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Fuel tax credits for auxiliary equipment

22 February 2013

In Linfox Australia Pty Ltd v Commissioner of Taxation, the Administrative Appeals Tribunal ruled that the fuel used in the refrigeration units of refrigerated trailers is not subject to the 25.5 cents per litre road user charge.

The ATO has responded to the decision by drafting amendments to its key fuel tax credits ruling (FTR 2008/1) for industry comment.

This submission draws on a survey of 34 affected businesses to recommend changes to the draft amendments, as well as changes to the guidance on record keeping and substantiation in the ATO’s fuel tax credits guide and internal administrative documents.

The submission recommends that none of the fuel used by the heavy on-road transport industry, including fuel used off-road for incidental purposes, should be subject to the carbon charge under the existing legislation.

It also argues that the fuel used to operate sleeper cab air conditioners is not ‘for travelling’ and should not be subject to the road user charge. This would enable trucking operators to claim up to $300 in additional fuel tax credits per truck per year.

To claim fuel tax credits, businesses need to substantiate their fuel use. The submission argues that the ATO should update its guidance material, and that it should work with the trucking industry and industry associations to develop a schedule of standard percentages that businesses could use as a safe harbour to calculate the fuel used in their power take off equipment.