Deloitte court challenge on toll road fuel excise

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International tax advisory company Deloitte is challenging the Australian Tax Office in court over the fuel tax being charged on trucks and buses when they drive on toll roads.

The bombshell announcement was made to delegates at the Australian Trucking Association’s annual conference at the Gold Coast last weekend.

Deloitte says that if successful, the case could set a huge precedent for far more than just the heavy vehicle industry.

The argument is likely to turn on whether a toll road is deemed to be a "public road" or not.

All vehicles currently pay 39 cents a litre in fuel excise, but because they are businesses, truck and bus operators can in theory claim all of that back in the form of a fuel tax credit.

However, because of the 26 cents a litre road user charge, in practice most operators can only claim back 13 cents a litre.

The road user charge only applies to vehicles travelling on "public roads". Deloitte will argue that a toll road is not a public road.

The full 39 cents a litre fuel credit has long been claimed by heavy vehicle operators using private roads such as on mine sites and farms, and in forests.

Over the past four years operators have also been able to claim the full 39 cents a litre for fuel used to power "auxiliary equipment" such as fridge motors; bunk and passenger air conditioners; and PTO’s on concrete agitators and garbage trucks.

This has been the situation since Deloitte – with Linfox as the litigant – instigated an earlier court case, which in 2012 concluded that fuel used in fridge motors should not be subject to the road user charge.

Deloitte – with about 300 clients that run heavy vehicles – says that since 2012 it has secured $150 million in fuel tax credits for auxiliary and off-road use.

"We are arguing that fuel use on a toll road is eligible at 39 cents a litre," says Peter Gibson, Deloitte national fuel tax director.

"We have clients that pay over $500,000 per month on toll roads, and we’ve got several clients that pay over $1 million a month in toll fees … so it’s becoming a very important issue," Gibson told the ATA conference.

"We have taken it to the Tax Office and not surprisingly they don’t like the idea. One reason they don’t like the idea is because the consequences are that it doesn’t only apply to vehicles over four and a half tonnes, it will apply to every vehicle in a business that travels on a toll road.

"There are 33,000 taxis operating out of Brisbane, Sydney and Melbourne (who) if we are successful in this matter will all be entitled to 39 cents a litre. Not only that but all the couriers and motorbikes and what-have-you that are in business, and no doubt your vehicles that are under four and a half tonnes that travel down the toll roads as well."

Gibson told delegates that both Deloitte and the ATO have consulted external tax barristers on the matter, "and we have agreed to go to court".

He says the firm is talking with a likely litigant, and expects the matter to be heard in court within about 12 months.

Gibson’s colleague, Chris Sant, told the conference that toll road statements and satellite tracking can be used to work out the distance travelled on toll roads.

He used Sydney’s 40km M7 as an example, and assumed that most heavy vehicles would use about 20 litres of fuel on the full stretch of the motorway.

"We’re saying that over those 20 litres you are entitled to 39 cents and not 13 cents. It’s about four bucks every time you go on the M7 as a refund, so it’s quite substantial, with that converting to about 20 per cent of the toll fee on that road, with similar percentages around Australia."

However any refund would come off the fuel excise, not the toll.

The ATO has been contacted for comment.


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