Federal Court Action: Fuel tax credits for heavy vehicles on public roads

Linfox has launched a test case to clarify the term ‘public road’ in the Fuel Tax Act 2006 to ensure that we are claiming the correct number of fuel tax credits on fuel used for business activity.

The test case is limited to a challenge on a very narrow area of the legislation, section 43-10(3) of the Fuel Tax Act 2006 which states:

“To the extent you acquire… fuel to use, in a vehicle, for travelling on a public road, the amount of your fuel tax credit is reduced by the amount of the road user charge for the fuel.”

The term ‘public road’ is not defined in The Act and is critical to the application of the road user charge which is used to fund government repairs to public highways.

Currently a Linfox truck travelling on a toll road pays the road user charge for this journey even though toll road repairs are not funded by the Government. The Commissioner of Taxation takes the view that a toll road is a public road for the purposes of applying the road user charge. Linfox estimates that 10% of its journeys use a toll road.

We have worked with the Commissioner of Taxation on this issue. In these discussions it was agreed that a court judgement would be the best way to clarify this issue.

To illustrate our case, Linfox is contending that the M2 toll road in New South Wales does not meet the description ‘public road’ and therefore we have been incorrectly reducing the amount of fuel tax credits we have been entitled to through applying the road user charge.

If successful, we will be entitled to seek a refund of any fuel tax credits that have been under-claimed. The decision would also mean that any other taxpayers using fuel on any roads that do not meet the term ‘public road’ would also be eligible for refunds.