Group governance
Integrity declaration
Members were advised of the introduction of an integrity declaration for all consultation groups. A copy of the declaration will be provided to members by email and will need to be completed and returned prior to the first meeting in 2025.
Integrity declarations are required to be signed annually by primary members of the group, as well as by proxy members at meetings. They are not required to be completed by Commonwealth members, who are covered by other Australian Public Service guidelines.
Annual review
An annual review is required for all consultation groups to ensure relevant representation of industry organisations and associations. Ongoing engagement is a factor in membership consideration. Following the review, a recommendation was made to offer an invitation for Fuel Tax Advisers which was accepted.
Charter
The Fuel Schemes Stakeholder Group (FSSG) charter has been updated to include the integrity declaration and a draft was provided with meeting papers. There were no comments received by members and the charter was endorsed.
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Action item |
FSSG Charter |
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Responsibility |
Rowena Troth, Secretariat |
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Description |
Enquire if endorsed FSSG charter can be published to FSSG webpage. |
2023–24 reflections and 2024–25 compliance focus areas
The fuel tax credit program is operating as intended. Total fuel tax credit (FTC) claims for 2023–24 will be published in October 2024 in the Australian Taxation Office (ATO) Annual Report however, it was noted that FTC claims are approximately $7.5 billion to $8 billion each year, with around 300,000 registered claimants. Mining (49%), transport (18%), and agriculture forestry and fishing (10%) represented the largest industries based on value of claims, closely followed by the construction industry however, most FTC clients are in agriculture, fishing or forestry, or road transport sectors.
For further details of claims by industry and FTC rates back to 2006, see Historical FTC ratesExternal Link.
The ATO continues to monitor the potential impact of electric vehicle usage on FTC claims however, to date this has not been significant with overall claimant population numbers and total FTC amount claimed growing overall. We consider the FTC product to be low risk with a very high level of voluntary compliance. The 2021–22 tax gap was estimated at 2.6% or $175.3 million, which represents the net of over and underclaims.
Following a request at the 2023 FSSG meeting, a one-page fact sheet of common errors was produced and distributed to members. Earlier in 2024, FTC-related content on ato.gov.au was updated as part of a website upgrade. Feedback is always welcome to improve reference material on the website. The FTC calculator was updated over the last year based on changes in Road User Charge, indexation and biodiesel rates and members were encouraged to utilise the FTC calculator when preparing their claims to ensure they are using the latest rates.
Members noted continuing frustrations in non-alignment of rate changes with business activity statement (BAS) reporting periods, with updates commencing at the beginning of the financial year quarters preferred for ease of administration. Current rate changes are linked to indexation of fuel duty rates, which are governed by existing legislative requirements.
During 2023–24 we updated the telematics checklist, which assists advisors and technology providers, to reflect changes in positional certification and the impact of hybrid vehicles.
We continue to see some attempts to fraudulently extract refunds using BAS. As FTCs are claimed on the BAS, that label has also been used for potential fraud where clients deliberately overstate FTC claims to obtain a refund. We are managing that risk, with rules in place to detect suspicious claims. At times these may delay some legitimate claims, however those are quickly released following checks being carried out.
Apportionment of fuel between on and off-road use continues to be the main area of potential risk, whether due to errors in manual record-keeping or an over-reliance on technology and incorrect methodologies used for that specific business. Back claims over extended periods can also contribute to increased errors. Excise centre continues to work with advisers and clients to provide Product Rulings and Class Rulings to give greater assurance and certainty for clients in the use of Global Positioning Systems (GPS) telematics. There are currently 3 Product Rulings and 5 Class Rulings in place.
Another common error arises where the incorrect entity in a contractual relationship claims FTCs. Despite what is written in a contract, only the correct entity is entitled to make the claim and particular attention should be given to establishing which entity has the proprietary interest in the fuel. Finally, from a common errors perspective, it was noted that claims have also been found to incorrectly include quantities of diesel exhaust fluid (often referred to as AdBlue), as a taxable fuel. FTC cannot be claimed for this product.
The focus for 2024–25 will continue to be on supporting and helping clients to claim their correct entitlement. The ATO can provide information for industry articles to assist clients in making correct FTC claims. Excise centre will continue to liaise with advisers, developers and clients to develop Product and Class Rulings. A specific compliance/audit focus will be on back claims that have relied on manual calculations or estimations with little evidence to support a claim.
