Issue
Does paragraph 43-8(4)(c) of the Fuel Tax Act 2006 (FTA) apply, and hence the carbon reduction is nil, for all fuel used in a vehicle with a gross vehicle mass (GVM) of more than 4.5 tonnes travelling on a public road, including fuel used in powering auxiliary equipment in or on the vehicle?
Decision
Yes, paragraph 43-8(4)(c) of the FTA applies and the carbon reduction is nil for all fuel used in a vehicle with a GVM of more than 4.5 tonnes travelling on a public road, including fuel used in powering auxiliary equipment in or on the vehicle.
Facts
The entity acquires fuel which it uses in a vehicle with a GVM of more than 4.5 tonnes travelling on a public road.
Some of the fuel is used in powering auxiliary equipment in the vehicle while the vehicle is travelling on public roads.
Fuel used to power auxiliary equipment is fuel that is not used for propelling the vehicle and for all aspects of the vehicle that are for the purpose of its travel on a public road.
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: ... 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. This can be contrasted with the wording in subsection 43-10(3) of the FTA which sets out the circumstances when fuel tax credits are reduced by the road user charge. Subsection 43-10(3) of the FTA focuses on whether fuel is to use, in a vehicle, for travelling on a public road.
The issue of when fuel is used in a vehicle for travelling on a public road was considered by the Administrative Appeals Tribunal (AAT) in Linfox Australia Pty Ltd v. Commissioner of Taxation [2012] AATA 517.
The issue decided by the AAT was whether fuel acquired by the applicant for use in a refrigeration unit in a refrigerated vehicle travelling on a public road was 'fuel to use, in a vehicle, for travelling on a public road' for the purposes of subsection 43-10(3) of the FTA. If it was (as the Commissioner contended), the amount of the fuel tax credit to which the applicant was entitled for the fuel would be reduced by the amount of the road user charge.
The AAT found that the punctuation in the phrase 'fuel to use, in a vehicle, for travelling on a public road' in subsection 43-10(3) of the FTA meant that, in order for the provision to apply, fuel must be acquired both: • to use in a vehicle; and • to use for travelling on a public road.
Based on the ordinary meaning of the word 'for', the AAT concluded that the only circumstance in which the second condition would be met is: ...where fuel is acquired to use for the purpose of travelling on a public road
The AAT found that the fuel in question was not acquired for this purpose, but was instead acquired and used for the 'entirely different' purpose of refrigerating cargo inside the refrigerated trailer. It followed that the fuel did not satisfy the second condition of subsection 43 10(3) of the FTA and was not, therefore, subject to the road user charge.
In discussing the statutory context, the AAT referred to the differences in wording between subsection 43-10(3) of the FTA and the similarly worded section 41-20 of the FTA. The AAT noted that: It is significant, in our view, that the word "for" does not precede the phrase "travelling on a public road" in s 41-20 but it does in s 43-10(3)... That is not the case in s 43-10(3), where the use of the word "for" before the phrase "travelling on a public road" is evidently intended to narrow the reach of the provision, such that the RUC on taxable fuel is only imposed where the purpose is to propel the vehicle on a public road [our emphasis].
In contrast to the wording in subsection 43-10(3) of the FTA, and its intended narrow focus, the intention and wording of paragraph 43-8(4)(c) of the FTA is similar to the broad intention and wording in section 41-20 of the FTA.
Therefore, for the purposes of paragraph 43-8(4)(c) of the FTA, the amount of the carbon reduction is nil for all fuel used in a vehicle with a GVM of more than 4.5 tonnes travelling on a public road, including fuel used in powering auxiliary equipment in or on the vehicle. It is not necessary that the fuel is used 'for' travelling on a public road.