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Edited version of private advice
Authorisation Number: 1012651954317
Ruling
Subject: Fuel tax credits for tractor slashers
Question 1
Is the travel between the depot and a mowing site on a public road by your tractor slasher mower considered incidental to the vehicle's main use for the purposes of subsection 43-10(4) of the Fuel Tax Act 2006 (FTA)?
Answer 1
No.
Question 2
Is the travel between the various mowing sites on a public road by your tractor slasher mower considered incidental to the vehicle's main use for the purposes of subsection 43-10(4) of the FTA?
Answer 2
Yes.
This ruling applies for the following period/s:
1 July 2010 to 30 June 2014
The scheme commences on:
1 July 2010
Relevant facts and circumstances
You have been registered for GST from 1 July 2000. You have tractor slasher mowers which are mainly utilised for mowing (service maintenance) park and oval sites. The tractors use diesel and have a gross vehicle mass of 7.6 tonnes.
Service maintenance of the sites is achieved by all tractors leaving the depot in the morning to travel to a particular area. The tractors travel on public roads. Once there the tractors will mow all the parks and ovals in that vicinity traversing from one park to the other. After the mowing the tractors will make their way back towards the depot in a sequenced manner thereby limiting sustained road travel.
You provided an indication of the maximum and minimum road travel distances to the mowing locations.
Relevant legislative provisions
Subsection 43-10(3) of the Fuel Tax Act 2006
Subsection 43-10(4) of the Fuel Tax Act 2006
Reasons for decision
Question 1
Is the travel between the depot and a mowing site on a public road by your tractor slasher mower considered incidental to the vehicle's main use for the purposes of subsection 43-10(4) of the Fuel Tax Act 2006 (FTA)?
Generally, where fuel is acquired for use in a vehicle travelling on a public road the amount of fuel tax credit is reduced by a road user charge.
Subsection 43-10(3) of the FTA provides that:
To the extent that 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 road user charge for the fuel.
This is consistent with the policy intent of the road user charge which is to ensure the charge is applied to all heavy vehicles which travel on a public road and to recover expenditure that is attributable to heavy vehicles in respect of the national road network.
However, subsection 43-10(4) of the FTA provides that the amount of fuel tax credit is not reduced by the road user charge if the travel on a public road is incidental to the vehicle's main use.
The primary purpose of subsection 43-10(4) of the FTA is to reduce compliance costs for entities entitled to fuel tax credit for off-road activities where, in relation to conducting those activities, there is travel incidental to the vehicle's main use on a public road.
Paragraph 2.80 of the Revised Explanatory Memorandum to the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006 provides that:
Incidental use of fuel may occur when a vehicle that is used almost exclusively off a public road, is moved a short distance from one off-road location to another via a public road or is operating incidentally on a public road (emphasis added).
Fuel Tax Ruling 2008/1 Fuel tax: vehicle's travel on a public road that is incidental to the vehicle's main use and the road user charge (FTR 2008/1) provides guidance in respect of incidental travel.
Paragraphs 69 to 73 of FTR 2008/1 state:
Example 16: travel on a public road that is incidental to the vehicle's main use - water cart
69 In the course of carrying on its enterprise, Waterwize Enterprises (Waterwize) uses a water cart on a construction site that straddles a public road. To move between parts of the construction site, the water cart has to travel along or across the public road. The distance travelled along the public road is no more than 500 metres.
70 The water cart travels along or across the public road on several occasions during the day. The water cart's main use is off road to transport and spray water within the construction site for dust suppression.
71 The water cart's travel on the public road occurs in the course of its off-road use. The travel on the public road is incidental to the water cart's main use as it is so interspersed with its off-road use so as to be part of that vehicle's off-road use (main use).
Example 17: travel on a public road that is not incidental to the vehicle's main use - water cart
72 Following on from Example 16, the water cart is garaged overnight at Waterwize's depot. At the beginning of each day the water cart travels from the depot to the construction site and returns to the depot at the end of the day.
73 This travel is not in the course of the water cart's off-road use and is not incidental to the cart's main use.
In accordance with example 17 above the travel between the depot and a mowing site on a public road by your tractor slasher mower is not considered incidental to the vehicle's main use for the purposes of subsection 43-10(4) of the FTA. Therefore, where fuel is acquired for such use in a vehicle travelling on a public road the amount of fuel tax credit is reduced by the road user charge.
Question 2
Is the travel between the various mowing sites on a public road by your tractor slasher mower considered incidental to the vehicle's main use for the purposes of subsection 43-10(4) of the FTA?
Paragraph 64 of FTR 2008/1 states:
64. Travel by a vehicle that is designed primarily for off-road use and which is used mainly in off-road activities is incidental where it occurs in the course of the vehicle's off-road use and:
• is insubstantial in extent; or
• is so interspersed with the vehicle's off-road use (its main use) so as to be part of that off-road use.
Paragraphs 67 and 68 of FTR 2008/1 state:
Example 15: travel on a public road that is incidental to the vehicle's main use - harvester
67. Roo Minate Enterprises Ltd (Roo Minate) carries on a primary production business on an agricultural property. Parts of the property are separated by a public road. Roo Minate uses a harvester it owns to harvest crops on its farm. In the course of harvesting, the harvester travels 2 kilometres on the public road to get from one part of the property to another.
68. The harvester's main use is to harvest crops. The harvester only travels on the road to go from one part of the farm to another during the course of harvesting. The travel on the public roads is insubstantial in extent, and occurs in the course of the harvester's off-road use. The travel on the public road is incidental to the harvester's main use.
We are of the view that travel between various mowing sites on a public road by your tractor slasher mower is incidental to the vehicle's main use for the purposes of subsection 43-10(4) of the FTA. Accordingly, the road user charge does not apply to this travel.