Issue
Does paragraph 43-8(4)(c) of the Fuel Tax Act 2006 (FTA) apply, and hence the carbon reduction nil, where fuel is acquired for use in a vehicle with a gross vehicle mass (GVM) of more than 4.5 tonnes that is moving along a public road while engaged in undertaking road maintenance?
Decision
No, paragraph 43-8(4)(c) of the FTA does not apply. The use of fuel in a vehicle moving along a public road whilst it is engaged in road maintenance will not satisfy the requirements of paragraph 43-8(4)(c) of the FTA.
This is because the vehicle is not travelling on a public road.
Facts
An entity operates a vehicle with a GVM of more than 4.5 tonnes.
The vehicle is engaged in the construction, maintenance and repair of public roads.
The entity acquires taxable fuel to power the vehicle.
Reasons for Decision
Subsection 43-5(1) of the FTA reduces the fuel tax credit an entity may claim by an amount of carbon reduction. However, in certain circumstances, the amount of carbon reduction will be nil. Paragraph 43-8(4)(c) of the FTA provides that: The *amount of carbon reduction that applies to the fuel is nil to the extent that: ... (c) you acquire, manufacture or import the fuel for use in a vehicle with a gross vehicle mass of more than 4.5 tonnes travelling on a public road; or ...
The wording of paragraph 43-8(4)(c) of the FTA focuses on whether fuel is for use in a vehicle travelling on a public road.
The meaning of the term 'travel' in the sense of travelling on a public road is considered in Fuel Tax Ruling FTR 2008/1: vehicle's travel on a public road that is incidental to the vehicle's main use and the road user charge .
The discussion of the meaning of the term 'travel' in FTR 2008/1 is focused on its significance in determining whether a road user charge is applicable under
subsection 43-10(3) of the FTA, and the possible effect of subsection 43-10(4) of the FTA.
However, given the test in paragraph 43-8(4)(c) of the FTA also contains the phrase 'travelling on a public road', the discussion in FTR 2008/1 is equally applicable to the determination of whether the carbon reduction applicable to the use of fuel in a vehicle with a GVM greater than 4.5 tonnes is nil.
With regard to the use of fuel in road maintenance vehicles, FTR 2008/1 provides the following guidance: Movement by a vehicle engaged in road construction, repair or maintenance 21. The movement of a vehicle engaged in road construction, repair or maintenance to and from a road works site is 'travelling' for the purposes of subsection 43-10(3). 22. However, 'travelling' in the sense contemplated by subsection 43-10(3) does not include the movement of a vehicle on a public road or portion of a public road where: • the vehicle is engaged in the construction, repair or maintenance of the road; and • that road or portion of that road is under construction, repair or maintenance. 23. The movement of a vehicle engaged in the construction, repair or maintenance of a road, for example, a grader, bulldozer, water cart or street sweeper which occurs on the road or portion of the road that is under construction, repair or maintenance is not 'travelling' for the purposes of subsection 43-10(3).
Consequently, while the vehicles in question are engaged in constructing, maintaining or repairing a road, they are not travelling on the public road. It follows that the fuel tax credit otherwise available is reduced by the relevant carbon reduction for the fuel calculated in accordance with section 43-8 of the FTA. Note: as discussed in FTR 2008/1, a vehicle is only considered not to be travelling while it is engaged in road maintenance. The movement on the public road to and from the point where road maintenance occurs is nevertheless 'travelling' for the purposes of subsection 43-10(3) of the FTA and similarly for paragraph 43-8(4)(c) of the FTA.