ATO Interpretative Decision

ATO ID 2003/1004 (Withdrawn)

Excise

• This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.
  Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of the period the Act was in force, 1 July 2003 up to and including 30 June 2012.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is travelling by boat, to and from a place where fishing will take place in the course of a fishing business, 'fishing operations' as defined in section 34 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) for the purposes of the energy grants credits scheme?

Decision

Yes. Travelling by boat, to and from a place where fishing will take place in the course of a fishing business, is 'fishing operations' as defined in section 34 of the EGCSA for the purposes of the energy grants credits scheme.

Facts

The client carries on a business of scuba diving for fish for sale.

The client operates a boat powered by a diesel motor in the course of the business.

The client uses the boat to travel to and from the place(s) where the scuba diving takes place and the fish are caught.

Reasons for Decision

Subsection 56(1) of the EGCSA states that if a person is entitled to an off-road credit, they are entitled to an energy grant.

Section 53 of the EGCSA provides that a person is entitled to an off-road credit if that person purchases diesel fuel for a use by that person that qualifies. Use 'in primary production (otherwise than for the purpose of propelling a road vehicle on a public road)', is a use that qualifies. Primary production is defined in section 21 of the EGCSA as meaning amongst other things, 'fishing operations'.

'Fishing operations' are defined in subsection 34(1) of the EGCSA as meaning various activities. The activity most relevant to the client's circumstances is:

(a) the taking, catching or capturing of fish; ...

For activities to constitute fishing operations for the purposes of the EGCSA, they must not be conducted, in whole or in part, otherwise than for the purposes of a business, or for business purposes connected with recreation, sport or tourism.

The client's activities are conducted solely for the purposes of a fishing business, and are not connected with recreation, sport or tourism. Therefore, the exclusionary tests are satisfied, and the client's activities (including the travel by boat to and from fishing sites) will constitute 'fishing operations' provided they form part of 'the taking, catching or capturing of fish'.

As stated above, for an off-road credit to be available, diesel fuel must be purchased for use in primary production. As primary production includes fishing operations, and fishing operations in turn include 'the taking, catching or capturing of fish', it follows that the client's use of diesel fuel will be eligible for an off-road credit provided travelling by boat to and from fishing sites is use 'in' the taking, catching or capturing of fish.

In establishing whether a person has used diesel fuel 'in' the taking, catching or capturing of fish, the meaning of the term 'in' must be determined. The preposition 'in' has been accepted as meaning 'in the course of' (see Chief Executive Officer of Customs v. WMC Resources Ltd (as agent for East Spar Alliance) (1998) 87 FCR 482).

In Federal Commissioner of Taxation v. Payne 2001 (2001) 202 CLR 93; (2001) 46 ATR 228, 2001 ATC 4027; Chief Executive Officer of Customs v. WMC Resources Ltd (as agent for East Spar Alliance) (1998) 87 FCR 482; Wandoo Alliance Pty Ltd v. Chief Executive Officer of Customs [2001] AATA 801, it was deemed pertinent to consider whether there was a causal, spatial or temporal link present in determining if an activity takes place 'in the course of' something.

In this instance, a causal link exists as the travel to the place where the taking of fish occurs is functionally integrated with the taking of fish. There is also a spatial link as a professional fisherman often has to traverse large areas of the sea (or other body of water) in order to find a suitable school of fish. Finally, there is a temporal link, as travel to and from the place where the fish are captured takes place in a timely fashion and forms an integral part of the activity.

Accordingly, in this instance, travel by boat to and from a place where fish are taken occurs in the course of 'taking or capturing of fish' and is therefore considered to occur 'in' 'fishing operations' as defined in section 34 of the EGCSA.

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   section 21
   subsection 56(1)
   section 53
   paragraph 34(1)(a)

Case References:
Federal Commissioner of Taxation v. Payne 2001
   (2001) HCA 3
   46 ATR 228
   2001 ATC 4027

Related ATO Interpretative Decisions
ATO ID 2003/1002
ATO ID 2003/1003

Keywords
EGCS fishing operations
EGCS off-road
EGCS taking, catching or capturing of fish
Energy grants (credits) scheme
Excise
Excise payments

Business Line:  Indirect Tax

Date of publication:  14 November 2003

ISSN: 1445-2782