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The ATO has released a Decision Impact Statement on the decision of the Administrative Appeals Tribunal in Re Gem Plant Hire Pty Ltd atf The Condello Family Trust and FCT [2012] AATA 852. This case concerned whether a hire company was considered to have used fuel in carrying on its enterprise under s 41-5 of the Fuel Tax Act 2006 (Cth) when it provided fuelled vehicles and equipment to a hirer.

The taxpayer supplied trucks and equipment under a hire arrangement to a hirer. The taxpayer was required to fuel, service, maintain and insure the trucks and equipment, and the hirer did not, nor was it required to, reimburse fuel charges or other expenses. The hirer paid the hire charges levied for the trucks and equipment and was responsible for providing drivers or operators as part of the hire arrangement.

Section 41-5(1) of the Fuel Tax Act provides: “You are entitled to a fuel tax credit for taxable fuel that you acquire ... to the extent that you do so for use in carrying on your enterprise”. The specific issue was whether the taxable fuel acquired by the taxpayer through the agency of the hirer’s drivers and operators was “for use in carrying on your [the taxpayer’s] enterprise”. The Tribunal decided in the affirmative.

In the ATO’s view, based on material before the Tribunal, it was open to conclude that the taxpayer had used the fuel in carrying on its enterprise. On this basis, the Commissioner has discontinued an appeal to the Federal Court. The Commissioner considers that, as this decision relates to specific facts and circumstances, it does not have broader implications for s 41-5(1).

The decision is consistent with the treatment of a hire arrangement for FTR 2009/1 purposes where a licence to use fuel has been given. FTR 2009/1, therefore, does not require amendment in this regard. However, to provide further guidance where there is a licence to use fuel, the Commissioner will consider if an additional example should be included in FTR 2009/1.

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