Lawyers warn operators to remember tax concessions for fuel used to power auxiliary equipment
Heavy vehicle operators will be able to receive further fuel savings after a decision by the Administrative Appeals Tribunal that deemed only fuel that powers the vehicle should be affected by the road user charge (RUC), according to Cooper Grace Ward lawyers.
In the wake of the verdict from the Linfox Australia Pty Ltd v Commissioner of Taxation [2012] AATA 517 case, the lawyers have warned transport operators to keep in mind the change of interpretation from the commissioner of ‘fuel to use, in a vehicle, for travelling on a public road’ and highlighted the breadth of potential savings it may bring.
“The case restricted the meaning of the phrase, and under the more restrictive interpretation, less fuel may be subject to the RUC, resulting in greater entitlements to fuel tax credits,” Cooper Grace Ward lawyers Fletch Heinemann, Terry Batch and Gillian Bristow say.
Questioning the former interpretation, Linfox did not believe all fuel it was consuming should be surrendered to the RUC, which is designed to aid road construction and maintenance costs.
“Linfox used refrigerated trailers to transport perishable goods that were required to be kept at specified temperatures,” the lawyer firm says.
“The fuel used to power the refrigeration units was kept in a separate tank to the fuel that was supplied to the engine of the vehicle.
“The Tribunal held that despite the fact that the trailer carrying the refrigeration unit was travelling on the road, the fuel used to power it was not used ‘for travelling on a public road’.”
As the FTC did not discriminate between the fuel used to drive the vehicle and the fuel used to run an accessory unit, tax concessions were reduced, generally, from 38.9 cents per litre to 12.76 cents per litre across all fuel consumed by heavy vehicles.
In his Decision Impact Statement, the commissioner separated the two fuel uses.
“This revision will impact the heavy trucking, cement manufacturing, and coach and bus industries … Specifically, fuel used to operate any apparatus or piece of machinery on a vehicle that is not for the purpose of travelling is no longer considered to be ‘fuel used in a vehicle, for travelling’. Some examples of machinery of this nature are the hydraulic arm lift of a garbage collection vehicle, the mixing bowl of a cement truck, the refrigeration unit on a perishables transportation truck and air-conditioning units of commercial buses and coaches.”
The ruling does not discriminate between vehicles that keep all fuel in one tank or in allotted tanks, like Linfox, but requires operators to make a reasoned judgement as to how much fuel was used in each capacity.
However, there are time limits according to the lawyers as operators will not be able to apply for unclaimed FTC after four years from the original tax return due date.