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Australia: Fuel tax credits, ATO’s position in decision impact statement

Australia: Fuel tax credits, ATO’s position in decision

The Australian Taxation Office (ATO) released a decision impact statement following the judgment of the Administrative Appeals Tribunal (AAT) and then the judgment on appeal before the Full Federal Court in a case concerning fuel tax credits.


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The decision impact statement provides the ATO’s view of the case and what this means for ATO advice and guidance.

Calculating fuel tax credits

The case concerned the operation of the Fuel Tax Act 2006 (FTA) that allows a taxpayer a fuel tax credit for taxable fuel that the taxpayer acquires for use in carrying on the enterprise. Under the FTA, the fuel tax credit is reduced by a road user charge (RUC) if the fuel is acquired to use for travelling on a public road.

The three substantive issues in the case were:

  • Whether the fuel tax credit was required to be reduced by the RUC when travelling on privately operated toll roads (that is, are such roads public roads?)
  • Whether credits relating to fuel acquired to power cabin air conditioning are required to be reduced by the RUC
  • If the fuel tax credit was required to be reduced by the RUC, whether the taxpayer was denied an entitlement to fuel tax credits outside of the four-year limitation period


What is a “public road” and “fuel used for travelling on a public road”?

In the ATO’s decision impact statement, the ATO summarises the conclusion of the AAT as follows:

  • The RUC applied in these situations.
  • Fuel used “for travelling on a public road” was not confined to meaning propelling a vehicle on a public road and was apt to include fuel used to power air-conditioning in the driver's cabin.
  • A public road, for the purposes of the FTA, is one on which members of the public are generally entitled as of right to travel.
  • It did not matter whether the road was maintained by private operators, or by government, or whether a toll was imposed for use of the road.

However, the tribunal found that Division 47 of the FTA would not have operated to deny the taxpayer any increased fuel tax credit that would have occurred if the RUC did not apply as the taxpayer had “taken into account” the relevant fuel tax credits at issue in an assessment.

On appeal, the Full Federal Court affirmed the decision of the tribunal (apart from the issue of the air-conditioning which it was not asked to consider).

ATO’s view and implications

Privately operated toll roads are public roads for FTA purposes: The outcome accorded with the ATO view that a public road includes a road available for use by members of the public (and therefore includes a privately operated toll road).

Air-conditioning: In regards to the decision on cabin air conditioning, being that fuel for travelling included fuel used for operations other than propulsion, the ATO noted that the outcome was consistent with:

  • Fuel Tax Determination FTD 2016/1 Fuel tax: fuel tax credits - fuel used for idling and cabin air-conditioning of a vehicle on a public road
  • Fuel Tax Ruling FTR 2008/1 Fuel tax: vehicle's travel on a public road that is incidental to the vehicle's main use and the road user charge

Further, the ATO position was that the reasoning would extend to the operation of all such auxiliary equipment in vehicles but the ATO is reconsidering how this applies to passenger air conditioning.

Time limits for credit claims: Although the ATO accepted how the RUC was “taken into account in an assessment,” it noted that “the particular facts before the Full Court did not require it to consider the situation where no credit has been claimed in respect of any particular fuel acquisition.” This leaves open the question of what occurs when a taxpayer forgets, or omits claiming a credit within the four-year period to amend an assessment. This question is equally as relevant to input tax credits that are not included in an assessment.

The ATO states that the Full Court and the Tribunal decisions in relation to time limits for credit claims together with the outcomes of other current litigation will be taken into account in finalising Draft Miscellaneous Tax Ruling MT 2018/D1 Miscellaneous tax: time limits for claiming an input tax or fuel tax credit.

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