Attribution rules and late registration for fuel tax credits

Under subsection 41-5(2) of the Fuel Tax Act 2006 (FTA), an entity is only entitled to a fuel tax credit for taxable fuel for use in carrying on their enterprise where at the time the entity acquires [1] , manufactures or imports the fuel, the entity is registered or required to be registered for goods and services tax (GST). [2]

All legislative references in this Practice Statement are to the FTA, unless otherwise indicated.

The general attribution rules for fuel tax credits are explained in section 65-5. Effectively, fuel tax credits are attributable to tax periods (or fuel tax return periods) and are included on a fuel tax return [3] for the relevant period. Broadly, if an entity is a business taxpayer [4] that acquires or imports taxable fuel, its fuel tax credit for the fuel is attributable to the same tax period as its GST credit for the fuel. [5] If the entity manufactures taxable fuel, the fuel tax credit is attributable to the tax period or fuel tax return period in which the fuel was entered for home consumption (within the meaning of the Excise Act 1901 ). [6] If the entity is a non-business taxpayer [7] that acquires or imports taxable fuel, its fuel tax credit for the fuel is attributable to the fuel tax return period in which it acquires or imports the fuel. [8]

However, subsection 65-5(4) allows an entity to attribute its fuel tax credits to a later period in certain circumstances. If an entity's return for a tax period or fuel tax return period states a net fuel amount that does not take into account a fuel tax credit that is attributable to the period mentioned in subsections 65-5(1), (2) or (3), then the credit: • ceases to be attributable to that period, and • becomes attributable to the first period for which the entity gives us a return that does take it into account. [9]

The Commissioner of Taxation is empowered with the general administration of the FTA pursuant to section 356-5 of Schedule 1 to the Taxation Administration Act 1953 (TAA). Broadly, the purpose of the general administration power is to place the day-to-day administration of the various tax laws in the hands of the Commissioner.

We will allow business taxpayers who register late for fuel tax credits, to attribute fuel tax credits to a later tax period where those credits are attributable to an earlier tax period in which a fuel tax return [10] has not been given.

However, later attribution is conditional on the entity being allowed the choice of either claiming the fuel tax credits on a current or later business activity statement (BAS) [11] or revising the relevant earlier BAS. [12]

As explained in paragraph 2 of this Practice Statement, an entity can attribute a fuel tax credit on a fuel tax return for a tax period or fuel tax return period based on the relevant attribution rules at subsections 65-5(1), (2) or (3). [13]

However, subsection 65-5(4) allows an entity to attribute its fuel tax credit to a later period where its fuel tax return for a tax period or fuel tax return period states a net fuel amount that does not take into account a fuel tax credit. [14]

'Net fuel amount' is defined in section 110-5 as having the meaning given by section 60-5, which provides that you calculate an entity's net fuel amount for a tax period or a fuel tax return period as follows: Total fuel tax - Total fuel tax credits + Total increasing fuel tax adjustments - Total decreasing fuel tax adjustments

The intent of subsection 65-5(4) is to allow the later attribution of a fuel tax credit where the credit was not taken into account through the application of the general attribution rules in subsections 65-5(1), (2) or (3).

In the circumstances described herein, the exercise of the general administration powers must be considered in the context of the general attribution rules in subsections 65-5(1), (2) or (3).

We will allow a business taxpayer that registers late for fuel tax credits and did not receive BASs with fuel tax credit labels 7C and 7D the choice to either revise their earlier BAS or include the fuel tax credits on their current or later BAS. [15]

Given the additional time and costs involved in revising BASs, it is unlikely that entities would make this choice. However, there may be advantages to an entity in limited circumstances where a debt had been incurred on an earlier tax period to which fuel tax credits would otherwise have been attributed. [16]

The approach to allow a business taxpayer to choose to postpone the attribution of a fuel tax credit to a later period even where they have not lodged a return pertaining to the earliest attributable period in which the fuel tax credit could have been claimed would be consistent with the intent of the provision.

Company A is a GST-registered toy wholesaler which lodges quarterly BASs.

Company A purchases diesel fuel for its delivery truck with a gross vehicle mass greater than 4.5 tonnes in the March tax period.

Company A claims a GST credit in relation to the purchase of the diesel fuel. The GST credit is attributed to Company A's March BAS.

At the time the fuel was acquired, Company A has not 'registered' [17] to claim fuel tax credits. Therefore, Company A's BAS does not contain the fuel tax credit labels 7C and 7D.

In May, Company A becomes aware that they are entitled to claim fuel tax credits in respect of the acquisition of diesel fuel which was used in the conduct of their enterprise.

Company A did not claim the fuel tax credit in the March BAS.

Company A registers for fuel tax credit and will receive the fuel tax credit labels on the June BAS.

Company A can either: • revise its March BAS, or • claim the fuel tax credit in the June BAS or a subsequent BAS (which will have the fuel tax credit labels).

Company A chooses to claim the fuel tax credit in its June BAS.