Australia: Fuel tax credit; substantiation using GPS technology

ATO recommends taxpayers consider whether the use of any fuel tax credit technology has a product ruling

Concerning fuel tax credit and substantiation using GPS technology

The Australian Taxation Office (ATO) released Taxpayer Alert TA 2021/3 that outlines ATO concerns about taxpayer use of global positioning system (GPS) technology products for the substantiation of fuel tax credit claims.

The ATO concerns largely relate to whether assumptions made, and samples used, in making GPS-based fuel tax credit claims result in a fair and reasonable outcome that can be substantiated. The ATO’s concerns in respect of GPS products can be summarised as:

  • Incorrect classification of public and non-public roads, including from using outdated mapping data
  • Inadequate sample sizes of data which are unreflective of the size of a user’s fleet of vehicles
  • Misleading assumptions and algorithms in the technology which do not properly capture distances travelled and fuel consumption rates
  • Lack of reconciliation between fuel tax credit claims and source data
  • Inherent limitations in GPS technology products
  • Incorrectly using ATO safe harbour methods in conjunction with the outputs of GPS products (intended to be applied exclusively of each other)

Going forward, the ATO recommends taxpayers consider whether any fuel tax credit technology being deployed either in-house or via a third party has a product ruling. Product rulings have been issued with regard to the fuel tax credit for the first time in 2021 and there is at present only one ruling but more are expected to follow.

Product rulings, if they are used in the way intended, may provide taxpayers with the protection from penalties when the ATO subsequently takes a different view in respect of quantum of a claim lodged.

KPMG observation

Taxpayers making fuel tax credit claims and that rely on GPS data not currently covered by a product ruling need to consider reviewing their fuel tax credit calculation method and claim processes to determine that all current ATO guidance is being followed. When GPS technology has not historically been used to support the fuel tax credit process, there may be a potential to introduce technology both to improve the accuracy of claims and claim all entitlements.   

For more information, contact a KPMG tax professional in Australia:

Leonie Ferretter | +61 2 9455 9330 |

Andy Larmour | +61 8 9263 7730 |


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