ATO Interpretative Decision
ATO ID 2006/45
Excise
Energy Grants (Credits) Scheme: off-road - forestry - transporting timber for storageFOI status: may be released
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Status of this decision: Decision Current
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the transportation of felled timber to a storage place outside the forest or plantation, within the definition of 'forestry' in section 35 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
No. The transportation of felled timber to a storage place outside the forest or plantation is not 'forestry' as defined in section 35 of the EGCSA.
Facts
A fire in a forest or plantation has required timber to be felled for salvage before the timber begins to deteriorate and while it still has good timber value.
The felled timber is transported to a place outside the forest or plantation to a log storage to be stored and preserved under water or constantly kept moist from irrigation sprays. The log storage process preserves and prevents deterioration of the felled timber.
The log storage is situated outside the forest or plantation and is not at a sawmill or chipmill outside the forest or plantation.
The logs may be stored over a long period of time.
Reasons for Decision
Section 53 of the EGCSA provides an off-road credit in respect of off-road diesel for, among other things, use in 'primary production', which is defined by section 21 of the EGCS as including 'forestry'.
In the context of the phrase 'in primary production' in subsection 53(2) of the EGCSA, the preposition 'in' means 'in the course of' or 'in the process or act of'. A given activity can be said to take place in the course of forestry if it is linked causally, spatially and temporally to forestry. 'Forestry' is defined in section 35 of EGCSA. Under paragraph 35(e) of the EGCSA, a person is entitled to an off-road credit if they purchase diesel fuel for use in the transporting of timber from the forest or plantation, in which it was felled, to a sawmill or chipmill situated outside the forest or plantation. The purpose of the journey so undertaken must be to transport timber for its milling at a sawmill, or chipmill, located outside the forest in which the timber was felled.
After a fire the felling and storage of timber is essential and integral to prevent deterioration. When logs affected by a fire are delivered to a log storage area they are generally intended to be stored and preserved for a lengthy period.
As the logs are stored over a period of time the final destination of the particular logs is not known at the time of transportation to the storage area. Therefore a 'causal link' cannot be established between transportation and milling.
The under-water log storage is not located in an area set aside or occupied for forestry. Thus there is no 'spatial link' as the log storage area is neither linked or connected with a sawmill or chipmill outside the forest or plantation.
As the felled timber is stored over a period of time to preserve and prevent deterioration a 'temporal link' does not exist as the time between when the logs are first stored and the commencement of the next process, after storing and preservation, may be considerable.
As the three relevant criteria are not satisfied, the relevant activity, of transporting felled timber to log storage at a place outside the forest or plantation, does not take place 'in the course of forestry.' We therefore consider that the activity is not a forestry activity within section 35 of the EGCSA.
Date of decision: 25 November 2005
Legislative References:
Energy Grants (Credits) Scheme Act 2003
section 35
paragraph 35(c)
paragraph 35(e)
section 53
subsection 53(2)
Related Public Rulings (including Determinations)
Product Grants and Benefits Ruling PGBR 2005/1
ATO ID 2004/466
ATO ID 2004/686
ATO ID 2006/46
Keywords
EGCS forestry
EGCS forestry transportation of timber
EGCS milling
EGCS off-road
EGCS processing
ISSN: 1445-2782
| Date: | Version: | |
| You are here → | 25 November 2005 | Original statement |
| 1 July 2012 | Archived |