Issue
Is an entity's fuel tax credit for fuel acquired for use in a clip-on generator set that powers a refrigerated container (reefer) while being transported by a prime mover, reduced by the amount of the road user charge under subsection 43-10(3) of the Fuel Tax Act 2006 (FTA)?
Decision
No. An entity's fuel tax credit for fuel acquired for use in a clip-on generator set to power a reefer while being transported by a prime mover, is not reduced by the amount of the road user charge under subsection 43-10(3) of the FTA.
Facts
An entity operates a transport enterprise and is registered for GST.
The entity acquires taxable fuel for use in a clip-on generator set to power a reefer.
A reefer is a refrigerated container that ensures the quality of perishable goods during transportation by maintaining the desired temperature of its contents.
In this case, the reefer has an integral refrigeration unit that is powered by electricity from a clip-on generator set attached to the reefer.
The clip-on generator set has its own fuel tank.
The reefer is transported on a skeletal trailer that is towed by a prime mover.
The entity is entitled to a fuel tax credit under section 41-5 of the FTA for taxable fuel it acquired for use in the generator set to produce electricity to power the reefer during the entire journey of the goods.
The disentitlement rules in Subdivision 41-B of the FTA do not apply.
Reasons for Decision
Subsection 43-10(3) of the FTA provides that, to the extent that an entity '...acquires, manufactures, or imports taxable fuel to use, in a vehicle, for travelling on a public road...' the amount of the entity's fuel tax credit for the fuel is reduced by the amount of the road user charge. Therefore, the question arises as to whether the fuel used in the generator set attached to the reefer is fuel used in a vehicle when the reefer is placed on the skeletal trailer.
The Commissioner's view of the term 'vehicle' for the purposes of subsection 43-10(3) of the FTA is expressed in paragraphs 11 to 13 of Fuel Tax Ruling FTR 2008/1. It includes any vehicle that is capable of being authorised to travel on a public road by a relevant road traffic authority, whether or not the vehicle is designed for road travel or ordinarily travels on a public road. It is not restricted to a conveyance for the carriage of passengers or goods. Nor is the term 'vehicle' confined to a self-propelled vehicle. It includes any plant, machinery or equipment that is capable of locomotion and which may be authorised to travel on a public road by a relevant road traffic authority.
A refrigerated container serves two purposes: (1) to ensure the quality of the perishable goods are maintained; and (2) to provide adaptability to a combined use of road, rail and sea transport in a single journey where it is critical and efficient to retain the perishable goods within the same container. A reefer is an independent object to the means of conveyance. Similar to palletised goods, the reefer is the thing being conveyed. Thus a reefer is not a vehicle. The clip-on generator set is likewise not a vehicle even when attached to a reefer on a trailer.
As a reefer is not a vehicle, fuel that is acquired for use in a clip-on generator set that powers a reefer does not fall within the expression 'fuel to use, in a vehicle' for the purposes of subsection 43-10(3) of the FTA.
Therefore, the road user charge does not apply to reduce the amount of the entity's fuel tax credit arising under section 41-5 of the FTA for fuel it acquired for use in a clip-on generator set to power the reefer while being transported by a prime mover.