Issue
Is an entity's fuel tax credit for fuel acquired for use in a refrigerated container (reefer) with an integral mechanically-driven compressor 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 reefer with an integral mechanically-driven compressor 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 reefer with an integral mechanically-driven compressor. A reefer is a refrigerated container that ensures the quality of perishable goods during transportation by maintaining the desired temperature of its contents.
The reentitlement 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, when a reefer with an integral mechanically-driven compressor is placed on the skeletal trailer the question arises as to whether the fuel used in the reefer is fuel used in a vehicle.
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 plant, equipment or machinery that is capable of locomotion and which may be authorised to travel on a public road by the relevant road traffic authority.
A reefer 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 with an integral mechanically-driven compressor is not a vehicle even when placed on a skeletal trailer.
As a reefer is not a vehicle, fuel that is acquired for use in the reefer with an integral mechanically-driven compressor 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 reefer with an integral mechanically-driven compressor while being transported by a prime mover.