Fuel tax credits telematics technology providers

Overview

Telematics products gather a range of information and data that can be sourced from the Global Navigation Satellite System (GNSS), vehicle sensors, and engine diagnostics.

You need to know about:

• how to get certainty and update your product
• what the checklist does
• evidence you need
• what happens if you are not a registered tax professional.

How to get certainty and update your product

Telematics technology providers should use this information for fuel tax credit purposes when:

• applying for a product ruling or class ruling on their products
• updating or developing telematics products.

Product rulings give you and your clients certainty about how your product works and the accuracy of data it produces.

Class rulings generally give you and your clients assurance that the reports can be used for record-keeping purposes.

You should also be aware of Taxpayer Alert TA 2021/3Opens in a new window – Fuel tax credit overclaims arising from aggressive marketing and use of GPS telematics technology products.

What the checklist does

Use our checklist before applying for a product ruling or class ruling for your telematics product. It will help you understand the information, data and evidence you need to provide when submitting your product or class ruling application.

The checklist is a guide only. We will request further details if you provide insufficient information. We need to analyse the information provided and understand your product before we rule. All ruling requests are assessed on their own merits.

You should make a full disclosure at the earliest possible time to avoid delaying the application process. If we don't receive all the necessary information, we may refuse to rule.

Read data, evidence and verification for more information about the tests and evidence you should consider when developing a telematics product for fuel tax credit purposes. You can provide this to us to support your ruling application.

The checklist will help you manage your telematics data for fuel tax credit apportionment purposes, and understand the verification and evidence required, including:

• the product user’s business operations
• source data
• road and location classification
• fuel use and fuel consumption rates
• fuel tax credit calculations.

Evidence you need

The evidence includes:

• good records
• reviews, controls and governance
• data if you use a mix of vehicles.

Good records

Clients who claim fuel tax credits will also need to keep other records to substantiate their fuel tax credit entitlement and claim. For example, your clients will need to keep records to show the total fuel purchased and used in their vehicles or equipment and machinery.

Reviews, controls and governance

You need to provide us with evidence of the reviews you undertake, the controls and governance you have in place, and documentation as part of your records. This checklist can assist with record keeping requirements to support telematics data and products. Telematics data used in apportioning distance and/or fuel usage needs records to support the events and fuel acquired.

Data if you use a mix of vehicles

Where a telematics product captures data relating to a mix of vehicles (such as hybrids and vehicles that are fuelled by liquid and gaseous fuels) your product needs to ensure that results capture the events and fuel usage correctly in relation to those vehicles. If your product captures activities undertaken by electric vehicles you need to ensure that any information captured does not distort the overall results relating to taxable fuel used in vehicles.

Not a registered tax professional

If you're a telematics technology provider and you’re not a registered tax professional, you need to be aware of the obligations when providing taxation advice. For more information, see Tax agent servicesExternal Link on the Tax Practitioners Board website.

Product and class ruling checklist

Use our checklist before applying for a product ruling or class ruling for your telematics product:

• Basic features
• Locational information
• Data capture and activity
• Positional accuracy and data capture integrity

Basic features

You need to provide us with the following basic features of your product:

• a description, including
  • set-up or installation process and the type of any hardware and software installed
  • backup functionality and frequency of backups
  • how the product operates
• what details your product records – for example, vehicle registration number, vehicle make and model, gross vehicle mass (GVM), year of vehicle manufacture, type of auxiliary equipment and driver details
• any certification or assurance received from an independent recognised certification entity – including a copy of that certification
• the controls in place to ensure the details are accurate and cannot be manipulated
• how your product differentiates vehicles with different usage and fuel use – for example, heavy vehicles
  • that use fuel directly to operate an air-conditioning unit in a sleeper cabin on a long-haul trip
  • powering refrigerated units
  • and light vehicles that travel on or off public roads 
• what documentation is in place to support or verify the distance travelled compared to the telematics data – for example, odometer readings
• any assumptions used within your product and reasons why limits or caps are applied to data capture or results and algorithms used to cleanse data
• controls and checks you have in place to ensure that fuel has been used in a specific vehicle.

Locational information

You must provide us with the following locational information:

• what maps are used in your product and how often you review and update them
• if your product uses perimeters to geofence – whether they align with the actual perimeters from the relevant authority
• how public roads, private roads and other non-public road areas are classified
• what geotunnel parameters are set within the product and the reasons behind the settings.

Data capture and activity

You must provide us with the following data capture and activity information:

• the periodicity of data transmission and recording
• the processes your product uses to ensure the data and results are accurate and reflect the actual activity, including    
  • whether the date and time have been set correctly
  • the GNSS location coordinates
  • where cadastral parcel information is being used, testing that the system outputs for travel or time within the land parcels are reasonable
  • that the data is checked against business records
  • how exceptions are identified and addressed – for example, high idle time and high off-road distance travelled
  • a description of any apportionment methodologies used within the product, for example, ATO-accepted percentages or simplified methods and how they are being used
  • determination of fuel consumption rates including evidence of testing or the use of manufacturers specifications and reasonableness to the activity and age of the vehicle or equipment
  • how your product captures the operation of different engines for example, hybrid vehicles.

