FSA032A.1.1—Diesel engine road vehicles apportionment models and record keeping requirements for diesel purchased from a retailer

1. Under the Fuel Subsidy Act 1997 (the Fuel Subsidy Act), a subsidy is payable for diesel used to propel a diesel engine road vehicle on a public road¹ (on-road travel).
2. A diesel engine road vehicle is a vehicle that has a diesel engine and is not conditionally registered or of a type that would qualify for conditional registration under a regulation under the Transport Operations (Road Use Management) Act 1995.²
3. A subsidy is not payable for diesel used for an off-road purpose.³ Public Ruling FSA000.1 clarifies when diesel used in a diesel engine road vehicle will be eligible for a subsidy under the Fuel Subsidy Act.
4. Where diesel is used in a diesel engine road vehicle for both on-road travel and for off-road purposes, the total quantity of diesel purchased from a retailer must be apportioned between those purposes in order to determine the subsidy entitlement.
5. A person who buys diesel in a retail quantity⁴ from a licensed retailer and uses any amount of it for an off-road purpose is required to keep the following records for at least five years from the day of purchase:⁵
   1. any record of the sale given to the person by the licensed retailer under s.16(2) of the Fuel Subsidy Act
      
      and
      
   2. records that enable the amount of the diesel used for an off-road purpose to be ascertained.
6. For paragraph 5(b), the Commissioner may give notice to a person requiring specific stated records to be kept.⁶ The records required to be kept may be included in a document, such as a Public Ruling issued by the Commissioner, accompanying the notice.⁷
7. This Public Ruling sets out the apportionment methods and record keeping requirements for retail purchases of diesel for diesel engine road vehicles.

8. Before a person purchases diesel from a retailer for an off-road purpose, the person must advise the retailer of the quantity of diesel that is to be used for the off-road purpose.⁸  As the retailer cannot claim the subsidy for this diesel, the retailer will usually increase the price by 9.2 cents per litre (cpl) i.e. the subsidy of 8.354 cpl + GST. The retailer must give the purchaser a record of the sale stating the total quantity of diesel sold and the quantity of diesel sold that is unsubsidised.⁹ This record is to be kept by the purchaser for five years from the day of purchase.¹⁰
9. A person who purchases subsidised diesel from a retail site and later uses it for an off-road purpose, must remit to the Office of State Revenue (OSR) the amount of the subsidy on the diesel used for the off-road purpose within seven days after the end of the month in which that diesel was used.¹¹ In addition to any record of sale given to the purchaser by the retailer, the purchaser must keep the following records for five years from the day of the purchase:
   1. records of the quantity of diesel used for the off-road purpose
   2. the amount of the subsidy
      
      and
      
   3. the date on which the subsidy was remitted to OSR.¹²
10. A person who regularly purchases diesel from retail sites for off-road purposes, but is unable to determine at the time of those purchases the quantities of diesel that will be used for an off-road purpose and the quantities that will be used for on-road travel, is required to use either the Actual Use model or the Percentage Use model, as outlined below, to calculate the quantity of diesel used for on-road travel and off-road purposes.
11. A flowchart of the apportionment models is provided in Attachment 1.
    

Actual Use Model

12. The ‘Actual Use’ model will enable a person who purchases subsidised diesel from the retailer, to calculate the actual quantity of diesel that is used for off-road purposes during the month. The person must remit the subsidy on the quantity of diesel used for an off-road purpose to OSR within seven days after the end of the month in which the diesel is used.
13. A person must keep records and work out the quantity of diesel used for an off-road purpose in accordance with either method 1 (off-road purpose) or method 2 (on-road travel) below.¹³

Method 1—Calculating and keeping records of diesel used for an off-road purpose

14. This method is used where a person is able to directly determine the actual quantity of diesel used for an off-road purpose by keeping monthly records (e.g. the number of hours equipment is used for an off-road purpose during the month).
15. The following records must be kept each month:
    1. total quantity of diesel used during the month
    2. records such as hour meter readings at both the beginning and end of the month, or other records used to determine the actual quantity of diesel used for off-road purposes
       
       and
       
    3. the average diesel consumption rate (litres per hour) while the vehicle is used for an off-road purpose.
16. These records are to be kept for five years from the day of purchase.¹⁴
    

Example 1

A concrete pumping truck operator has an hour meter for the concrete pump on their truck and is able to calculate the average diesel consumed per hour while the truck is pumping concrete. The operator will be required to keep a record of the pump’s hour meter readings each month and the basis of the average diesel consumption rate while pumping concrete.

To calculate the diesel used for off-road purposes:
Step 1—Total hours off-road

End of month hour meter reading
Less beginning of month hour meter reading
= Total hours off-road (A)

Step 2—Diesel consumed off-road

Total hours off-road (A)
Multiplied by average diesel consumption rate per hour
= Diesel consumed off-road (B)

Step 3—Subsidy amount ($) to remit to OSR

Diesel consumed off-road (B)
Multiplied by the subsidy rate of 0.08354
= Subsidy amount ($) to remit to OSR

Method 2—Calculating and keeping records of diesel used for on-road travel to determine diesel used for an off-road purpose

17. This method is used where a person is able to determine the actual quantity of diesel used for on-road travel by keeping records to calculate the diesel used while travelling on a public road (e.g. keeping a record of the kilometres travelled on-road). The quantity of diesel used for on-road travel during the month is deducted from the total quantity of diesel used for the month to determine the volume of diesel used for off-road purposes.

