ATO Interpretative Decision

ATO ID 2002/1093

Customs tax

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the transport of forestry products by boat, from a loading point to a place for export 'marine transport' for the purposes of section 164(7) of the Customs Act 1901 (Customs Act)?

Decision

Yes. The transport of forestry products by boat, from a loading point to a place for export is marine transport for the purposes of section 164(7) of the Customs Act.

Facts

An entity purchases diesel fuel for use by it in the conduct of its enterprise. As part of that enterprise the entity plans to:

(a)

transport raw timber, by boat, from a loading point at the forest where the timber was felled to port where the timber will be unloaded and later shipped for export; and

(b)

transport chipped logs, by boat, from a loading point at the forest where the timber was felled and chipped, to either a waiting ship for immediate export, or to a port from which the chipped timber will be exported.

Reasons for Decision

Under section 78A of the Excise Act 1901 (Excise Act) and subsection 164(1) of the Customs Act, a diesel fuel rebate is payable, subject to certain conditions and restrictions, to a person who purchases fuel for use:

'in marine transport (otherwise than for the purpose of propelling a road vehicle on a public road) in the course of carrying on an enterprise'

Marine transport is relevantly defined in subsection 164(7) of the Customs Act as:

' Marine transport includes transport by vessels in or on fresh water, but does not include any transport relating to forestry.'

The transport of timber products by boat for export will meet the definition of marine transport^[F1] unless they are 'any transport relating to forestry'.

The activities will be regarded as 'transport relating to forestry' if they either:

(a)

fall within the definition of 'forestry' in the Customs Act; or,

(b)

are otherwise regarded as relating to forestry as defined in the Customs Act.

Forestry is relevantly defined in the Customs Act as meaning:

(a)

The planting or tending, in a forest or plantation, of trees intended for felling; or

(b)

the thinning or felling, in a forest or plantation , of standing timber

and includes-

(c)

the transporting, milling or processing, in a forest or plantation, of timber felled in the forest or plantation

(d)

the milling of timber at a sawmill or chipmill that is not situated in the forest or plantation where the timber was felled

(e)

where timber is milled at a sawmill or chipmill that is not situated in the forest or plantation in which the timber was felled - the transporting of the timber from the forest or plantation in which it was felled to the sawmill or chipmill; or

(f)

the making and maintaining in a forest or plantation referred to in paragraph (a) or (b) of a road that is integral to the activities referred to in paragraphs (a), (b) or (c)'

In this case, the transport of timber products is not forestry as defined by the Customs Act.

Therefore all that remains is to consider whether the transportation of timber products is 'transport relating to forestry'.

The Macquarie Dictionary (second edition) defines the intransitive verb 'relating' as meaning:

'....

3.

to have reference (to)

4.

to have some relation (to).'

And 'relation' as:

1.

'an existing connection; a particular way of being related ...'

Consequently, an activity will be transport relating to forestry if it can be said to have a reference or connection to forestry. The phrase 'in relation to' is broad and capable of referring to a wide range of relationships. In this context it closely resembles the phrase 'in connection with', which was previously used in diesel fuel rebate legislation and was much considered by the Courts.

In considering whether an activity could be regarded as 'in connection with' agriculture or mining, the Courts generally considered whether the activity being examined could properly be described as one in connection with the defined agricultural or mining activity or was best described as an activity in connection with something else.

When considering if the transport of livestock for sale was connected with the rearing of livestock, the Courts consistently held that the transport of livestock for sale could not be an activity 'in connection with' the rearing of livestock, as the rearing of livestock had ceased. Rather the transport of livestock in these circumstances is seen as in connection with the disposal, by sale or other means, of the livestock.

Likewise, in the current case, as the timber is leaving the place where it was felled for export, and as the chips are leaving the place where they were milled for export, the forestry activity has ceased. Accordingly, the transport of timber products for export is not an activity relating to forestry. The transport of timber products from the place at which it was felled or milled to a port or vessel for export is best regarded as transport relating to the sale or disposal of forestry products by export.

As the transport of timber products by boat, for export is not transport relating to forestry, the activities fall within the definition of marine transport' for the purposes of the diesel fuel rebate scheme.

Legislative References:
Customs Act 1901
   subsection 164(1)
   subsection 164(7)

Case References:
Collector of Customs v. Pressure Tankers Pty Ltd and Pozzolanic Enterprises Pty Ltd
   (1993) 43 FCR 280

Related ATO Interpretative Decisions
ATO ID 2002/643

Keywords
Diesel fuel rebate scheme
DFRS forestry
DFRS marine

Business Line:  Excise

Date of publication:  30 November 2002

ISSN: 1445-2782