Taxation Law - Energy Grants and Fuel Tax Credits
Date: July 02, 2008
Authors: Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Most members of the public are not aware that heavy haulage or trucking or logistics operators may be entitled to either an energy grant or a fuel tax credit with respect to their trucking operations. There are a number of selected eligibility criteria which apply in this area before a claim will be entertained and therefore paid. On the compliance side, originally all such credits were required to be made on a claim form to which was attached necessary documentation to support the claim. With the advent of computerisation everything is now done on line and the supporting documentation has been dispensed with unless an enquiry, review, investigation or audit occurs.
Essentially what this scheme allows is for trucking or logistics operators to make a claim or rebate on diesel fuel purchases. The rebate was at the rate of 18.5 cents per litre which may be increased to 19.1 cents per litre should the senate decide. Obviously with diesel fuel costs having through the roof and the current market rate in and around Sydney at approximately $1.85 per litre this rebate is essentially very valuable for fleet operators.
Many operators are tied into fixed price contracts which interfere with their ability to pass on these costs to their customers. Many trucking operators are currently bleeding to death with quite a number having gone under or been placed in voluntary administration. The temptation has always been there to make a claim(s) for increased diesel fuel usage even though this usage cannot be substantiated. Some operators think they are never going to be caught and don’t recognise the importance of record keeping and/or substantiation to back their claims when called upon to do so.
Where anomalies are detected in fuel tax credits they are dealt with by the Excise Active Compliance area which always looks to record keeping and proper substantiation for support of any claims made. It goes without saying that source documentation including tax invoices, fuel logs or other like documentation will be relied upon to prove or disprove the amount claimed. Although the Excise Compliance area follows the Taxpayers’ Charter with respect to fairness and equity when dealing with taxpayers they will not allow claims where appropriate records including tax invoices are not held.
Often when fuel is purchased and individual tax invoices are obtained they are often printed on thermal paper which fades over time. Thermal paper printouts normally only last up to two and half or perhaps three years therefore if one is called upon to substantiate any claims made and these documents have faded into oblivion then there is a real challenge faced by the operator who has made claims.
The ATO insists that where fuel has been purchased and individual tax invoices obtained they should be photocopied to ensure that the records remain in perpetuity or for such period of time as necessary to assist both the taxpayer and the ATO should further information be required to substantiate any claims made. Normally a taxpayer’s affairs will be reviewed for a period of four years which means that records, where the taxpayer is involved in fully-compliant behaviour, should be maintained for five years. It should also be stressed that where a taxpayer has been involved in fraud or obtained or attempted to obtain a benefit be deception then the ATO is well within is rights to insist upon substantiation for whatever period they require.
The old energy grants scheme lasted until 30 June 2006 with the new fuel tax credit scheme coming into vogue on 1 July of the same year. For many operators fuel tax credits have become the lifeblood of their business together with any discounts they can achieve on diesel fuel purchases. As ridiculous as it seems even the largest operators only receive a discount of approximately four cents per litre on any fuel purchased from any diesel fuel supplier. This discount is normally only available to account customers with a strong credit history and who have demonstrated their ability to withstand the vicissitudes of the transport business. Fuel tax credits are not recouped on the amount paid for fuel but strictly on the basis of litreage purchased and used in a legitimate transport activity which satisfies the overreaching guidelines in this area.
The key to claims is bound up with the amount of litreage legitimately used by the operator to run their diesel fleet; how the claim is made; whether records are kept or whether there are sufficient records kept to satisfy the ATO; and whether the substantiation rules have been met allowing the claim to be maintained or whether, on review or inspection of all relevant records, they satisfy the requirements of the ATO and will allow the claim to stand or whether payment is required with penalties and interest. Of course where intentional disregard of a taxation law is proved then the matter may be referred for criminal prosecution.
Many operators are in jeopardy in this area because of the harsh economic realities of the current recession and because although they are good transport operators the manner in which they run their businesses and the systems they have backing them up normally fail to meet the requirements set by the ATO and therefore it is highly likely that any number of them will have to reimburse amounts paid as if they had over-claimed because they are unable to satisfy the ATO’s record-keeping and substantiation requirements. Should you require competent, legal advice and representation in this area, contact LAC Lawyers on (02) 9904 6800 for assistance.
