Edited version of private advice

Authorisation Number: 1051746483908

Date of advice: 28 August 2020

Ruling

Subject: Fuel tax credits

Question

Are roads on land classified in a specific Act considered to be "public roads" for the purposes of section 41-20 of the Fuel Tax Act 2006?

Answer

No. However, many roads that border or traverse that land is not in fact part of the specified land. They are expressly excluded under the relevant Act.

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 July 20XX

Relevant facts and circumstances

You are registered for goods and services tax and fuel tax credits.

You acquire fuel and use in light vehicles travelling within the land specified in the Act and on roads bordering the land.

A permit is required to enter the lands.

Relevant legislative provisions

Section 41-5 Fuel Tax Act 2006

Subdivision 41-B Fuel Tax Act 2006

Section 41-20 Fuel Tax Act 2006

Reasons for decision

Section 41-5 of the 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.

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 FTA 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.

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 Fuel tax: vehicle's travel on a public road that is incidental to the vehicle's main use and the road user charge.

A public road is a road that is available for use by members of the public.

The Administrative Appeals Tribunal (AAT) heard the case of Linfox Australia Pty Ltd and Commissioner of Taxation [2019] AATA 222 (Linfox 2019 AAT), the facts of which involved a taxpayer acquiring fuel for use in a heavy on-road vehicle which travelled from time to time on privately operated toll roads. The taxpayer argued that the road user charge did not apply to fuel acquired for travelling on privately operated toll roads.

In determining whether a toll road is a 'public road' for the purposes of the FTA the AAT found that a public road, for the purposes of the FTA, is one on which members of the public are generally entitled as of right to travel. The toll road in question satisfied this test. The Tribunal also found that there was insufficient justification from the legislation to interpret "public road" to mean a road for which government is responsible for construction and maintenance costs or a road which is not operated with the object of making a profit for a private entity (Linfox 2019 AAT paragraph 29).

The taxpayer appealed the AAT's decision to the Full Federal Court (FFC) in respect of the decision that a toll road is a public road (Linfox Australia Pty Ltd and Commissioner of Taxation [2019] FCAFC 131 (Linfox 2019 FFC)). The Full Federal Court upheld the AAT's decision with respect to toll roads being public roads and expressed the following factors as being key considerations when determining whether a road is a "public road":

a)    whether the public is generally entitled to use the road; and

b)    whether the roads are fully integrated into the overall public road system to ensure public accessibility.

Having regard to these observations, we consider that accessibility by the public is the key consideration, with a practical rather than legalistic approach to classification of a road as public being preferred. In this context, we consider that the integration of the road within the public network is relevant to the assessment of whether the road be regarded as part of a public road.

The roads on the lands are not integrated within the public road network. Even though members of the public can apply for permits, the roads are not available for use by members of the public without those permits. As such, we consider that the roads on the lands are not public roads for fuel tax purposes.

Furthermore, paragraph 44 of FTR 2008/1 provides examples of a 'public road.'

A road is a public road if:

·         it is opened, declared or dedicated as a public road under a statute;

·         it is vested in a government authority having statutory responsibility for the control and management of public road infrastructure; or

·         it is dedicated as a public road at common law.

Consideration is also given to the examples provided above in respect of the roads that are the subject of this ruling to confirm that these roads are not public roads.

Other roads - public roads traversing the lands

There are roads that traverse land specified in the Act.

Roads, for example highways or arterials roads, that traverse land specified within the Act where the general public have access are considered public roads for fuel tax credit purposes.

There is no entitlement to a fuel tax credit for any fuel used in light vehicles travelling on these roads. In working out the amount of fuel tax credits for fuel acquired and used in heavy vehicles for travelling on these public roads, the amount of credit is to be reduced by the road user charge.