We encourage members to liaise with the excise centre if they believe there are further opportunities for safe harbours to be developed for FTC claims.
ATO technical advice
The Road User Charge (RUC) rate increased on 1 July 2024 from 28.8 cents per litre to 30.5 cents per litre, which reduces the fuel tax credit rate for fuel used in heavy vehicles travelling on public roads. Members were advised of the upcoming indexation of fuel excise rates which will take effect from Monday 5 August, in line with the consumer price index. The next indexation date of effect will be from 3 February 2025. The ATO’s FTC calculator and web content will always reflect the most current rate.
A draft Miscellaneous Taxation Ruling MT 2024/D1 Miscellaneous tax: time limits for claiming an input tax or fuel tax credit was released for consultation in February 2024. This draft ruling explains the ATO’s view on the 4-year time limit that applies to claims for input tax credits and fuel tax credits. The final ruling is expected to be published in the coming weeks and an email will be sent to FSSG members. Refer to the ATO advice and guidance page on the ATO website which provides details of draft and final public advice.
Excise Centre’s Technical Advice team continue to develop new and renew existing Product and Class Rulings as well as responding to queries relating to FTC claims. Common queries include clarifying the fuel ownership for FTC purposes and determining the correct volume of fuel acquired when fuel has been invoiced based on a temperature corrected volume. The ATO noted that regardless of contracts including references to which entity can claim FTCs under the contract, this does not override the legislative requirements as set out in Section 41 of the Fuel Tax Act 2006.
Excise centre continues to work with clients and advisers regarding apportionment methodologies which can be complex. It was noted that clients cannot simply rely on methodologies or results prepared by another entity. Each client’s assumptions/variables need to be supported by testing and adequate sampling, particularly in relation to testing of inputs and fuel consumption rates.
The ATO is aware of incorrect advice being provided to clients that diesel particulate regeneration fuel is not subject to the RUC and attracts a higher FTC. The ATO advised members that the Commissioner of Taxation’s view is that this use is considered ‘travelling’ and that this view is supported by the Decision Impact Statement Linfox > Australia Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia. The 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 deals in part with ‘travelling’ and that the FTC for this fuel is reduced by the RUC.
Since the 2023 FSSG meeting, the previous legislative instrument for correcting errors had sunsetted, with the update remade on 25 September 2023, Fuel Tax Act 2006 Legislative Instrument LI 2023/33.
Members were advised of recent deregulation streamlining changes to the administration of excise and excise equivalent goods. Measures came into effect on 1 July 2024 dealing with licensing fees and renewal requirements, as well as entity level licensing. These changes impacted excise and customs duty payers. The final measure of this package, to take effect on 1 January 2025, relates to removing excise and customs duty for fuel used in commercial shipping, which would have an impact on FTC claims by those clients in relation to fuel used in domestic voyages. Excise centres are currently updating ATO web content relating to bunker fuels and commercial shipping and will continue to liaise with FSSG members involved in the commercial shipping industry. The Association of Mining and Exploration Companies raised the issue of transition arrangements from 31 December 2024 to 1 January 2025 and asked that appropriate advice be provided in advance.
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Action item |
Deregulation new measures |
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Responsibility |
Anthony Barnard, ATO |
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Description |
Liaise with Australian Border Force in relation to transitional arrangements for deregulation new measures to ensure that appropriate advice regarding customs duty is developed and published prior to December 2024, in addition to ATO advice regarding excise duty. |
Industry updates – roundtable
Pitcher Partners advised of instances where entities claiming fuel can be impacted by organisational restructures where fuel is purchased by one entity and used across the organisation, and subsequently recharged across the group.
Support was shown for development of safe harbours and the potential expansion of the current safe harbour Practical Compliance Guideline PCG 2021/2 Fuel tax credits – basic method for heavy vehicles relating to businesses claiming $10,000 or less in FTCs annually. Analysis has found that the current safe harbour is not being widely used, with customers relying on the FTC calculator. The ATO is happy to consider safe harbours or practical approaches where the demand is there and feedback from industry and advisors is important in determining that demand.
Support was shown for an expanded threshold to the existing safe harbour, noting that larger clients were more likely to utilise GPS for other compliance purposes, while smaller clients were not able to afford the cost of GPS technology. A potential safe harbour relating to burn rates was suggested.
