Fuel Tax Credit application for use in auxiliary equipment - implications for the Refrigerated Transport industry and other Road Going Heavy Vehicle Usage

You may note from the table provided in Article 1 that the ATO now separately qualifies a Fuel Tax Credit Rate for fuel acquired "to power auxiliary equipment of a heavy vehicle* travelling on a public road - such as fuel used to power a refrigeration unit or a concrete mixing barrel".

Subsequent to the findings of the Administrative Appeals Tribunal (AAT) in the matter ofLinfox Australia Pty Ltd and Commissioner of Taxation [2012] AATA 517, the Australian Taxation Office has issued a Decision Impact Statement confirming that the Commissioner agrees with the view of the Tribunal that any fuel used in the operation of auxiliary equipment of a road going vehicle is separate to that of the fuel used to power the vehicle itself in its operation to propel the vehicle on a public road.

It's an argument on the semantics of what is meant by "fuel to use, in a vehicle, for travelling on a public road" in subsection 43-10(3) of theFuel Tax Act 2006which was previously set out in Fuel Tax Ruling FTR 2008/1 as to include both fuel used for propulsion and fuel used to power auxiliary equipment, such as a refrigeration unit, in (or affixed to) a vehicle while it is travelling on a public road.  The Commissioner has now revised this ruling to reflect the AAT's reasoning.

What hasn't yet been decided is what method the Commissioner will accept other than exact record keeping and substantiation of fuel consumption of the auxiliary equipment as separate from the road vehicle to be able to claim the 38.143 cents per litre credit instead of the reduced 12.003 cents per litre credit.

In February 2013, the Australian Trucking Association made a submission to the ATO with their recommendations for amendments to the Rulings and their findings of a survey they conducted on businesses in various transport related industries. 

You can read their full submission here.

So what does this mean for our clients affected by this clarification of opinion? 

While the ATO have not advertised their change of opinion, or provided any form of guidance on acceptable apportioning methods, if you are able to show a fair and reasonable approach to substantiating your claim then you are entitled to the increased Fuel Tax Credit rebate on the consumption of fuel used for auxiliary equipment.  This will require an in-depth look at your equipment, your fuel consumption, how you pay for your fuel and how you keep your records.  If you are not already claiming your entitlements, call your BBA Advisor today to discuss analysing your records and eligibility.