From 1 November 2019, fuel tax credits for fuel used to power passenger airconditioning units must be claimed at the rate for “heavy vehicles for travelling on public roads”. This rate is reduced by the road user charge (RUC).
Before 1 November 2019, clients claiming fuel tax credits for fuel used in passenger airconditioning of a bus or coach can use the “all other business uses” rate.
This change is a result of the decision in Linfox Australia Pty Ltd v Commissioner of Taxation.
The AAT had ruled that the act of travelling involves more than mere propulsion, and that fuel used for airconditioning is also considered for the purposes of travelling.
“The vehicle does not travel merely by the engine propelling the wheels. It travels, and can travel, because it has a driver controlling the steering, headlights, indicators, windscreen wipers, brakes and airconditioning to ensure the driver can remain comfortable,” said the AAT.
“As I do not accept the limitation of mere propulsion, I see nothing anomalous in the fact that two heavy vehicles may make the same journey and use the same amount of fuel for mere propulsion but different amounts of fuel due to the use of airconditioning by one driver and not the other. This is still fuel acquired ‘for travelling’.”
Fuel Tax Ruling 2008/1 and Practical Compliance Guideline 2016/11 have since been updated to reflect the relevant changes.
The ATO has advised that clients may need to use different rates in their December quarter activity statement for fuel acquired before and after 1 November 2019.