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ATO Interpretative Decision

ATO ID 2003/1165 (Withdrawn)

Excise

Energy Grants (Credits) Scheme: on - road diesel fuel
FOI status: may be released
  • This ATO ID is withdrawn due to amendments to the Energy Grants (Credits) Scheme Act 2003 applying after 30 June 2006. Despite its withdrawal the ATO ID continues to be the precedential view in respect of entitlement.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Status of this decision: Decision Withdrawn 30 April 2010
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is a vegetable oil emulsion consisting of vegetable oil blended with diesel fuel and ethanol 'on-road diesel fuel' as defined in regulation 8 of the Energy Grants (Credits) Scheme Regulations 2003 (the Regulations) for the purposes of the Energy Grants Credits Scheme (EGCS)?

Decision

No. A vegetable oil emulsion consisting of vegetable oil blended with diesel fuel and ethanol is not 'on-road diesel fuel' as defined in regulation 8 of the Regulations for the purposes of the EGCS.

Facts

An entity manufactures two fuels. Each fuel consists of a blend of vegetable oil, diesel fuel and ethanol. The proportions of each part of the blend vary, but include a maximum of 41% diesel.

Only the diesel fuel part of the blend is a product derived from petroleum or shale.

The fuels are capable of being used as a fuel by road vehicles powered by diesel engines.

Reasons for Decision

For the purposes of the EGCS, 'on-road diesel fuel' is defined in regulation 8 of the Regulations as:

... a substance that:

(a)
has been purchased for use as fuel by road vehicles powered by diesel engines; and
(b)
consists principally of products derived from petroleum or shale, including the following:

(i)
stabilised crude oil, topped crude oil, or condensate
(ii)
a recycled substance that has been produced by a process of refining or has been recovered by another process; or
(iii)
recycled waste oil.

In determining whether the two vegetable oil emulsions are 'on-road diesel fuel', it is necessary to determine whether the emulsions consist principally of products derived from petroleum or shale.

In Federal Commissioner of Taxation v. F. H. Faulding & Co. Ltd (1950) 83 CLR 594; (1950) 9 ATD 201 (Faulding), the High Court considered whether certain fruit juices cordial consisted principally of Australian fruit. In their consideration of 'principally' Latham J determined that, 'the words "consisting principally of" must be read as referring to quantity expressed in terms of either volume or weight'. The other justices adopted the same view.

The definition of on-road diesel fuel in the Regulations is drafted in a similar context to the legislation considered by the High Court in Faulding. Therefore, a determination on whether the emulsions consist principally of products derived from petroleum or shale should be interpreted in a quantitative sense, consistent with the reasoning of the High Court.

The emulsions contain only three components. Of those components, only the diesel fuel is a product derived from petroleum or shale. In both emulsions, the diesel is quantitatively less than the other two components collectively and individually less than the vegetable oil component. Accordingly, neither vegetable emulsion consists principally of products derived from petroleum or shale. Therefore, they are not 'on-road diesel fuel' for the purposes of the EGCS.

Date of decision:  18 November 2003

Legislative References:
Energy Grants (Credits) Scheme Regulations 2003
   Regulation 8

Case References:
Federal Commissioner of Taxation v. F. H. Faulding & Co. Ltd
   (1950) 83 CLR 594
   (1950) 9 ATD 201

Related ATO Interpretative Decisions
ATO ID 2003/877
ATO ID 2003/1164
ATO ID 2003/1166

Keywords
EGCS on-road diesel fuel
Energy grants (credits) scheme

Business Line:  Excise

Date of publication:  24 December 2003

ISSN: 1445-2782

history
  Date: Version:
  18 November 2003 Original statement
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