Positional accuracy and data capture integrity

Documentary evidence is required to support positional data accuracy and data capture for the product.

Telematics products that have been assessed and certified by an independent recognised certification entity (including type-approval of telematics devices) may be referenced as part of providing documentary evidence for the product. A copy of the certification will assist with a product or class ruling application.

We will not require a detailed examination of the actual data and installation process if a product:

• is currently certified by an independent recognised certification entity (and includes the use of type-approved telematics devices)
• is used in conjunction with a scheme that
  • recognises the certification of the product
  • provides assurance over positional accuracy and data capture, including installation processes of hardware devices
  • has ongoing governance and assurance processes and controls to identify any errors through the scheme
  • has mitigation steps in place to identify and correct errors.

If your product has not been certified for positional accuracy and data capture by an independent recognised certification entity, then you must demonstrate the:

• accuracy of the data
• governance and assurance processes
• controls in place to identify and mitigate errors with the data.

Data, evidence and verification

The following information should be used when developing or updating your product for fuel tax credit purposes.

It will help you understand and verify the accuracy of your product, so clients of your product can claim fuel tax credits correctly. You should provide the information outlined below, including the samples and tests, to support your product or class ruling application.

Information used when developing or updating your product:

• Data fields
• Vehicle verification
• Locations and distances
• Distance verification
• Fuel consumption rates
• Idling verification
• Activity verification
• Reviews
• Controls and governance
• Record keeping and documentation.

Data fields

When developing a telematics product for fuel tax credit purposes, at a minimum, we expect the following types of data fields to be recorded in your product:

• trip or visit identification
• vehicle details, including asset identification, vehicle registration, vehicle type, vehicle class, GVM, and auxiliary equipment asset identification and type
• date and timestamp in the format of DDMMYYYY and HH:MM:SS
• latitude and longitude (for example, a location or start and end points)
• distance travelled (including any classification on and off public roads)
• location description identifiers (for example, public road, port, client depot)
• idle time
• engine status and ignition on and off status
• auxiliary usage time
• speed (how derived)
• fuel calculations (if applicable)
• odometer readings
• any other data fields used in activity apportionment calculations (for example, other speeds and fuel consumption rates).

Vehicle verification

Your telematics product must produce an accurate list of vehicles in the data output that is linked to the client's vehicle asset records.

You should undertake testing of a valid sample of asset identifications to verify that the asset:

• can be linked and aligns with the assets operated by the fuel tax credit client in the tax period
• is correctly classified by vehicle class, GVM and auxiliary equipment, including identifying hybrid vehicles.

If your fuel tax credit calculation is a real-time record of vehicles, you need processes in place to update your database so that the asset identification aligns with the current asset list.

Locations and distances

Your telematics product must use a reputable geospatial data mapping source that updates regularly when determining the location of a GPS coordinate. Your maps should update at least annually.

You should also:

• review your road classification annually to check it’s recording correctly. If you make any adjustments, you need to correct all affected results and notify clients to make changes to relevant fuel tax credit claims (if applicable)
• have a reporting function in your product that details the amount of activity for different classifications, such as distance travelled on and off public roads and idle time
• retain documentary evidence of the classification process, including areas that are geofenced or cadastral parcels that you have determined are not on a public road.

Geotunnel parameters

If your product uses geotunnel parameters from the centre line of the road then it must allow enough coverage for transmission accuracy issues. This includes for multiple lanes and varying widths of roads and verges.

We accept as a minimum 30 metres from the centre line of a public road where the telematics data frequency rate (ping) is second-by-second. If the ping rate interval is longer, your product will need to show how it minimises the risk of providing inaccurate data for travel where bends or curves occur in the road.

Distance verification

Your product needs to use quality control processing and algorithms to cleanse and adjust raw telematics data to ensure that the calculated distance is within an acceptable variation percentage of the actual distance travelled.

Tests

You should conduct tests:

• to identify potential errors associated with data capture, including device error or obstacle interference from buildings, tunnels and trees
• on a sample of data by comparing the distance computed by the product to similar paths of distance on reputable mapping data sources or odometer readings of a vehicle.

The tests should be conducted on a variety of locations, including:

• highways
• roads that have a high chance of error, including roads next to obstructions, new roads, or corners
• built up city areas
• mountainous and coastal routes
• main routes or locations travelled for the sample clients.

At a minimum, testing should be conducted over a 5-day period and include 5 trips at the main locations of activity.

Quality controls

You need to have quality controls in place to ensure the data reflects the activity and the distance calculation is not distorted. The controls need to eliminate large gaps between pings that could result in an unrealistic distance calculation. This includes distance calculated on a line between pings across buildings or that don’t follow curves or bends in the road.

