Issue
Where an entity does not attribute their fuel tax credit (in whole or in part) in the tax period in which they acquire taxable fuel, can they attribute their remaining fuel tax credit in a later period, under subsection 65-5(4) of the Fuel Tax Act 2006 (FTA), by reference to the amount of fuel they have actually used for eligible purposes?
Decision
Yes. Where an entity does not attribute their fuel tax credit (in whole or in part) in the tax period in which they acquire taxable fuel, they can attribute their remaining fuel tax credit in a later tax period, under subsection 65-5(4) of the FTA by reference to the amount of fuel they have actually used for eligible purposes.
Facts
An entity purchases taxable fuel for use in its enterprise. The majority of the fuel is used in activities which entitle the entity to a fuel tax credit. The remainder of the fuel is used for purposes that do not give rise to an entitlement to a fuel tax credit.
The entity is unable to determine at the time of acquisition of the fuel the extent to which it will be used in activities that give rise to an entitlement to a fuel tax credit.
Upon purchase, the entity's fuel is stored in tanks at the entity's business premises. The entity records the quantity of fuel which is used in eligible activities as the fuel is drawn from the storage tank for that use. The entity calculates at the end of each month the amount of fuel that was used in eligible activities during that month.
The entity is registered for goods and services tax (GST) and accounts for its fuel tax credit entitlement on its business activity statement (BAS) on a monthly basis.
Reasons for Decision
All legislative references in this ATO Interpretative Decision are made to the FTA.
Division 41 provides that an entity is entitled to a fuel tax credit for taxable fuel that it acquires or manufactures in or imports into Australia to the extent that it does so for use in carrying on its enterprise. Division 41 also provides that there are exclusions from eligibility for a fuel tax credit.
Section 65-5 sets out the attribution rules for fuel tax credits. Where entities are registered or required to be registered for GST, fuel tax credits are attributable to the same tax period in which the input tax credit in respect of the fuel would have been attributable. This means an entity will often be able to claim fuel tax credits before they have actually used the relevant fuel.
If an entity does not claim a fuel tax credit in the period in which it would normally be attributable, subsection 65-5(4) provides that the amount ceases to be attributable to that tax period and becomes attributable to the period in which the entity ultimately claims the credit.
Where an entity has not claimed a fuel tax credit (in whole or part) until after they have used the fuel for an eligible purpose, they have not lost their entitlement to the fuel tax credit rather they have not attributed it. This means that an entity may attribute any remaining fuel tax credit entitlement to a later tax period. This enables the entity to reliably determine the extent to which the fuel was acquired or manufactured or imported into Australia for an eligible purpose and claim accordingly.
Therefore where an entity does not attribute their fuel tax credit (in whole or in part) in the tax period in which they acquire taxable fuel, they can attribute their remaining fuel tax credit in a later period, under subsection 65-5(4), by reference to the amount of fuel they have actually used for eligible purposes.