Edited version of private advice

Authorisation Number: 1051599541588

Date of advice: 25 October 2019

Ruling

Subject: Fuel tax credits

Question 1

Is your calculation of the average fuel consumption rate per hour for your fleet of heavy vehicles fair and reasonable?

Answer 1

Yes

Question 2

Is your proposed methodology to apportion fuel used in your heavy vehicles off a public road for the purposes of calculating your fuel tax credits fair and reasonable?

Answer 2

Yes

This ruling applies for the following periods:

20XX - 20XX income year

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 carry on an enterprise which includes providing bulk haulage services using your fleet of heavy vehicles with a gross vehicle mass (GVM) of over 4.5 tonnes.

You advised that your vehicles are similar in types and sizes.

The heavy vehicles travel on public roads, private roads, in quarries and work sites. Typically, your fleet would travel on roads other than public roads to pick up raw materials and deliver/unload it at work sites.

The auxiliary equipment (mainly tippers) are only used while the vehicle is off a public road. The auxiliary equipment operates via a power take off using the same fuel source as the main engine while the vehicle is idling.

Your proposed methodology is to work out an average fuel consumption rate, and apply that rate to the hours spent off a public road to calculate the fuel used while the vehicles are travelling off a public road, for powering auxiliary equipment and also for idling off a public road.

You have provided data to show:

·   Details and sizes of all your heavy vehicles. They are all similar in types and sizes.

·   Total fuel usage (diesel) and the engine hours of your fleet for the sample periods.

·   You divide total litres of fuel used by total engine hours to get an average fuel consumption rate (litres per hour).

·   The fleet also have Global Positioning System (GPS) to confirm the exact time (enter and exit times) when the vehicles are off public roads.

·   The GPS can show the time when the vehicles are off a public road, however, it will not show what activities the vehicles engaged in during that time (e.g. travelling, idling, idling and powering auxiliary equipment).

·   Your data shows that the time spent off a public road is minimal compared to the times spent on public roads

·   The vehicles in your fleet are not turned off at any stage once the vehicles leave the depot.

Relevant legislative provisions

Fuel Tax Act 2006 section 60-5

Reasons for decision

The FTA and Fuel Tax Regulation 2016 do not set out any methods that an entity must use to apportion taxable fuel.

Fuel Tax Determination 2010/1 Fuel tax: is apportionment used when determining total fuel tax credits in calculating the net fuel amount under section 60-5 of the Fuel Tax Act 2006? (FTD

2010/1) sets out the Commissioner's view on apportioning fuel tax credit entitlements.

The Commissioner considers that an entity can use any apportionment methodology that is fair and reasonable in its circumstances.

Relevantly, paragraphs 7 and 8 of FTD 2010/1 provide that:

7. You can use any apportionment method that is fair and reasonable in your circumstances to determine the fuel tax credit that is available for the taxable fuel that you acquire.

8. Where there is more than one fair and reasonable way of apportioning, you may choose any method as long as it is fair and reasonable in your circumstances.

Your proposed methodology has utilised some known reliable measures to apportion and calculate fuel usage. Your proposed methodology includes using GPS data to determine when the vehicles are located off public roads.

Your sample period and sample size is considered to be very reasonable.

Your proposed methodology is to work out an average fuel consumption rate, and apply that rate to the hours spent off a public road to calculate the fuel used while the vehicles are travelling off a public road, for powering auxiliary equipment and also for idling off a public road.

Generally, a fair and reasonable apportionment of fuel needs to consider the different fuel consumption rates of when the vehicle is travelling in different road conditions, as well as when idling and/or powering auxiliary equipment. It is reasonable to expect some variations in fuel consumption when a vehicle is travelling compared to when it is stationary and idling.

In your circumstance, and based on the sample data you have provided, the time spent off a public road is minimal compared to the time spent travelling on public roads.

Therefore, it is considered that the variation of fuel consumption during the different activities would not have a significant effect on the average hourly fuel consumption rate and the amount of fuel allocated to activities being conducted off a public road.

In the event that your business changes, and there is a significant change in the pattern of fuel used in your vehicles within off public road areas, the apportionment methodology will need to be reviewed.

By way of further information, you may use the GPS's record of the time the vehicles are located off a public road, however you will nevertheless remain obligated to ensure that the apportionment of the fuel tax credit claim is fair and reasonable by ensuring that in analysing the data, the location of the vehicle when the fuel is used is appropriately determined to be either a public road or a non-public road area. You will also need to keep all the appropriate records to substantiate this.