Issue
Is an entity's entitlement to a fuel tax credit for fuel used in a grader for travelling to and from a work site on a public road reduced by the road user charge pursuant to subsection 43-10(3) of the Fuel Tax Act 2006 (FTA)?
Decision
Yes. An entity's entitlement to a fuel tax credit for fuel used in a grader for travelling to and from a work site on a public road is reduced by the road user charge pursuant to subsection 43-10(3) of the FTA.
Facts
The entity is registered for goods and services tax (GST) and is contracted to conduct road maintenance activities using a diesel powered grader.
The entity acquires the diesel fuel to conduct these activities.
The grader has a gross vehicle mass (GVM) of greater than 4.5 tonnes.
The grader travels to and from a work site along a public road.
The entity is entitled to a fuel tax credit in respect of this travel.
Reasons for Decision
Subsection 43-10(3) of the FTA provides that the amount of a fuel tax credit for fuel used in a vehicle travelling on a public road is reduced by the amount of the road user charge, for the fuel. However, subsection 43-10(4) of the FTA provides that the fuel tax credit is not reduced by the road use charge if the vehicle's travel on a public road is incidental to the vehicle's main use.
However, subsection 43-10(4) of the FTA provides that the fuel tax credit is not reduced by the road use charge if the vehicle's travel on a public road is incidental to the vehicle's main use.
The term 'incidental' is not defined in the FTA, and therefore takes its ordinary meaning. The Macquarie Dictionary , 2001, rev 3 rd edn, The Macquarie Library Pty Ltd, NSW provides the following definition of 'incidental': 1. happening or likely to happen in fortuitous or subordinate conjunction with something else. 2. incurred casually and in addition to the regular or main amount: incidental expenses. 3. something incidental, as a circumstance. 4. (plural) minor expenses. 5. incidental to , liable to happen in connection with; naturally appertaining to.
Paragraph 2.80 of the Explanatory Memorandum to the Fuel Tax Bill 2006 (EM) reflects the ordinary meaning of the term 'incidental'. 2.80 The amount of a taxpayer's fuel tax credit is not reduced by the amount of the road-user charge if their vehicle's travel on a public road is incidental to its main use. Incidental use of fuel may occur when a vehicle that is used almost exclusively off a public road, is moved a short distance from one off-road location to another via a public road or is operating incidentally on a public road. [emphasis added] Example 2.9 Phil is a farmer. In order to move between parts of his property when he is harvesting crops he has to drive his combine harvester on a public road. As the main use of the combine harvester is off-road, the travel that occurs on a public road is considered incidental and Phil does not have to reduce the amount of fuel tax credit by the amount of the road-user charge for part of the use of fuel for travelling on a public road.
The example demonstrates that merely crossing a public road between the farmer's properties in the course of harvesting activities is incidental to the harvesting activities.
In contrast, the grader is moving to and from the site where it conducts its grading activities. It is not travelling along the public road in the course of its actual grading work. Accordingly, the movement along the public road is not occurring as an incidental part of the grader's grading activities.
On this basis, the road user charge applies to reduce the fuel tax credit otherwise available to the entity for fuel used in the grader for travelling to and from a work site on a public road.