ATO Interpretative Decision

ATO ID 2004/951

Excise

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Issue

Is the cultivation, harvesting and stacking of turf onto pallets 'horticulture' as defined in section 33 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

Yes. The cultivation, harvesting and stacking of turf onto pallets, is 'horticulture' as defined in section 33 of the EGCSA.

Facts

An entity operates a business producing turf, which involves the cultivation of turf through activities such as hoeing the turf paddocks, aerating the soil, fertilising the turf, and harvesting the turf.

The turf is either harvested into roll form or cut into slabs. Both types of harvesting methods involve the cutting of the turf, and once cut it is collected together on pallets. The pallets are left in a central collection area to await loading onto trucks.

Reasons for Decision

Section 53 of the EGCSA provides that subject to the conditions and restrictions specified in the regulations, an entity is entitled to an off-road credit if they purchase or import into Australia off-road diesel fuel for a use by them that qualifies, including 'agriculture'.

The definition of 'agriculture' in subsection 22(1) of the EGCSA states in part:

Subject to subsection (2), the expression agriculture means:

(d)

horticulture.

Section 33 of the EGCSA defines 'horticulture' as including:

(a)

the cultivation or gathering in of fruit, vegetables, herbs, edible fungi, nuts, flowers, trees, shrubs or plants; or

(b)

the propagation of trees, shrubs or plants; or

(c)

the production of seeds, bulbs, corms, tubers or rhizomes.

The Australian Oxford Dictionary, 1999, Oxford University Press, Melbourne, defines the term 'horticulture' as being 'the art of garden cultivation'. The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie University, NSW, defines 'horticulture' as:

1.

commercial cultivation of fruit, vegetables, and flowers, including berries, grapes, vines and nuts.

2.

the science or art of growing fruit, vegetables, and flowers or ornamental plants.

3.

the cultivation of a garden.

Therefore, the definition of horticulture in section 33 of the EGCSA takes the ordinary meaning of the term and expands that ordinary meaning by including activities in 'gathering in' of horticultural produce.

The entity's activities of hoeing the turf paddocks, aerating the soil, fertilising the turf, and harvesting the turf are clearly the cultivation of plants, that is, the cultivation of turf.

The term 'gathering in' was considered in the case Vicmint Partners Pty Ltd v. Chief Executive Officer of Customs (1997) 48 ALD 475. Deputy President Dr. Gerber stated:

It seems generically that 'gathering in' consists of: the process of plucking plants from the ground, or fruit or other produce from the plant, some initial processing in the immediate vicinity of the place where the plant was, or is, in the ground; and collecting such roughly processed items together in the same place, either on or off the property on which it was growing.

In this case, the turf is either harvested into roll form or cut into slabs. Both types of harvesting methods involve the cutting of the turf, and once cut it is collected together on pallets. The pallets are left in a central collection point to await loading onto trucks for transport.

The harvesting processes, which involve the cutting of the turf, and the placing of the turf onto pallets, form part of the 'gathering in' of the turf, as it is the process by which the turf is picked or harvested from the place of growth, and physically collected together in one place for the first time.

Therefore, the point at which the turf has been placed onto pallets and left in a central collection area awaiting transport is when the gathering in of the horticultural produce is considered to have ceased.

Accordingly, the cultivation, harvesting and stacking of turf onto pallets is 'horticulture' as defined in section 33 of the EGCSA.

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   subsection 22(1)
   paragraph 22(1)(d)
   section 33
   section 53

Case References:
Vicmint Partners Pty Ltd v. Chief Executive Officer of Customs
   (1997) 48 ALD 475

Related Public Rulings (including Determinations)
Draft Product Grant and Benefit Ruling 2004/D3 - Energy Grants: Off-Road credits for agriculture

Related ATO Interpretative Decisions
ATO ID 2004/952

Other References:
The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie University, NSW
The Australian Oxford Dictionary, 1999, Oxford University Press, Melbourne

Keywords
EGCS agriculture
EGCS horticulture

Business Line:  Indirect Tax

Date of publication:  3 December 2004

ISSN: 1445-2782