Fuel tax credits for fuel use in vehicles on public roads

The ATO has amended its guidance on fuel tax credit claims for business taxpayers who acquire the fuel for use in a vehicle travelling on a public road.

The amount of credit for taxable fuel that is acquired to use in a vehicle for “travelling” on a public road is reduced by the amount of road user charge.

The amendments follow the AAT’s decision in Linfox Australia Pty Ltd v FC of T [2019] AATA 222. In that case, the reasoning was that fuel, for this purpose, was not confined to that which propelled the vehicle on the public road, but also fuel used to power air-conditioning in the driver’s cabin.

Although the Linfox case concerned fuel used to power cabin air-conditioning in vehicles, the Commissioner’s view is that the rationale employed in the decision is equally applicable to the powering of passenger air-conditioning in buses. Therefore, fuel used for this purpose would be included when working out the reduction in the fuel tax credit claims, in the ATO’s view.

An addendum has been issued to 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. It removes the example relating to bus air-conditioning which had stated that such “additional fuel consumed by the air-conditioner is not ‘for travelling’. The fuel is used for the purpose of passenger comfort”.

Guidance in Practical Compliance Guideline PCG 2016/11 Fuel tax credits — apportioning taxable fuel used in a heavy vehicle with auxiliary equipment has also been updated to remove the bus air-conditioning reference in the table in para 9.

The amendments apply to taxable fuel acquired on or after 1 November 2019.