Reconciliation

You should include details of how your system accounts for any variation between GNSS-calculated distance and actual distance travelled. When comparing your sample data with an acceptable map, you need to record your steps to review this in your product and what variations occur and whether they are reasonable.

Fuel consumption rates

You need evidence to demonstrate the fuel consumption rates and inputs are reasonable for a client’s activities unless you use a simplified method.

If your client has individualised fuel consumption rate data for each vehicle, you need to check that different vehicles are appropriately classified to their make and activities to calculate fuel use.

Examples of factors impacting fuel consumption rates include:

• whether the vehicle is idling or travelling
• vehicles with power take-off have a higher fuel consumption rate for idling
• the type of trip undertaken – for example, long haul versus short distance trips.
• hybrid vehicles use substantially less fuel when idling and travelling.

You cannot use a weighted average of fuel consumption rate based on the number of vehicles.

You will need to keep records of the total fuel use as calculated by the fuel consumption rates and compare this to the fuel actually acquired for the vehicles and equipment for the same periods.

If you use the simplified method

If you use the simplified method to calculate your fuel tax credits for a particular vehicle, you won't be able to do a separate calculation for fuel used while the vehicle is off public roads (such as for idling or propelling the vehicle and powering auxiliary equipment). See Simplified method for working out fuel used in vehicles with auxiliary equipment.

Idling verification

Your product needs to use quality control processing and algorithms to cleanse and adjust high idle times which may indicate incorrect data recordings.

Your product needs to record idle time linked to the actual engine activity of the vehicle.

You should conduct tests to verify high idle time recordings against actual business records a client maintains to ensure they reflect actual engine activity of the vehicle, including:

• whether the vehicle has an auto-idle cut-off
• throttle override data records
• business operations meet environment emission controls and Occupational Health and Safety requirements. Other legislative requirements or obligations may also be a clue to check against the accuracy of the data.

All high idle time identified should be verified. We expect idle time over 10 minutes in a trip record should be included in any testing. Automatic scheduled device pings are not interpreted as idling.

If your product uses certain speed thresholds to identify idling time, ensure that the threshold generates reasonable results. If you decide to use this threshold, you need to keep evidence of the testing.

Hybrid vehicles

If you have hybrid vehicles in your assets, you will need to demonstrate that your product accurately captures when the electric engine is in operation and fuel isn't being used.

Activity verification

You should undertake tests to ensure that the trips or activity recorded by your product actually occurred and aligns with your client’s source records, including logbooks, driver diaries, delivery details, warehouse records, port registers or other similar records.

Your product should record:

• start and end times of trips, events, or activities to allow this to be compared to a sample of the client’s source records
• accurate vehicle details and identification to allow a trip or activity recorded in your product database to be linked back to the actual activity of the same vehicle.

Reviews

You need to document the types of reviews and how often you undertake them for your product, including:

• accurate data capture to ensure no misrepresentations
• road classifications and areas
• map source data for currency
• any quality control or limits used to ensure they remain current and don’t misrepresent results
• results, including reviews with original source documentation, such as odometer readings, driver job sheets and delivery dockets
• any inputs, samples or tests for currency
• activities such as idling and travelling off public roads, to determine reasonableness and identify errors
• checking the total fuel calculated by the product using fuel consumption rates against the fuel acquired for the vehicles and equipment
• testing and sampling to ensure your results are accurate – you should review this annually or when there is a software update that may impact the data
• whether the results are consistent with company policies and other requirements, including occupational health and safety relating to speed, idling and emission control.

If your product is used for your client’s whole fleet, you need to demonstrate that you have undertaken testing and sampling to ensure your data represents the fleet in similar conditions and environments from which the data was drawn.

Controls and governance

Controls and governance processes should be used within your product to ensure:

• the data captured is accurate, cannot be manipulated and is tamper-proof
• that any device information cannot be moved to another vehicle without documentation
• any data limits or caps used to support the testing demonstrate accurate results
• the results from sample testing populations are determined by testing to be representative before being applied to whole vehicle fleet
• if you replace a unit, device or hardware within a vehicle, that it is reporting on the correct vehicle.

If telecommunications or transmission coverage is limited or interrupted, you need controls in place to ensure data is stored, backed up and is accurate. You should have processes in place to ensure the accuracy of data when coverage is resumed.

Record keeping and documentation

You must keep all records for at least 5 years. This includes documentary evidence of reviews, including testing and samples undertaken for fuel consumption rates and errors corrected.

You must also keep copies of the reports generated from your product, including:

• data reports
• asset register details
• apportionment of kilometres, hours and fuel usage
• trip reports, including distance travelled on and off public roads
• exception reports, including anomalies, outliers and errors.

You should also keep copies of the disclaimers used to ensure clients who are claiming fuel tax credits understand the implications of using your product.