ATO Interpretative Decision

ATO ID 2007/134 (Withdrawn)

Excise

• This ATO ID is withdrawn from 1 July 2013 because Division 45 of the Fuel Tax Act 2006 was repealed with effect from 1 July 2009. Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of fuel acquired between 1 July 2006 and 30 June 2009.
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Issue

Is an entity required, under subsection 45-5(1) of the Fuel Tax Act 2006 (FTA), to be a member of the Greenhouse Challenge Plus Programme (GCPP) at the time it acquires taxable fuel to receive fuel tax credits exceeding $3 million in a financial year?

Decision

Yes. An entity is required, under subsection 45-5(1) of the FTA to be a member of the GCPP at the time it acquires taxable fuel to receive fuel tax credits exceeding $3 million in a financial year.

Facts

An entity accounts for its fuel tax credits monthly on a Business activity statement (BAS). The entity is not a member of a goods and services tax (GST) group or a participant in a GST joint venture.

The entity has taken into account in its net fuel amounts in earlier tax periods in the financial year fuel tax credits in excess of $3 million.

Reasons for Decision

All legislative references are made to the FTA

Section 41-5 provides that an entity is entitled to a fuel tax credit for taxable fuel it acquires, manufactures or imports into Australia, to the extent that is does so for use in carrying on its enterprise.

However subsection 45-5(1) states:

You must not take into account, in your net fuel amounts for tax periods in the financial year, a total of more than $3 million of fuel tax credits arising under section 41-5 unless the Environmental Secretary has determined that you are a member of one of the following programmes:

(a)

the GCCP

(b)

another programme determined, by legislative instrument, by the Environmental Minister for the purposes of this section.

The phrase 'take into account' is not defined in the FTA and therefore takes its ordinary meaning. The definition of the phrase 'take into account' in The Australian Oxford Dictionary, 2nd edition, 2004, Oxford University Press, Melbourne, refers to the definition of 'account'. The phrase 'take into account' for the purposes of the definition of 'account' states:

2. take account of (or take into account ) consider along with other factors (took their age into account).

Therefore, when substituting the phrase 'take into account' in subsection 45-5(1) with the definition provided in the Australian Oxford Dictionary, the subsection reads, you must not consider along with other factors in 'your net fuel amounts...fuel tax credits arising under section 41-5 unless...you are a member of one of the following programmes....'

Support for this interpretation is found in Craig Willliamson Pty Ltd v. Barrowcliff (1915) VLR 450 where Hodges J at 452 stated:

I think it is a fundamental rule of construction that any document should be construed as far as possible so as to give the same meaning to the same words wherever those words occur in that document, and that applies especially in an Act of Parliament, and with especial force to words contained in the same section of an Act. There ought to be very strong reasons present before the Court holds that words in one part of a section have different meaning from the same words appearing in another part of the same section ...

The phrase 'take into account' has been consistently used in the FTA to refer to fuel tax credits that were not 'considered' in particular tax periods, specifically:

•

paragraph 45-5(2)(a) - 'you have a decreasing fuel tax adjustment if you were not entitled in a financial year to take into account the whole or part of a fuel tax credit under subsection (1)'

•

subsection 45-5(2) - 'the amount of the adjustment is the amount of the credit that you were not entitled to take into account'

•

subsection 65-5(4) - 'if your return for a tax period or fuel tax return period states a net fuel amount that does not take into account a fuel tax credit that is attributable to the period...'

•

subsection 65-5(5) -'subsection (4) does not apply in respect of the whole or a part of a fuel tax credit that you are not entitled to take into account under subsection 45-5(1).'

Therefore the phrase 'take into account', as it appears in subsection 45-5(1) and throughout the FTA, means to include in a calculation.

We consider that subsection 45-5(1) creates a nexus between the entitlement to a fuel tax credit on the acquisition, manufacture or importation of taxable fuel that arises under section 41-5, and the entitlement to include the fuel tax credit in the calculation of the net amount of a relevant tax period.

This nexus means that, where the amount of fuel tax credits included in a financial year exceed $3 million, an entity may only include a fuel tax credit in the calculation of their net fuel amount in a tax period within the financial year if, at the time the entitlement to the fuel tax credit arose (that is when they acquired, manufactured or imported the taxable fuel), the entity is a member of the GCPP, or a programme prescribed under paragraph 45-5(1)(b).

For example:

The entity was a member of the GCPP between 1 July 2006 and 25 May 2007.

The entity accounts for its fuel tax credits monthly on a BAS.

The entity has already received fuel tax credits totalling $3 million for the first 10 months of the financial year.

The entity acquired taxable fuel on 10 May 2007 and 27 May 2007 and obtained a tax invoice for each purchase at the time of acquisition.

The entity was a member of the GCPP until 25 May 2007 and therefore it is entitled to take into account the fuel tax credit entitlement that arose on 10 May 2007. However the entity was not a member of the GCPP on 27 May 2007 and therefore is not entitled to take into account the fuel tax credit for the entitlement that arose on that date.

Year of income:  Year ended 30 June 2007

Legislative References:
Fuel Tax Act 2006
   section 41-5
   subsection 45-5(1)

Case References:
Craig Willliamson Pty Ltd v. Barrowcliff
   (1915) VLR 450

Keywords
FTC environmental measures
FTC Greenhouse Challenge Plus Program
Fuel tax credits

Business Line:  Indirect Tax

Date of publication:  29 June 2007

ISSN: 1445-2782