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Edited version of your written advice
Authorisation Number: 1051206190442
Date of advice: 24 March 2017
Ruling
Subject: Fuel tax credits
Question 1
Is the use of fuel to power karts in a karting business considered an 'all other business use' in order to be entitled to claim fuel tax credits?
Answer
Yes
Question 2
Is the entity entitled to claim unclaimed fuel tax credits from the 1 October 2013?
Answer
Yes
This ruling applies for the following periods:
1 October 2013 - 30 June 2019
The scheme commences on:
1 October 2013
Relevant facts and circumstances
1. An entity carries on a karting business and has been registered for GST at the time of acquisition of the taxable fuel.
2. The entity charges customers to hire and race karts around the tracks, which are exclusively used for go-karting and entirely contained within the businesses' private property.
3. The tracks are only suitable for light karts which are not suitable for registration and use on the general road network, unlike, for example passenger cars.
4. The karts have a vehicle mass less than 4.5 tonnes and are powered by an internal combustion engine.
5. The fuel used to power the karts is unleaded petroleum, which is purchased and kept on site.
6. The fuel is never on-sold.
7. The entity is registered for goods and services tax.
Relevant legislative provisions
Fuel Tax Act 2006, section 41-5
Fuel Tax Act 2006, section 41-20
Fuel Tax Act 2006, section 43-8 (Repealed 1 July 2014)
Fuel Tax Act 2006, subsections 47-5(1) and (2)
Fuel Tax Act 2006, subsection 65-5(1)
Reasons for decision
Question 1
Under section 41-5 of the FTA, the entity is entitled to a fuel tax credit for taxable fuel they acquired for use in carrying on their enterprise. As such the entity is entitled to a fuel tax credit for the unleaded petroleum (which is a taxable fuel) they acquired for the purpose of powering the karts used in carrying on their enterprise.
However, under section 41-20 of the FTA the entity would be denied a fuel tax credit for the unleaded petroleum used in the karts if the tracks were considered public roads.
The ATO considers that the tracks are not roads in the context of the FTA. The tracks are only suitable for karts and not for vehicles generally used by the public, and as such are not 'public roads' for the purposes of section 41-20 of the FTA.
Go-karting activities will fall under the following fuel tax rates as found on our website for the following periods:
● “all other business uses” (from the 2015 year of income onwards); and
● “other off-road activities where fuel is combusted” (for the 2014 year of income).
https://www.ato.gov.au/business/fuel-schemes/fuel-tax-credits---business/rates---business/?utm_source=exact_target&utm_medium=newsletter&utm_campaign=sbn0217
The table below outlines the rates used for calculating the 'fuel tax credit amount' applicable to liquid petroleum fuel acquired during the relevant periods between 1 July 2013 to 30 June 2017.
Any fuel tax credit entitlements for taxable fuel the entity acquired during the period 1 October 2013 to 30 June 2014 will be affected by the applicable carbon reduction rates under section 43-8 (now repealed) of the FTA.
Period |
Business use |
Rate (cents per litre) |
1 July 2013 30 June 2014 |
Other off-road activities where fuel is combusted |
32.347 (this rate includes the carbon charge) |
1 July 2014 9 November 2014 |
All other business uses: Light vehicle on a private road using combustible petrol (liquid fuel) |
38.143 |
10 November 2014 1 February 2015 |
“” |
38.6 |
2 February 2015 30 June 2015 |
“” |
38.9 |
1 July 2016 31 July 2015 |
“” |
38.9 |
1 August 2015 31 January 2016 |
“” |
39.2 |
1 February 2016 30 June 2016 |
“” |
39.5 |
1 July 2016 31 July 2016 |
“” |
39.5 |
1 August 2016 31 January 2017 |
“” |
39.6 |
1 February 2017 30 June 2017 |
“” |
40.1 |
Question 2
In accordance with subsections 47-5(1) and (2), and 65-5(1), of the FTA, an entity is entitled to fuel tax credits within four years from the day after they were required to lodge a return for the tax period to which the fuel tax credit would be attributable.
For entities registered for GST, or required to be registered for GST, the relevant tax period is either:
● The same tax period that an input tax credit for the fuel is attributable to under the GST Act; or
● The same tax period that an input tax credit would have been attributable to under the GST Act if the fuel had been a creditable acquisition or a creditable importation.
Where fuel tax credits are attributable to the quarterly period 1 October 2013 to 31 December 2013, the required date to lodge a return for those fuel tax credits is 28 February 2014. Therefore the entity will cease to be entitled to these fuel tax credits from 1 March 2018.