(5) of the FTCTPA.

Subitem 11(5) provides that you are entitled to a fuel tax credit under section 41-5 of 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 'off-road diesel fuel' for a use by you that qualifies. Note that subparagraph 11(5)(b)(ii) of the FTCTPA states that references to 'off-road diesel fuel' in part 4 of the EGCSA are now references to the fuel. This means any fuel that is classified as a taxable fuel, including petrol, from 1 July 2008.

A qualifying use under section 53 of the EGCSA includes using the fuel in certain activities in specific industries such as mining, agriculture or marine transport.

Consequently, using premium unleaded petrol in your aircraft is not a use that qualifies under section 53 of the EGCSA.

Accordingly, you would not have been entitled to an off-road credit for premium unleaded petrol used in your aircraft per section 53 of the EGCSA and therefore an entitlement to a fuel tax credit does not arise per subitem 11(5) of the FTCTPA.

However, subitem 11(6) of the FTCTPA provides that if you acquire taxable fuel for use in carrying on your enterprise between 1 July 2008 and 30 June 2012, you are entitled to half of the amount of the fuel tax credit if you would not have been entitled to a credit previously. The half rate is 19.0715 cents per litre.

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 a credit,

· for fuel used in light vehicles travelling on public roads,

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

· aviation fuels used in aircraft.

It has been determined above that you were not entitled to an off-road credit previously for the use of premium unleaded petrol in your aircraft. As this fuel has not been entered into home consumption for use in aircraft where a different excise duty rate would have applied, the above disentitlement rule does not apply.

Therefore, you are entitled to a fuel tax credit at the half rate for the use of premium unleaded petrol in an aircraft that is used for training purposes for the tax period 1 April 2009 to 30 June 2012.

Tax periods for which you are no longer entitled

Division 47-1 of the FTA provides that your entitlements to fuel tax credits will cease unless you include them in your net fuel amounts within four years.

More specifically, section 47-5 of the FTA imposes a time limit on entitlement to fuel tax credits and provides that:

You cease to be entitled to a fuel tax credit to the extent that you have not taken it into account in working out your *net fuel amount for:

(a) the *tax period or *fuel tax return period to which the fuel tax credit would be attributable under subsection 65-5(1), (2) or (3); or

(b) any other tax period, or fuel tax return period, for which you give to the Commissioner a return under section 61-15 during the period of 4 years after the day on which you were required to give to the Commissioner such a return for the tax period or fuel tax return period referred to in paragraph (a).

As such, for the tax period 1 July 2008 to 31 March 2009 you have ceased to be entitled to fuel tax credits.