Edited version of your written advice

Authorisation Number: 1051422893800

Date of advice: 30 August 2018

Ruling

Subject: Fuel tax credit

Question 1

Are you entitled to a fuel tax credit for taxable fuel acquired and used in your boat to catch fish for the purpose of carrying on your fishing enterprise?

Answer

Yes

Question 2

Are you entitled to a fuel tax credit for taxable fuel acquired and used in a vehicle with a gross vehicle mass of 4.5 tonnes or less when the vehicle is on a beach and dragging nets up and down the beach in the course of your fishing enterprise?

Answer

Yes

This ruling applies for the following periods:

20XX – 20XX income year

20XX – 20XX income year

20XX – 20XX income year

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are registered for Goods and Services Tax.

You conduct a business of commercial fishing as a sole trader.

As part of carrying on your fishing business, you use a light vehicle and a boat to catch fish which you sell.

You purchase unleaded petrol to use in your boat and diesel is purchased to use in your light vehicle.

The business is seasonal so at times you use the boat to go further out from the beach to catch the fish, but other times, you use your light vehicle to catch the fish closer to the beach.

In using your light vehicle to catch the fish, you travel to on the beach to the fishing area, you cast the nets out into the water and use your vehicle to drag the nets up and down the beach until enough fish have been caught. The vehicle is used 100% for business purposes, and the majority of its use is at the beach. The vehicle is also used to tow the boat on the boat ramp and to transport the fish to the depot etc.

You advised you have been conducting this business for a number of years but were not aware of your potential entitlement to fuel tax credits. You understand that if you are entitled, you may claim your fuel tax credit entitlement subject to a four year time limit.

Assumptions

The beach is not a road and there is no road on the beach.

Relevant legislative provisions

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 section 41-20

Fuel Tax Act 2006 subsection 47-5(1)

Fuel Tax Act 2006 subsection 65-5(1)

Reasons for decision

Section 41-5 of the Fuel Tax Act 2006 (FTA) provides that if you are registered for goods and services tax at the time you acquire the fuel, you are entitled to a fuel tax credit for taxable fuel that you acquire or manufacture in, or import into, the indirect tax zone to the extent that you do so for use in carrying on your enterprise.

You conduct a commercial fishing business and you are registered for goods and services tax. You purchase unleaded petrol, a taxable fuel, to use in your boat to catch eels and fish (“fish”) which you sell in the course of your enterprise.

Accordingly, the purchase and use of the taxable fuel in the boat satisfies the fuel tax credit entitlement provision.

Time limits to claim fuel tax credits

You need to claim your fuel tax credit entitlement within four years of the end of the tax period in which the credit would be claimed at the time of acquisition of the fuel. You also need to be registered for goods and services tax at the time you acquire the fuel. If the fuel tax credit is not claimed within this time the entitlement ceases under subsection 47-5(1) of the FTA.

Subsection 47-5(1) of the FTA states:

You cease to be entitled to a fuel tax credit to the extent that it has not been taken into account, in an assessment of a net fuel amount of yours, during the period of 4 years after the day on which you were required to give to the Commissioner a return for 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).

Question 2

Are you entitled to a fuel tax credit for taxable fuel acquired and used in a vehicle with a gross vehicle mass of 4.5 tonnes or less when the vehicle is on a beach and dragging nets up and down the beach in the course of your fishing enterprise?

Detailed reasoning

As discussed above, the relevant fuel tax credit entitlement provision is section 41-5 of the FTA.

Subdivision 41-B of the FTA includes the disentitlement rules for fuel tax credits, and section 41-20 of the FTA contains the disentitlement rules in respect of light vehicles. Section 41-20 of the Fuel Tax Act states:

You are not entitled to a fuel tax credit for taxable fuel to the extent that you acquire, manufacture or import the fuel for use in a vehicle with a gross vehicle mass of 4.5 tonnes or less travelling on a public road.

The term ‘light vehicle’ is used in the FTA in reference to a vehicle with a gross vehicle mass (GVM) of 4.5 tonnes or less.

For the majority of the time, your light vehicle is used on the beach to catch fish. You also use your light vehicle on a public road but you are aware that you are not entitled to a fuel tax credit for the portion of fuel used in the light vehicles when travelling on a public road. Your question relates to whether you would be entitled to a fuel tax credit for when your light vehicle travels on the beach to catch the fish. For this activity, you would cast the nets into the water and use your vehicle, while it is located on the beach, to drag the nets up and down the beach until sufficient fish have been caught.

The term ‘public road’ is not defined in the FTA; however, the Commissioner’s view of what constitutes a public road is discussed in Fuel Tax Ruling FTR 2008/1: vehicle’s travel on a public road that is incidental to the vehicle’s main use and the road user charge (FTR 2008/1). Paragraph 43D of FTR 2008/1 states:

43D. The term 'public road' is not defined in the FT Act and therefore it takes its ordinary meaning.

The Macquarie Dictionary, viewed August 2018, defines the noun ‘road’ to mean:

noun 1. a way, usually open to the public for the passage of vehicles, persons, and animals.

2. any street so called.

3. the track on which vehicles, etc., pass, as opposed to the pavement.

The Macquarie Dictionary, viewed August 2018, defines the noun ‘beach’ to mean:

noun 1. the sand or loose water-worn pebbles of the seashore.

2. that part of the shore of the sea, or of a large river or lake, washed by the tide or waves.

3. the beach, the seaside as a place of recreation: *A lot of people in the city go to the beach on a day like today. –tim winton, 1986.

In your circumstance, when your light vehicle is used on the beach to drag fishing nets in the activity of catching fish, the vehicle is not being used in the activity of ‘travelling on a public road’; it is being used on a beach and for the distinct and separate purpose of commercially catching fish. Accordingly, the disentitlement provision of section 41-20 of the FTA does not apply to your circumstance, and you are entitled to a fuel tax credit under section 41-5 of the FTA for the portion of fuel being used on the beach and dragging the nets.

It is noted that when the vehicle is used to transport the fishing boat to the beach and launch the boat into and from the water at the boat ramp the fuel is used while the vehicle is ‘travelling on a public road’ and as such section 41-20 of the FTA applies to deny a fuel tax credit for the taxable fuel used.

As noted above, fuel tax credits cease under section 47-5 of the FTA to the extent that they are not claimed within 4 years of the day you were required to give the Commissioner the business activity statement for the tax period in which they would be attributable under subsection 65-5(1) of the FTA.