ATO Interpretative Decision

ATO ID 2004/215

Excise

• This ATO ID has been amended to include legal references to Part 3 and paragraph 42(2)(b) of the Energy Grants (Credits) Scheme Act.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the use of auxiliary equipment permanently mounted on a vehicle, to unload goods transported by that vehicle, an 'incidental use' of the vehicle that is integral to operating the vehicle as provided in paragraph (a) or (b) of subsection 42(2) for the purposes of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

Yes. The use of auxiliary equipment mounted on a vehicle, to unload goods transported by that vehicle, is an 'incidental use' of the vehicle that is integral to operating the vehicle as provided in paragraph (a) of subsection 42(2) of the EGCSA.

Facts

The entity carries on an enterprise of transporting and delivering goods.

The entity operates semi-trailers which are over twenty tonnes gross vehicle mass (GVM). The semi-trailers are registered and are vehicles for transporting passengers or goods for the purposes of the EGCSA.

The semi-trailers are fitted with auxiliary diesel motors which power auxiliary equipment used to unload the goods.

Reasons for Decision

Under Part 3 of the EGCSA an entity is, subject to the requirements specified in that part, entitled to an on-road credit in the form of an energy grant in certain circumstances.

Section 42 of the EGCSA details the circumstances when a client will be entitled to an on-road credit for the use of diesel or alternative fuel in a registered vehicle that has a GVM of 20 tonnes or more.

Subsection 42(1) of the EGCSA provides that a claimant is entitled to an on-road credit if they purchase on-road diesel fuel or on-road alternative fuel for:

(a)

use in a registered vehicle that has a gross vehicle mass of 20 tonnes or more, or

(b)

incidental use in relation to such a vehicle.

However, the extent of entitlement is limited by subsection 42(2) of the EGCSA which requires that the fuel is for use in the carrying on of the entity's enterprise. This requirement is satisfied.

Subsection 42(2) of the EGCSA also serves to separate entitlement based on whether or not the vehicle is a vehicle for transporting passengers or goods.

As the vehicle is a vehicle for transporting passengers or goods, paragraph 42(2)(a) of the EGCSA is relevant and states that the use of fuel will be eligible if the fuel is used in operating the vehicle on a road in Australia.

However, regardless of whether a vehicle is a vehicle for transporting passengers or goods, paragraph 42(2)(c) of the EGCSA provides that entitlement extends to incidental use, or any other use, of the vehicle that is integral to operating the vehicle as mentioned in paragraphs (a) or (b).

Therefore, in order to meet the requirements of section 42 of the EGCSA, the operation of auxiliary equipment mounted on a vehicle must be an incidental use of the vehicle, or any other use of the vehicle, that is integral to operating the vehicle as mentioned in paragraph 42(2)(a) or 42(2)(b).

Each test will be considered in turn.

Is the operation of auxiliary equipment on a semi-trailer to unload goods transported in the trailer an 'incidental use', or any other use of the vehicle'?

'Incidental use' in relation to a vehicle is defined in section 8 of the EGCSA which states:

Each of the following, whether or not it takes place on a road, is an incidental use in relation to a vehicle:

(a)

powering the vehicle, or auxiliary equipment in or on the vehicle, while:

(i)

goods to be transported in or on the vehicle are loaded or goods that have been so transported are unloaded; or

The operation of the auxiliary equipment on the semi-trailer to unload goods from the semi-trailer, falls within the definition of incidental use contained in paragraph 8(a)(i) of the EGCSA. In this case goods that have been transported on the vehicle are being unloaded.

Therefore the diesel fuel used in operating auxiliary equipment is an 'incidental use' of that vehicle for the purposes of subsection 42(1) of the EGCSA.

Is the incidental use integral to operating the vehicle as mentioned in paragraph 42(2)(a) or 42(2)(b) of the EGCSA?

The powering of equipment on the vehicle to unload goods is an incidental use of the vehicle. However, the incidental use must also be integral to operating the vehicle as mentioned in paragraph 42(2)(a) or 42(2)(b) of the EGCSA.

As explained above, paragraph 42(2)(a) of the EGCSA is the relevant paragraph in this instance, as the trailer is a vehicle for transporting passengers or goods.

Therefore, the powering of the auxiliary equipment will be eligible if it is an incidental use of the vehicle that is integral to operating the vehicle on a road in Australia.

'Integral' is not defined in the legislation and therefore takes on its common meaning. It is defined in The Macquarie Dictionary 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW as:

1.

of or relating to a whole; belonging as part of the whole; constituent or component: the integral parts of the human body

2.

necessary to the completeness of the whole

3.

made up of parts which together constitute a whole

Therefore, an incidental use of the vehicle will be integral to operating the vehicle on a road in Australia, where it is necessary to and forms a fundamental part of the operation of the registered vehicle on a road in Australia.

In this particular example, the semi-trailer is operated to transport and deliver goods. The unloading of these goods forms a fundamental part of the operation of the semi-trailer on a road in Australia.

Therefore, the use of equipment on the semi-trailer to unload goods from the semi-trailer is an incidental use of the semi-trailer that is integral to operating the semi-trailer on a road in Australia.

Accordingly, the use of auxiliary equipment on a semi-trailer, to unload goods from that vehicle, is an 'incidental use' of the vehicle that is integral to operating the vehicle, as provided in paragraph 42(2)(a) of the EGCSA.

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   Part 3
   section 4
   section 8
   paragraph 8(a)(i)
   section 42
   subsection 42(1)
   subsection 42(2)
   paragraph 42(2)(a)
   paragraph 42(2)(b)
   paragraph 42(2)(c)

Other References:
The Macquarie Dictionary 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW

Keywords
EGCS incidental use
EGCS on-road
Energy grants (credits) scheme

Business Line:  Indirect Tax

Date of publication:  5 March 2004

ISSN: 1445-2782