ATO Interpretative Decision
ATO ID 2004/422 (Withdrawn)
Excise
Energy Grants Credits Scheme: off-road - electricity generation - retail/hospitality - ready access - power supply insufficient for the needs of the businessFOI status: may be released
-
This ATO ID should be withdrawn as the fuel tax credits scheme has replaced the energy grants credit scheme for eligible fuel acquired from 1 July 2006 for the purpose of electricity generation.
This decision is applicable to eligible fuel purchased between 1 July 2003 and 30 June 2006 for the purposes of the Energy Grants (Credits Scheme) Act 2003. Entitlement to a credit for eligible fuel acquired from 1 July 2006 for use in generating electricity is dealt with under the Fuel Tax Act 2006 and Fuel Tax (Consequential and Transitional Provisions) Act 2006.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Does an entity that conducts a retail/hospitality business have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) if a commercial power supply is available for connection but is insufficient for the entity's needs?
Decision
No. An entity that conducts a retail/hospitality business does not have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the EGCSA if a commercial power supply is available for connection but is insufficient for the entity's needs.
Facts
An entity purchases diesel fuel and uses it to generate electricity for use in carrying on an enterprise that has, as its principal purpose, the retail sale of goods or services or the provision of hospitality. The electricity generated is used at the premises where the retail/hospitality business is carried on.
The site where the enterprise is carried on is a temporary site. There is nothing preventing the entity from accessing a commercial supply of electricity at the site, but the entity chooses not to, as the commercial power supply would be inadequate to meet their needs.
Reasons for Decision
Subsection 53(1) of the EGCSA states that an entity is entitled, subject to various prescribed restrictions, to an off-road credit if they purchase diesel fuel for a use by them that qualifies.
Paragraph 53(4)(a) of the EGCSA provides that the following is a use that qualifies:
use at particular premises to generate electricity for use in the course of carrying on, at those premises, an enterprise that:
The phrase 'ready access' in subparagraph 53(4)(a)(ii) of the EGCSA is not defined in the legislation, but the Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002 (the Explanatory Memorandum), says that a business would be regarded as having ready access if:
A commercial supply of electricity was present or convenient to the business and immediately available for connection. (emphasis added)
The Diesel Fuel Rebate Scheme was the precursor to the Energy Grants (Credits) Scheme, and was administered under the Customs Act 1901 and the Excise Act 1901.
The Excise Act and the Customs Act both contained similar provisions to that contained in paragraph 53(4)(a) of the EGCSA. Consequently, the Explanatory Memorandum remains relevant.
In this instance, a commercial supply of electricity is not present, in terms of the business already being connected to it. It must therefore be determined whether a commercial supply of electricity is 'convenient' to the business. If so, it must then be determined whether the electricity supply is 'immediately available' for connection.
The term 'convenient' in this context suggests that connection to the electricity supply should not be burdensome to the business in terms of cost and effort. It also suggests that connection to the power supply should suit the business.
From this entity's point of view, the commercial power supply that is immediately available for connection is inadequate for the needs of the business. Therefore, it does not suit and is not 'convenient' to the business.
As the commercial power supply is neither present nor convenient to the business, the business does not have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the EGCSA, notwithstanding that there is nothing preventing the entity from accessing a commercial supply of electricity at its premises.
Date of decision: 28 April 2004
Legislative References:
Energy Grants (Credits) Scheme Act 2003
subsection 53(1)
subsection 53(4)(a)
subparagraph 53(4)(a)(ii)
ATO ID 2004/421
ATO ID 2004/423
Other References:
Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002
Keywords
EGCS off-road
EGCS use of eligible fuel at certain premises
EGCS use to generate electricity
Energy grants (credits) scheme
EGCS use to generate electricity at a retail/hospitality enterprise
ISSN: 1445-2782
| Date: | Version: | |
| 28 April 2004 | Original statement | |
| You are here | 26 March 2010 | Archived |