18. The following records must be kept each month:

    1. the total quantity of diesel used in the month

    2. the number of kilometres travelled on-road during the month or other records to substantiate the quantity of diesel used for on-road travel during the month
       
       and
       

    3. the average diesel consumption rate (kilometres per litre) while the vehicle is being used for on-road travel.

19. These records are to be kept for five years from the day of purchase.¹⁵

Example 2

A mobile crane operator purchased a total of 1,500 litres of subsidised diesel during a month for use in their mobile crane. The crane’s odometer readings showed that the mobile crane travelled 1,000 kilometres on-road during that month. The operator knows that the crane uses an average of 1 litre of diesel to travel 2 kilometres on-road.
 
1. Kilometres travelled during the month
Odometer reading at end of the month (km)                    24,000
Less odometer reading at beginning of the month (km)   23,000
= Total kilometres travelled                                                1,000  (A)

2. Diesel consumed during the month
Litres in tank at beginning of the month                               300
Plus diesel purchased during the month (litres)                 1,500
Subtotal (litres)                                                                   1,800
Less diesel in tank at the end of the month (litres)               500
= Total litres of diesel used during the month                    1,300  (B)

3. Fuel consumption rate
Average number of kilometres travelled per one litre of diesel
(actual known amount or can be reasonably estimated)           2  (C)

Calculate diesel used for off-road purposes

Step 1
Litres used for on-road travel

Total kilometres travelled (A)  = 1,000 km  =  500 litres (D)
Fuel consumption rate (C)   2 km/L

Step 2
Litres used for off-road purposes

= Total diesel used (B) – diesel used on-road (D) = 1,300(L) – 500(L) =  800 litres (E)

Step 3
Subsidy amount ($) to remit to OSR

Litres used for off-road purposes (E) x 0.08354
  = 800 (L) x 0.08354 =  $66.83

Percentage Use Model

20. The ‘Percentage Use’ model will enable a person, based on a typical 12 week period, to calculate, on average, the percentage of diesel used for on-road travel and off-road purposes. The person can then use this percentage for all later purchases from a retailer to determine the quantity of diesel to purchase at the subsidised price for on-road travel and the quantity that will be unsubsidised for an off-road purpose.
21. The ‘Percentage Use’ model is only suitable for determining the quantity of diesel used for off-road purposes if the ratio between the diesel used by a vehicle for on-road travel and for off-road purposes remains relatively constant over time. A separate percentage calculation must be made for each type of vehicle i.e. make, model, use of vehicle. To calculate the percentage, either of the two methods under the ‘Actual Use’ model should be used during the initial 12 week period.
22. Under this model a person must keep records for a typical 12 week continuous period, for both the on-road travel and off-road purposes, in order to calculate a percentage of diesel that is used for off-road purposes. This percentage should be applied to all retail diesel purchases made after the end of the 12 week period to determine the quantity of diesel to be purchased unsubsidised from the retailer (unless of course the exact amount of diesel that will be used for off-road purposes is known). During the initial 12 week period one of the two methods under the ‘Actual Use’ model should be used to calculate the actual proportion of diesel used for off-road purposes. During that 12 week period, the person must remit the subsidy on the quantity of diesel used for an off-road purpose to OSR within seven days after the end of each month in which the diesel is used.
23. If a substantial variance of 15% or more occurs between the ratio of diesel used for on-road travel and off-road purposes in any given month following the initial 12 week period, the person is required to keep records for a further 12 continuous weeks. Either one of the two methods under the ‘Actual Use’ model should be used for these 12 weeks in order to establish the new percentage basis. The new percentage should then be used for future diesel purchases.
24. If no substantial variance occurs within a five year period which could necessitate a change to the percentage basis under the ‘Percentage Use’ model, fresh records will need to be kept for another continuous 12 week period. Either one of the two methods under the ‘Actual Use’ model should be used for these 12 weeks to determine a new percentage basis.
25. The following records are to be kept:
    1. records for the continuous 12 week period used to determine the percentage of total diesel used for off-road purposes and the methodology used to determine this percentage (this record keeping requirement applies to the calculation of the initial percentage basis and any subsequent calculations undertaken over a 12 week period to determine a new percentage basis)
       
       and
       
    2. for each purchase of diesel after the 12 week period, records to substantiate the quantity of unsubsidised diesel purchased and the total quantity of diesel purchased.
26. These records are to be kept for five years from the day of purchase.¹⁶
    

Example 3

A concrete pumping truck operator maintains records for the volume of diesel used for on-road and off-road use for a continuous 12 week period. Using these records, the operator calculates that, on average, 40% of the total diesel fuel used in the truck is for on-road travel and 60% for off-road purposes (see table below). For future purchases of diesel, the operator must advise the retailer that 60% of the diesel purchased is for off-road purposes. The retailer will then sell 60% of the total diesel purchased by the operator unsubsidised and the remaining 40% subsidised. The retailer must provide a record of sale, which the operator must keep for five years. 

Percentage calculation table:

Month	Off-road	On-road	Total (On-road + Off-road)
1st month	870(L)	650(L)	1,520(L)
2nd month	780(L)	580(L)	1,360(L)
3rd month	1,200(L)	680(L)	1,880(L)
Total	2,850(L)	1,910(L)	4,760(L)
Percentage	59.87%	40.13%	100.00%
Rounding	60.00%	40.00%	100.00%

   
   

27. This Public Ruling takes effect from the date of issue. 

 

David Smith
Commissioner of State Revenue
Date of Issue 24 February 2009

Public Ruling	Issued	Dates of effect
		From	To
FSA032A.1.1	24 February 2009	24 February 2009	Current
Supersedes Practice Direction NFSS 10.2	22 November 2006	22 November 2006	23 February 2009