Do you own a heavy vehicle that is used to power auxiliary equipment on that vehicle? You may be entitled to previously unclaimed fuel tax credits.
The recent Practice Statement Law Administration 2013/4 (‘the Practice Statement’), released 23rd December 2013, outlines the ‘fair and reasonable’ apportionment for taxable fuel used in a vehicle for powering the auxiliary equipment of that vehicle, that under section 41-5 of the Fuel Tax Act 2006 (‘Fuel Tax Act’), an entity has an entitlement to a fuel tax credit for.
For an owner of a heavy vehicle (gross mass exceeding 4.5 tonnes) used on a public road, the entitlement to a fuel tax credit is reduced by the value of the road user charge.
However, in vehicles where fuel powers the auxiliary equipment of the vehicle (e.g. a refrigerated truck), a fuel tax credit on the proportion of fuel used to power auxiliary equipment will not be reduced by the value of the road user charge, therefore entitling the entity to additional, and perhaps unclaimed, fuel rebates.
While the fuel tax credit is nothing new, the Practice Statement outlines the definition of fair and reasonable apportionment, therefore providing a better indication of what is an acceptable entitlement.
Who does this apply to?
Fuel tax credits may be available to owners of vehicles with a gross vehicle mass of over 4.5 tonnes, used to power the auxiliary equipment of that vehicle.
Auxiliary equipment is defined by the Practice Statement as a ‘mechanism or apparatus of a vehicle that does not propel or operate the aspects of the vehicle that are for the purpose of travelling.’
This can include:
• the mechanisms for loading and unloading goods transported (including pumps for bulk haulage vehicles, tipper mechanisms of dump trucks – this includes tippers)
• the mixing barrel and associated loading and unloading mechanism of a concrete transit vehicle
• the bin lift and compacting mechanism of a waste compactor (including side, front and rear loading)
• the waste jetter and vacuum system of vehicles used in the cleaning of drains
• the pump of a gas or liquid tanker
• winches and towing equipment of a tow truck
• air conditioning of commercial buses and coaches for passenger comfort
• the refrigeration unit of a refrigerated vehicle
• truck loading crane
• elevated platforms (buckets) and snorkels; and
• truck mounted drilling equipment
Does the ATO owe you?
What is ‘fair and reasonable’ apportionment?
In a heavy vehicle with powered auxiliary equipment, the road user charge will only apply to that fuel used in the vehicle for travelling, interpreted as ‘not only fuel for propulsion, but also for aspects of the vehicle’s function and operation that are for the purpose of travelling on a public road. This includes fuel used for stopping and idling while stationary in the course of a journey as well as the use of lights, brakes, power-steering and windscreen wipers.’
It is necessary then to apportion the fuel of the vehicle between that used for travelling (subject to a road user charge), and that used to power the auxiliary equipment of the vehicle (not subject to a road user charge.)
The ATO has provided the Auxiliary Equipment Apportionment Table outlining the percentage of fuel, used to power the auxiliary equipment of the vehicle, not subject to the road user charge. The Commissioner accepts that the percentage of fuel outlined in this table is ‘fair and reasonable.’
While an entity may use the Auxiliary Equipment Apportionment Table, the ATO also allows scope for self-assessment, and permits an entity to use any method of apportionment, so long as it is fair and reasonable. If the entity has two different (but both fair and reasonable) methods of apportionment which yield two different results, they may use either method. PSLA 2010/3 explains how an entity may meet the fair and reasonable apportionment requirements when using their own methodology.
What are you entitled to?
If you have not previously claimed fuel tax credits (unaffected by the road user charge) for the portion of fuel used to power auxiliary equipment on your vehicle, you may be entitled to an additional fuel tax rebate.
Taxpayers who operate their vehicles on a public road should review their activities and apportion their fuel according to what is outlined as ‘fair and reasonable’ (using the table or otherwise), and where appropriate, may be able to seek refunds from the Commissioner for fuel tax credits that have previously been unclaimed. While quick off-road uses of the auxiliary equipment may only result in small claims, claims may be significantly higher if these activities take longer.
The Practice Statement applies to tax periods and fuel tax return periods commencing both before and after the date of its issue, meaning you may be able to claim fuel tax credits for a number of years prior to the current tax period.
RSM Bird Cameron can help you to recognise where you may have unclaimed fuel credits for your vehicles and assist you in claiming your correct entitlement. Please contact us today.
Tel: (02) 6217 0300 Lvl 1, 103 – 105 Northbourne Avenue www.rsmi.com.au
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