ATO Interpretative Decision
ATO ID 2004/195
Excise
Energy Grants (Credits) Scheme: off-road - mining - hobby mining operationsFOI status: may be released
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This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 an entity entitled to claim off-road credits under the Energy Grants (Credits) Scheme Act 2003 (EGCSA) for diesel fuel purchased for use in mining operations, if the entity's activities constitute a hobby?
Decision
No. An entity is not entitled to claim off-road credits under the EGCSA for diesel fuel purchased for use in mining operations, if the entity's activities constitute a hobby.
Facts
An entity ceased to operate as a business as their mining activities were unprofitable.
The entity has continued to undertake mining operations as a hobby and has now lodged a claim for diesel fuel purchased for use in the activity.
Reasons for Decision
Subsection 53(1) of the EGCSA provides that an entity is entitled to an off-road credit if it purchases or imports into Australia off-road diesel fuel for a use by the entity that qualifies, subject to such conditions and restrictions as are specified in the regulations. Mining operations (otherwise than for the purpose of propelling any vehicle on a public road) is a use that qualifies under subsection 53(2) of the EGCSA.
Section 11 of the EGCSA defines the expression 'mining operations' and includes within the definition certain mining activities that may entitle an entity to an off-road credit and therefore an energy grant.
The EGCSA does not expressly prescribe that only commercial mining operations can qualify as eligible for an off road credit and therefore an energy grant.
The precursor to the EGCSA was the diesel fuel rebate scheme, which, following a number of amendments in 1995, contained equivalent entitlements.
The Explanatory Memorandum to the Customs and Excise Legislation Amendment Bill 1995 states at 'Notes On Clauses - Clause 2 - Commencement':
The Amendments proposed are to clarify the ambit of the Diesel Fuel Rebate Scheme (DFRS) as being a targeted scheme intended to provide rebate of duty paid on diesel fuel used by those who are genuinely involved in the business of mining or farming, or those who undertake activates that are intimately bound up with mining or farming.
The intention is implicit in paragraphs 164(1)(a) and (aa) of the Customs Act which provides that rebate is payable in respect of diesel fuel purchased for use in mining operations and in primary production.
Because the EGCSA maintains entitlements that are equivalent to those that were available under the former scheme, the explanatory memorandum to the DFRS is relevant in determining eligibility under the new Scheme. As explained in the explanatory memorandum, Parliament's intention was for entitlement to extend only to mining operations conducted in the form of a business.
Therefore, where an entity conducts mining activities as a hobby, no entitlement to off-road credits exists.
Date of decision: 23 February 2004
Legislative References:
Energy Grants (Credits) Scheme Act 2003
subsection 56(1)
subsection 53(1)
subsection 53(2)
section 11
Other References:
Explanatory Memorandum to the Customs and Excise Legislation Amendment Bill 1995
Keywords
EGCS mining operation
EGCS off-road
Energy grants (credits) scheme
Hobby vs business
ISSN: 1445-2782
| Date: | Version: | |
| You are here → | 23 February 2004 | Original statement |
| 1 July 2012 | Archived |