In Linfox Australia Pty Ltd v Commissioner of Taxation [2019] FCAFC 131 the Full Federal Court dismissed the taxpayer’s appeal against the conclusion of the Tribunal ([2019] AATA 222) that certain toll roads operated and maintained by a private operator were a “public road” for the purposes of the Fuel Tax Act. While the decision relates to fuel tax, one of the issues in the appeal was whether the taxpayer’s entitlement to claim the credits had expired due to the four year rule in s 47-5(1) of the Fuel Tax Act. This provision is analogous to s 93-5 of the GST Act.

As observed by the Full Court (at [122]), “the taxpayer made a self-assessment, deemed to be an assessment, under which it calculated (on this assumption incorrectly) its net fuel amount by assessing its total fuel tax credits by reducing the amount of its fuel tax credits ascertained under s 43-5(1) by the amount of the road user charge for the fuel pursuant to s 43-10(3). The taxpayer now contends that it should not have so reduced its fuel tax credits under s 43-10(3), with the result that the amount of its total fuel tax credits is increased and its net fuel amount is reduced.”

The Commissioner contended that the taxpayer’s entitlement to claim the fuel tax credits had expired by reason of the operation of s 47-5(1) of the Fuel Tax Act, which states as follows:

You cease to be entitled to a fuel tax credit to the extent that it has not been taken into account, in an assessment of a net fuel amount of yours, during the period of 4 years after the day on which you were required to give to the Commissioner a return for the tax period or fuel tax return period to which the fuel tax credit would be attributable under subsection 65-5(1), (2) or (3).

The Commissioner contended that the section was engaged because the taxpayer had not “taken into account” the additional fuel tax credits by claiming them in its BAS within four years. The Full Court rejected this contention and concluded as follows (at [129]:

We do not accept the respondent’s submission that the non-inclusion of amounts referable to the road user charge in the taxpayer’s BAS has the result that those amounts were not taken into account in an assessment, or what may be implicit in it, which is that the meaning of s 47-5 is controlled by what is in the integers of a taxpayer’s BAS. Nor do we accept the respondent’s submission that what is “taken into account” in an assessment of a taxpayer’s net fuel amount, for the purposes of s 47-5(1), is the specific elements of the statutory formula for net fuel amount in s 60-5, relevantly here “total fuel credits”, and does not encompass, as the Tribunal found, an (unreduced) fuel tax credit amount which is part of the calculation of the total fuel credits amount

The Full Court appeared to adopt a broad view of the meaning of the expression “taken into account, as reflected in the following observation at [131]: (emphasis added)

The statutory language is broad enough to encompass, as we would see no reason to exclude from its operation, credits the taxpayer has taken into account in working out its net fuel amount…Further, it is relevant that “assessment” is defined in s 110-5 of the Fuel Tax Act by reference to the meaning given to that term in s 995-1 of the Income Tax Assessment Act which is, in relation to an assessable amount such as a net fuel amount, the “ascertainment” of that amount. That term, as defined, describes not an outcome or an amount or a notice of assessment (or BAS), but a process the completion of which has the consequence that a specific amount becomes due…When the term “assessment” as used in s 47-5(1) is understood in this way, there is little difficulty in describing an integer representing the taxpayer’s unreduced credits as having been taken into account in an assessment by reason of it having formed part of a calculation (the process) which produced the net amount recorded in the taxpayer’s BAS that created an entitlement to a refund (the consequence) by the deemed assessment mechanism.

The decision has clear implications for the Commissioner’s draft Draft Miscellaneous Taxation Ruling MT 2018/D1 ‘Miscellaneous tax: time limits for claiming and input tax or fuel tax credit’, which was issued in November 2018 (my initial comments on the draft ruling can be accessed here). The underlying premise to the draft ruling is that fuel tax credits and input tax credits are only “taken into account” to the extent that the taxpayer actually claims the credits in its BAS.