The continued move by the mining industry toward use of renewable fuel sources was discussed. Over the last 6 to 18 months several companies, particularly in Western Australia, have been importing electric vehicles (EVs) for use in remote and regional environments. Over the past 5 to 10 years, power requirements at sites are being transitioned from diesel to solar power. Companies are testing electrified four-wheel drive and heavy vehicle fleets (dump trucks) and are working with vehicle manufacturers to operate effectively with EVs. This is likely to lead to a notable reduction in diesel used in some remote facilities.
Despite this, the mining industry continues to be a significant user of diesel which is not likely to change in the short term without breakthroughs in technology, particularly for trucks carrying ore and diesel locomotives pulling ore cars. Industry continues to work with equipment providers for alternative solutions. Although solar and wind farms are providing some stationary energy for industry, issues are still being worked through in terms of storage of energy. The Minerals Council of Australia has contributed to a government discussion paper on low carbon liquid fuels, noting that while the use of biofuels being used to replace diesel was gaining traction in the USA, Australia was still some way behind.
An update was provided about the impacts of global tensions on international shipping routes, which is leading to significant increases in delivery delays and the cost of shipping freight. The International Maritime Organisation has adopted a strategy to decarbonise the shipping industry by 2050, with the use of methanol increasing across industry. In the last 3 years, the number of methanol powered vehicles has increased from zero to approximately 350, while other renewable energy sources being considered are LNG, hydrogen and ammonia.
Wayne Calder advised members of a name change from the former 'Australian Petroleum Production and Exploration Association' to 'Australian Energy Producers'.
The Maritime Industry Australia Ltd offered support in liaising with the shipping industry on the implementation of deregulation new measures relating to bunker fuels.
The significant number of FTC claimants in the construction industry was discussed, with approximately 1,200 contractors. It was noted that the Civil Contractors' Federation was interested to work with the ATO to look at options for administrative savings, particularly for the 300 to 400 smaller contractors.
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Action item |
Civil construction industry assistance |
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Responsibility |
Michael Brooks, ATO |
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Description |
Liaise with Nicholas Proud (Civil Contractors Foundation) to explore options for administrative savings in the civil construction industry. |
Attendees
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Organisation |
Attendee |
|---|---|
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ATO |
Tony Poulakis (Chair), Small Business |
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ATO |
Alexandra Godwin, Small Business |
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ATO |
Anthony Barnard, Small Business |
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ATO |
Bonnie Joshi, Small Business |
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ATO |
Claudia Bianco, ATO Corporate |
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ATO |
Michael Brooks, Small Business |
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ATO |
Michael Hughes, Small Business |
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ATO |
Michelle Scott, Small Business |
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Association of Mining and Exploration Companies |
Darryl Daisley |
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Australian Energy Producers |
Wayne Calder |
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BAS Agent |
Nikki Hannaford |
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Bioenergy Australia |
Shahana McKenzie |
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Civil Contractors' Federation |
Nicholas Proud |
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Deloitte |
James Hallebone |
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EY |
Kylie Norman |
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Fuel Tax Advisers |
Peter Perich |
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KPMG |
Anthony Harmer |
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Maritime Industry Australia Limited |
Sarah Cerche |
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Minerals Council of Australia |
Ross Lyons |
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National Farmers' Federation |
Guy Nicol |
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National Road Transport Association |
Samuel Marks |
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Pitcher Partners |
Peter Quattrocchi |
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Ryan |
Chris Sant |
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Shipping Australia Limited |
Jim Wilson |
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Shipping Australia Limited |
Melwyn Noronha |
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Treasury |
Caitlin Payne |
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Treasury |
Isaac Rosser |
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Treasury |
Liz Jaspers |
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Treasury |
Zoe Chalmers |
Apologies
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Organisation |
Member |
|---|---|
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ATO |
Mark Arnold, Small Business |
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Ampol Australia Petroleum Pty Ltd |
Megan Kirkby |
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Australian Trucking Association |
Christopher Wren |
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Bus Industry Confederation |
Roz Chivers |
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Commonwealth Fisheries Association |
Andrew Sullivan |
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Deloitte |
Laura O'Brien |
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KPMG |
Andy Larmour |
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Maritime Industry Australia Limited |
Angela Gillham |
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National Farmers' Federation |
Ash Salardini |
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PwC |
Gary Dutton |
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Transport Certification Australia |
John Gordon |