A two year transition measure will be introduced to assist businesses in the move to claiming fuel tax credits through the Business Activity Statement (BAS), Minister for Revenue and Assistant Treasurer, Peter Dutton, announced today.
“Following discussions with the National Farmers Federation, the Australian Trucking Association and fishing and paint manufacturing industries, the Government has proposed a two year transition measure to help claimants of fuel tax credits get in tune with the new system,” Mr Dutton said.
Under legislation before Parliament, the multi-layered and complex system of fuel tax concessions will be replaced by a single system providing fuel tax credits claimable via the BAS in a similar way that goods and services tax input credits are claimed.
“Industry groups support the Government’s fuel tax reform, however some groups have raised concerns about cash flow issues as businesses move from the old system to the new,” Mr Dutton said.
“This two year transitional period will allow businesses to align their practices to the new arrangements so that by 1 July 2008 all fuel users who make claims will be aware of how the new system works and come on board.”
“The Government has listened to the issues raised by the National Farmers Federation, the Australian Trucking Association and other groups and provided a responsible option.”
Under the two year transition period, eligible claimants may elect to make a claim for an early payment of fuel tax credit entitlements via a written form sent to the Tax Office. At the end of the tax period claimants will still have to report their fuel tax entitlements for the period on their BAS and reconcile the early payment. The transitional arrangement will apply to GST registered businesses who currently claim an energy grant under the Energy Grant (Credits) Scheme and to businesses who use fuel other than as fuel or use burner fuel. They will also apply to businesses who distribute burner fuel or pack fuel for use by private parties.
Mr Dutton said that ultimately the plan to modernise and simplify the fuel taxation system would benefit thousands of Australian businesses and households.
“This modernisation of the fuel tax system is vital. It is estimated that the number of businesses and individuals eligible to claim fuel tax relief will rise from around 185,000 to 1.2 million.
“The introduction of the new fuel tax credit system is good news, particularly for Australian business. It will cut $1.5 billion in fuel tax from eligible businesses and individuals across Australia.”
“It will lower compliance costs, reduce tax on business and remove the burden of fuel tax from thousands of individual businesses and households,” Mr Dutton said.
BACKGROUND - A simpler and more equitable system of fuel tax relief
The two bills introduced into Parliament - the Fuel Tax Bill 2006 and Fuel Tax (Consequential and Transitional Provisions) Bill 2006 – will establish the new fuel tax credit arrangements from 1 July 2006 and will phase in extensions to eligibility between then and 1 July 2012.
When the fuel tax credit system is fully implemented, fuel tax will only be effectively applied to:
- business use of fuel on-road in vehicles with a gross vehicle mass (GVM) of 4.5 tonnes or less;
- business use of fuel on-road in vehicles with a GVM of more than 4.5 tonnes, but only to the extent of the applicable road user charge; and
- private use of fuel on-road in motor vehicles and in certain off-road applications.