Edited version of private advice

Authorisation Number: 1052146338716

Date of advice: 25 July 2023

Ruling

Subject: Fuel tax credit

Question

Is the Goods and Services Tax (GST) group representative entitled to claim fuel tax credits for taxable fuel acquired and used by a GST group member when it was part of another GST group pursuant to the Fuel Tax Act 2006?

Answer

No

This ruling applies for the following period:

1 July 2019 to 30 June 2020

1 July 2020 to 30 June 2021

1 July 2021 to 30 June 2022

The scheme commenced on:

1 July 2019

Relevant facts and circumstances

The GST group representative is registered for GST and fuel tax credit.

The GST group recently acquired and also became the GST group representative of the GST group member (the member).

The member was previously a member of another GST group (the previous GST group).

Upon acquisition by the GST group (the current GST group), the member has continued to conduct the same business activities as it has conducted under its previous ownership.

The member, while it was with the previous GST group, purchased and used taxable fuel to carry on its enterprise. However, due to an oversight, the representative member of the previous GST group never claim the fuel tax credits.

The current GST group wishes to confirm its entitlement to claim fuel tax credits that relate to fuel acquired and used by the member before it became a member of the current GST group for which no claim has previously been made.

There was no fuel on hand as at the time the current GST group acquired the member.

Relevant legislative provisions

Fuel Tax Act 2006 section 41-5

Fuel Tax Act 2006 section 41-15

Fuel Tax Act 2006 section 70-5

Fuel Tax Act 2006 subsection 70-10(1)

Reasons for decision

The fuel tax credit entitlement provision is section 41-5 of the FTA. To be entitled to a fuel tax credit, you must have acquired, manufactured or imported taxable fuel, and used that fuel to carry on an enterprise.

The member was a member of the previous GST group. During that time, the member purchased and used taxable fuel in carrying their enterprise.

Section 70-5 of the FTA, for the purposes of the fuel tax law, treats all the members of a GST group as a single entity, and gives the representative member all the rights, powers and obligations of the single entity. The group representative claims all the fuel tax credits on behalf of the members of the GST group.

Therefore, fuel acquisitions made by a member of a GST group and used in carrying on an enterprise would give rise to a fuel tax credit for the group for which the GST group representative has the right to claim. That is, the previous GST group representative has a fuel tax credit entitlement for taxable fuel purchased and used by the member.

Due to an oversight, the previous group representative never claimed the fuel tax credit.

The member was then acquired and became a member of the current GST group.

Subsection 70-10(1) of the FTA states:

Entry history rule

(1) For the purposes of the fuel tax law, from the time when a particular entity starts to be treated as part of a single entity under section 70-5, everything that happened (including because of any previous application of this section) before that time, in relation to any fuel in the hands of the particular entity at that time, is taken to have happened as if the fuel had been in the hands of the single entity.

Example: The single entity is taken to have acquired the fuel for the purposes for which the particular entity acquired the fuel.

Subsection 70-10(1) refers to fuel 'in the hands of the particular entity at that time', and 'that time' referred to is the time when a particular entity starts to be treated as part of a single entity.

As there were no fuel on hand as at the time the member was acquired by the current GST group and became a member, there is no requirement to consider whether there is an entitlement to fuel tax credits for any fuel in existence under subsection 70-10(1) for the current GST group.

To the extent that fuel is no longer in existence as at the time the member left the previous group, any fuel tax credit entitlement (section 41-5) will remain with the GST group representative of the previous GST group (section 70-5).

Accordingly, section 41-15 of the FTA precludes the current GST group from claiming the fuel tax credit for the fuel purchased and used by the member prior to joining because another entity was previously entitled to the fuel tax credits, being the previous GST group representative:

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.