Edited version of your private ruling

Authorisation Number: 1051860859360

Date of advice: 8 July 2021

Ruling

Subject: Fuel tax credits - public roads

Question

Are all sections of roads that make up a haulage route "public roads" for the purposes of section 43-10 of the Fuel Tax Act 2006 (FTA)?

Answer

Certain sections of roads are considered "public roads" for the purposes of section 43-10 of the FTA.

This ruling applies for the following periods:

Year ended 30 June 2019

Year ended 30 June 2020

Year ended 30 June 2021

Year ended 30 June 2022

Year ended 30 June 2023

Year ended 30 June 2024

The scheme commences on:

1 July 2018

Relevant facts and circumstances

You are registered for Goods and Services Tax.

You acquire taxable fuel and use in heavy vehicles as part of carrying on your enterprise.

Your vehicles travel on a haulage route, of which certain sections of roads are constructed, owned, operated and maintained by you. There are signs to prevent public access, and gates at certain entrances.

The rest of the haulage route are pre-existing gazetted roads and are available for use by the public, generally land holders that that live along that road.

Relevant legislative provisions

Section 41-5 Fuel Tax Act 2006

Subdivision 43 Fuel Tax Act 2006

Section 43-10 Fuel Tax Act 2006

Subsection 43-10(3) 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 43 provides the rules for working out the amount of fuel tax credits. Fuel tax credits for fuel purchased for use in heavy vehicles is reduced by the road user charge (RUC) to the extent that it is for travelling on a public road under subsection 43-10(3) of the FTA.

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 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 AAT 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 FFC 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.

Public roads:

Certain sections of roads are considered "public roads" because the roads are gazetted public roads. These sections of roads are used by the public, mainly those that live along that road. Furthermore, you do not have the right to restrict access to these sections of the haulage route.

Where the general public have access, the roads are considered public roads for fuel tax credit purposes.

Non-public roads:

Certain sections of roads are considered not to be public roads because the roads are constructed, owned and operated by you.

The public has no access to these roads. There are signs to prevent public access and gates at certain entrances. You also have the authority to close off public access to the roads.