REVEALED: Council’s $300K tax debt caused by ‘glitch’
SOUTH Burnett Regional Council said there was a miscalculation in the fuel tax credits after they engaged a consultant to maximise the amount of eligible claims.
Council CEO Mark Pitt said after they followed advice by the council's fuel tax consultant, they lodged a retrospective claim with their August 2018 Business Activity Statement for a fuel tax credit (FTC) amount of $1,027,037.
"The Australian Taxation Office initiated a review of the FTC claim due to the size of the refund," Mr Pitt said.
"It was identified during this review that council's Motorola GPS units remained on for an additional six hours following the vehicle's engine being disengaged.
"On this basis, the software used to calculate the FTCs had been interpreting the data to be that the engine continued to be engaged.
"With this detail coming to light, council's fuel tax consultant sought to find the most fair and reasonable means of eliminating the false vehicle usage readings through multiple discussions with Council and the ATO.
"The result was a superseded version of the software which implemented an alternative algorithm to address this particular type of scenario, effectively limiting engine usage in an idle state to 6 minutes per trip," he said.
Mr Pitt said this led to an adjustment to the 2018/19 operating budget with an increase to $1,027,023.
However, once the FTC discrepancy was identified and based on the new calculations, he said the refund claim was reduced from $1,027,023 to $597,421.
"The reduction of the fuel tax credit will see a future payment to the ATO of $322,212, funded through council's restrictive cash," Mr Pitt said.
"In turn, this will result in an adjustment of the 2019/20 operating budget with a $322,212 decrease proposed for the first quarter.
"Council would like to reiterate that engagement with the fuel tax consultant has resulted in a net income to council of $448,066 funded through FTCs.
"This income has provided an overall increase to Council's operating budget with the initial increase recognised in the 2018/2019 financial year," he said.
The projected 2019-20 operating deficit will further increase by $322,212 with a reduction to the amount of restrictive cash on hand.
Even though it was lower than the initial $1,027,037 refund, Mr Pitt said he wanted to emphasise that the engagement of the fuel tax consultant resulted in a net income to council of $448,066.
Fuel tax credits provides a credit for the fuel tax that is included in the price of fuel, which includes fuel used in business activities such as machinery and plant.