Edited version of private advice

Authorisation Number: 1051566050841

Date of advice: 15 August 2019

Ruling

Subject: Fuel tax credits

Question 1

Are you entitled to a fuel tax credit for taxable fuel (diesel and petrol) you acquired for use in engines, tools and machinery for off road activities as part of your enterprise?

Answer

Yes

Question 2

Are you eligible to claim fuel tax credits for kerosene acquired for cleaning of the engines?

Answer

Yes, provided the supplier of the kerosene has not claimed fuel tax credits under subsections 41-10(2) of the Fuel Tax Act 2006 (FTA), which will preclude you from claiming any further fuel tax credit claim under section 41-15 of the FTA.

Question 3

Are you eligible to claim fuel tax credits for oils you acquired for lubricating engines?

Answer

No

Question 4

Are you able to make a back-claim for fuel purchased and used in the process of commencing your enterprise?

Answer

Yes, provided you were registered for GST at the time you purchased the fuel, and your entitlement to the fuel tax credit has not ceased under section 47-5 of the FTA.

This ruling applies for the following periods:

20XX - 20XX income year

20XX - 20XX income year

20XX - 20XX income year

20XX - 20XX income year

20XX - 20XX income year

20XX - 20XX income year

The scheme commences on:

1 January 20XX

Relevant facts and circumstances

You are registered for goods and services tax (GST).

As part of your enterprise, you acquired and used taxable fuel (diesel and unleaded petrol) off public roads.

Diesel and unleaded petrol is used in engine, tools and machinery.

You also purchased and used Kerosene for cleaning of the engines.

You confirmed all activities are conducted off public roads.

You also use oils for lubricating engines.

You advised that you use many types of oil and all oils are purchased inclusive of excise.

You also would like to make a back-claim for fuel purchased and used in the process to commencing your enterprise.

Relevant legislative provisions

Subdivision 41-B Fuel Tax Act 2006

Section 41-5 Fuel Tax Act 2006

Subsection 41-10(2) Fuel Tax Act 2006

Section 41-15 Fuel Tax Act 2006

Section 47-5 Fuel Tax Act 2006

Section 110-5 Fuel Tax Act 2006

Reasons for decision

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

Subdivision 41-B of the FTA includes the disentitlement rules for fuel tax credits. Relevantly, section 41-15 of the FTA states:

41-15 No fuel tax credit if another entity was previously entitled to a credit

(1) You are not entitled to a fuel tax credit (under this Division or Division 42) for taxable fuel if it is reasonable to conclude that another entity has previously been entitled to a fuel tax credit (under this Division or Division 42), or a *decreasing fuel tax adjustment, for the fuel.

(2) However, subsection (1) does not apply if it is also reasonable to conclude that another entity had, in respect of the credit, an *increasing fuel tax adjustment of the *amount of the credit.

You are registered for GST and are carrying on an enterprise.

Diesel and Unleaded Petrol

You acquired and used taxable fuel (diesel and unleaded petrol) off public roads in carrying on your enterprise.

You acquired diesel and unleaded petrol to use in engines, tools and machinery.

Accordingly, the purchase and use of the diesel and unleaded petrol in engines, tools and machinery for off road activities satisfies the fuel tax credit entitlement provision.

Based on the facts provided, there are no relevant provisions under subdivision 41-B that remove the entitlement.

Kerosene

The kerosene is purchased in 20 litre refillable drums every few weeks.

Kerosene is acquired and used for cleaning of the engines

Under subsections 41-10(2) of the FTA,the suppliers of certain fuel (including kerosene) may claim a fuel tax credit themselves thereby precluding any further fuel tax credit claim under section 41-15.

Therefore, it is your responsibility to confirm with the supplier whether the kerosene was sold to you on an excise duty inclusive basis and whether the supplier claims any fuel tax credits for it. If they have not, then you would be eligible to claim fuel tax credits for the kerosene purchased and used in carrying on your enterprise.

Oils

In regards to oils, you advised that you use many types of oil.

All oils are purchased inclusive of excise.

The oil is for lubricating engines. You also provided a list of the types of oils you purchased.

You are only eligible to claim fuel tax credits on taxable fuel that you purchased and used in carrying on your enterprise.

The term taxable fuel is defined in section 110-5 of the FTA:

taxable fuel means fuel in respect of which duty is payable under:

(a) the Excise Act 1901 and the Excise Tariff Act 1921; or

(b) the Customs Act 1901 and the Customs Tariff Act 1995;

but does not include fuel covered by:

(c) item 15, 20 or 21 of the Schedule to the Excise Tariff Act 1921; or

(d) any imported goods that would be classified to item 15 of the Schedule to the Excise Tariff Act 1921, if the goods had been manufactured in the indirect tax zone.

Note: Item 15 of the Schedule to the Excise Tariff Act 1921 deals with certain petroleum based oils and greases. Item 20 of that Schedule deals with certain stabilised crude petroleum oils. Item 21 of that Schedule deals with certain condensate.

It appears the oils you purchased and used are lubricant oils classified to item 15 and 20 of the Excise Tariff.

As per the FTA, the definition of taxable fuels does not include item 15 and 20 products, so there would be no fuel tax credits entitlement for these oils.

Back-claim

You are carrying on an enterprise and are registered for GST. Carrying on an enterprise includes doing anything in the course of the commencement of the enterprise. As such, where you have purchased taxable fuel and used the fuel from the date you were registered for GST for the purposes of getting your enterprise up and running, you would be eligible to a fuel tax credit.

You don't have to claim the fuel tax credit in the period it arises. They can be claimed in a later activity statement. However you should make a claim for any entitlement to fuel tax credits under the law within the four year time limit. That is, four years after the day on which you were required to give a fuel tax return (i.e. BAS) for the tax period to which the fuel tax credit would have been attributable.

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).

To claim a fuel tax credit, you must work out the amount using the rate that applied at the time you acquired the fuel.