ATO Interpretative Decision
ATO ID 2003/1165
Excise
Energy Grants (Credits) Scheme: on - road diesel fuelFOI status: may be released
This version is no longer current. Please follow this link to view the current version. |
-
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is a vegetable oil emulsion consisting of vegetable oil blended with diesel fuel and ethanol 'on-road diesel fuel' as defined in regulation 8 of the Energy Grants (Credits) Scheme Regulations 2003 (the Regulations) for the purposes of the Energy Grants Credits Scheme (EGCS)?
Decision
No. A vegetable oil emulsion consisting of vegetable oil blended with diesel fuel and ethanol is not 'on-road diesel fuel' as defined in regulation 8 of the Regulations for the purposes of the EGCS.
Facts
An entity manufactures two fuels. Each fuel consists of a blend of vegetable oil, diesel fuel and ethanol. The proportions of each part of the blend vary, but include a maximum of 41% diesel.
Only the diesel fuel part of the blend is a product derived from petroleum or shale.
The fuels are capable of being used as a fuel by road vehicles powered by diesel engines.
Reasons for Decision
For the purposes of the EGCS, 'on-road diesel fuel' is defined in regulation 8 of the Regulations as:
... a substance that:
In determining whether the two vegetable oil emulsions are 'on-road diesel fuel', it is necessary to determine whether the emulsions consist principally of products derived from petroleum or shale.
In Federal Commissioner of Taxation v. F. H. Faulding & Co. Ltd (1950) 83 CLR 594; (1950) 9 ATD 201 (Faulding), the High Court considered whether certain fruit juices cordial consisted principally of Australian fruit. In their consideration of 'principally' Latham J determined that, 'the words "consisting principally of" must be read as referring to quantity expressed in terms of either volume or weight'. The other justices adopted the same view.
The definition of on-road diesel fuel in the Regulations is drafted in a similar context to the legislation considered by the High Court in Faulding. Therefore, a determination on whether the emulsions consist principally of products derived from petroleum or shale should be interpreted in a quantitative sense, consistent with the reasoning of the High Court.
The emulsions contain only three components. Of those components, only the diesel fuel is a product derived from petroleum or shale. In both emulsions, the diesel is quantitatively less than the other two components collectively and individually less than the vegetable oil component. Accordingly, neither vegetable emulsion consists principally of products derived from petroleum or shale. Therefore, they are not 'on-road diesel fuel' for the purposes of the EGCS.
Date of decision: 18 November 2003
Legislative References:
Energy Grants (Credits) Scheme Regulations 2003
Regulation 8
Case References:
Federal Commissioner of Taxation v. F. H. Faulding & Co. Ltd
(1950) 83 CLR 594
(1950) 9 ATD 201
ATO ID 2003/877
ATO ID 2003/1164
ATO ID 2003/1166
Keywords
EGCS on-road diesel fuel
Energy grants (credits) scheme
ISSN: 1445-2782
| Date: | Version: | |
| You are here → | 18 November 2003 | Original statement |
| 30 April 2010 | Archived |