Edited version of your private ruling

Authorisation Number: 1012552116722

Ruling

Subject: Fuel tax credits - use of fuel card

Question 1

For the purposes of section 41-5 of the Fuel Tax Act 2006 (FTA), have you acquired the diesel fuel provided to entity B in the form of fuel cards issued in conjunction with the terms of your specified agreement?

Answer

Yes.

Question 2

For the purposes of section 41-5 of the FTA, are you entitled to claim fuel tax credits for the diesel you acquire and provide to entity B for use in heavy vehicles with a gross vehicle mass of greater than 4.5 tonnes travelling on public roads to carry transport obligations?

Answer

Yes.

This ruling applies for the following periods:

2012-13 income year

2013-14 income year

2014-15 income year

The scheme commences on:

1 July 2012

Relevant facts and circumstances

You are registered for both goods and services tax and fuel tax credits.

You engage various transport companies to deliver goods.

You entered into an agreement with entity B to provide the aforesaid transport services.

You provide the fuel for the transport vehicles that are used by entity B to service the agreement. This was done by issuing the entity B's drivers who work on the contract with a fuel card.

There are no other circumstances where entity B is able to supply their own fuel. Entity B's trucks must use the fuel cards.

The fuel is used in heavy vehicles travelling on a public road. The vehicles have a gross vehicle mass greater than 4.5 tonnes. In addition, diesel vehicles acquired before 1 July 2006 have a gross vehicle mass equal to 4.5 tonnes. The diesel vehicles meet one of the environmental criteria.

The fuel purchases and provided to entity B under the fuel card arrangement is diesel fuel.

You pay a service fee for the provision of transport services to entity B.

Relevant legislative provisions

Fuel Tax Act 2006 section 41-5

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.

In determining whether you are entitled to fuel tax credits, it must first be determined whether you have 'acquired' fuel for the purpose of the fuel tax provisions, and if so, whether you have then 'used' the fuel in an eligible activity in carrying on your enterprise.

Acquire

The term 'acquire' is not defined in the FTA and therefore takes on its ordinary meaning. In the context of the FTA, the term 'acquire' has the ordinary meaning of to 'get as one's own'.

To 'get as one's own' requires property in or ownership of the relevant taxable fuel to pass from one entity to another entity, or alternatively, that ownership is conferred because the fuel has been obtained by an entity as its own.

You acquire taxable fuel if:

· you purchase the fuel;

· the fuel is gifted to you; or

· you get the fuel as your own by any other means (other than manufacture or import). This necessarily means that you get ownership of, or proprietary rights in respect of, the fuel.

Whether you get ownership of, or proprietary interest in, fuel will depend on all facts and circumstances of each case. It will be necessary to examine the surrounding circumstances, together with any relevant documentation, including any written agreement.

In your case you entered into an agreement for provision of transport services. As part of that agreement, you provide and pay for the fuel used for the transport vehicles that are used by entity B to service the agreement. This was done by issuing the entity B's drivers who work on the contract with a fuel card, which they can use to fill their vehicles to carry out their transport obligations.

Accordingly, you have acquired the diesel fuel provided to entity B in the form of fuel cards issued in conjunction with the terms of your specified agreement.

Use

For the purposes of the FTA and in the context of the expression 'for use', the term 'use' means 'expend or consume in use', which in turn requires that the fuel be expended or consumed, such that it no longer exists as fuel, by putting it into service in carrying on your enterprise. Therefore, fuel that is acquired would be used in carrying on your enterprise if, in the course of carrying on that enterprise it ceases to exist after an action to use it (for example, internal combustion engines).

In reference to FTD 2009/1 Fuel tax: what is the meaning of 'use' for the purposes of section 41-5 of the Fuel Tax Act 2006?, 'use' will include use of fuel that is acquired or manufactured in, or imported into Australia by a taxpayer, but actually used by a contractor in carrying on the taxpayer's enterprise as long as the taxpayer is not taken to have sold the fuel to the contractor as part of their contract.

You have engaged entity B to provide transport services in accordance with a specified agreement. You configure charges for the provision of services and provide fuel via fuel cards to enable them to carry out their transport obligations. You are not taken to have sold the fuel to entity B

As such, this element of section 41-5 of the FTA is satisfied.

Accordingly, you are entitled to claim fuel tax credits for the diesel you acquire and provide to entity B for use in heavy vehicles with a GVM of greater than 4.5 tonnes travelling on public roads to carry out transport obligations.