Fuel Tax Credits: GST groups and membership of approved environmental programmes

Is the representative member of a goods and services tax (GST) group required to be a member of a relevant programme for the purposes of section 45-5 of the Fuel Tax Act 2006 (FTA), for the GST group to claim fuel tax credits in excess of $3 million in a financial year?

Yes. The representative member of a GST group is required to be a member of a relevant programme for the purposes of section 45-5 of the FTA for the GST group to claim fuel tax credits in excess of $3 million in a financial year.

An entity is registered for GST, and is the representative member of a GST group approved under section 48-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Not all of the members of the GST group use taxable fuel for purposes giving rise to entitlements to fuel tax credits.

The group wishes to claim fuel tax credits exceeding $3 million in a financial year.

Subsection 70-5(1) of the FTA provides that where entities have formed a GST group, as approved under section 48-5 of the GST Act, they are to be treated as a single entity for the purposes of the fuel tax law.

Section 45-5 of the FTA provides that an entity will not be entitled to more than $3 million in fuel tax credits in a financial year unless the entity is a member of the Greenhouse Challenge Plus Programme (GCPP) or another programme determined, by legislative instrument, by the Environment Minister for the purposes of that section.

Given the effect of subsection 70-5(1) of the FTA, it follows that where a GST group exists, the limitation imposed on entitlements by section 45-5 of the FTA applies to the members of the GST group as a collective. Therefore, the GST group must not take into account, in a financial year, a total of more than $3 million of fuel tax credits without having membership of a relevant programme.

The mechanics of how section 70-5 of the FTA applies to GST groups is explained in paragraph 2.104 of the Revised Explanatory Memorandum to the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006, which provides that: As a GST group is treated as a single entity for fuel tax purposes, the $3 million threshold for entities operating within an approved group, will be calculated as the sum of fuel tax credits received by the group as a whole. If the criterion applies, then the group member claiming fuel tax credits on behalf of the group (as the representative member of the group) will be required to join the GCP Programme and enter into a GCP agreement on behalf of all entities within the group in order to be entitled to payment of fuel tax credits.

Accordingly, the representative member and all members of the GST group must be covered by a GCCP or any other relevant programme membership. By entering into an appropriate agreement, which accommodates the particular structure of the GST group, the representative member is effectively making the membership applicable to all members of the GST group, and thereby satisfying the requirements of section 45-5 of the FTA.

The representative member's role in entering into an agreement on behalf of all the members of the GST group is also consistent with subsection 70-5(2) of the FTA, which provides that where entities form a GST group, the representative member has all the rights, powers and obligations of the GST group under the fuel tax law.

In this case, as the group wishes to claim fuel tax credits exceeding $3 million in a financial year, the representative member must become a member of a relevant programme for the purposes of section 45-5 of the FTA.