ATO Interpretative Decision
ATO ID 2006/280 (Withdrawn)
Excise
Energy Grants (Credits) Scheme: Off-road credit - diesel fuel used in the construction of a premisesFOI status: may be released
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This ATO ID is withdrawn and is replaced by ATO ID 2009/12This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 13 March 2009
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 diesel fuel used at a hospital for the purposes of paragraph 53(4)(c) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) when it is used in the construction of distinct premises on the grounds of the hospital?
Decision
No. Diesel fuel is not used at a hospital for the purposes of paragraph 53(4)(c) of the EGCSA when used in the construction of distinct premises on the grounds of the hospital.
Facts
Diesel fuel is used in undertaking excavation work in the construction of new premises.
The new premises are being constructed in the grounds of a hospital.
The purpose of the new premises and the activities to be conducted therein are distinct from the purpose and activities of the hospital.
Reasons for Decision
Section 53 of the EGCSA provides that, subject to the conditions and restrictions specified in the Energy Grants (Credits) Scheme Regulations 2003, an entity is entitled to an off-road credit if they purchase or import into Australia off-road diesel fuel for a qualifying use.
Subsection 53(4) of the EGCSA lists a number of uses that qualify. One use, set out in paragraph 53(4)(c) is:
...use at a hospital or nursing home or at any other institution providing medical or nursing care.
In this instance, diesel fuel is being used in the grounds of a hospital to construct new premises that are distinct from the purpose and activities of the hospital. To meet the requirements of paragraph 53(4)(c) of the EGCSA, the fuel must be used 'at' the hospital'.
The Energy Grants (Credits) Scheme, which replaced the Diesel Fuel Rebate Scheme (DFRS), maintained the entitlements that were available under the DFRS. Therefore, for the purposes of determining the meaning of the phrase 'use at' in paragraph 53(4)(c) of the EGCSA, the Second Reading Speech to the Bill that introduced the DFRS is relevant.
The DFRS was introduced under the Diesel Fuel Taxes Legislation Amendment Bill 1982. The Second Reading Speech for the Bill explained that:
...The users of diesel fuel in the categories defined in clause 5 of the Bill who use the fuel for 'off road' purposes are eligible for a rebate of the duty paid on the diesel fuel used in their operations...The categories I have just referred to relate to the use of diesel fuel in the agriculture, mining, forestry and fishing industries, in domestic premises, hospitals, aged persons homes and nursing homes...
In determining whether fuel has been used 'at' certain premises, the Second Reading Speech makes it clear that diesel fuel should be used in the operations of the relevant industries. In this instance, the diesel fuel is not being used in the course of the hospital's operations. Rather it is being used to construct new premises that will exist for a distinct purpose from that of the hospital.
Neither can it be said that the construction of the new premises occurs at the hospital in a physical sense. Although the new premises are being constructed in the grounds of the hospital, from the time the first sod of dirt is shifted in the construction of the new premises, the site ceases to be part of the hospital and is more properly regarded as the site of the new premises.
Accordingly, diesel fuel is not being used at a hospital for the purposes of paragraph 53(4)(c) of the EGCSA when it is used in the construction of distinct premises on the grounds of the hospital.
Date of decision: 25 September 2006
Legislative References:
Energy Grants (Credits) Scheme Act 2003
paragraph 53(4)(c)
The Regulations
Other References:
Diesel Fuel Taxes Legislation Amendment Bill 1982
Keywords
Energy grants (credits) scheme
Diesel
ISSN: 1445-2782
| Date: | Version: | |
| 25 September 2006 | Original statement | |
| You are here → | 13 March 2009 | Archived |