ATO Interpretative Decision
ATO ID 2004/535
Excise
Energy Grants Credits Scheme: on-road credit - incidental use - movement on a highway construction siteFOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 movement of a water truck on a highway construction site to and from the place where it will spray water, an incidental use of the vehicle that is integral to operating the vehicle as provided in paragraph 42(2)(a) or 42(2)(b) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
Yes. The movement of a water truck on a highway construction site to and from the place where it will spray water is an incidental use of the vehicle that is integral to operating the vehicle as provided in paragraph 42(2)(a) or 42(2)(b) of the EGCSA.
Facts
An entity carries on a transport enterprise.
The entity operates a water truck with a GVM of over 20 tonnes. The water truck is registered for use on public roads and is a vehicle for transporting passengers or goods for the purposes of the EGCSA.
The water truck is used to transport water to and spray it on the surface of a partially constructed highway.
The water truck travels on existing roads to and from the construction site.
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 42(2)(a) or 42(2)(b).
Therefore, in order to meet the requirements of section 42 of the EGCSA, the movement of the water truck on the construction site to and from the place where it sprays water 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 movement of the water truck on the construction site to and from the place where it will spray water 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:
The spraying of water is the unloading of goods from the water truck and falls within the definition of incidental use contained in paragraph 8(a)(i) of the EGCSA.
The water truck travels on the construction site to and from the place where this unloading happens. This movement is accordingly an incidental use as defined in paragraph 8(a)(iii) of the EGCSA.
Therefore, the movement of the water truck on the construction site to and from the place where it will spray water 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 movement of the water truck on the construction site to and from the place where it will spray water is an 'incidental use' of that 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 water truck is a vehicle for transporting passengers or goods.
Therefore, the movement of the water truck on the construction site to and from the place where it will spray water 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 water truck is operated to transport and deliver water. The powering of the vehicle while it moves to and from the place where it unloads water forms a fundamental part of the transport function of the vehicle and is thus a fundamental part of the operation of the water truck on a road in Australia.
Therefore, the movement of the water truck on the construction site to and from the place where it is needed to spray water is an incidental use of the water truck that is integral to operating the water truck on a road in Australia.
Accordingly, the movement of a water truck on a highway construction site to and from the place where it will spray water is an incidental use of the vehicle that is integral to operating the vehicle as provided in paragraph 42(2)(a) of the EGCSA.
Date of decision: 25 May 2004
Legislative References:
Energy Grants (Credits) Scheme Act 2003
paragraph 42(2)(a)
paragraph 42(2)(b)
paragraph 42(1)(a)
paragraph 42(1)(b)
subsection 42(2)
paragraph 42(2)(c)
section 8
paragraph 8(a)
subparagraph 8(a)(i)
subparagraph 8(a)(iii)
ATO ID 2004/18
ATO ID 2004/63
ATO ID 2004/215
ATO ID 2004/216
ATO ID 2004/218
ATO ID 2003/1163
Other References:
The Macquarie Dictionary 2001, rev. 3rd edn, The Macquarie Library Pty Ltd NSW
Keywords
Energy grants (credits) scheme
EGCS on-road
EGCS incidental use
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 25 May 2004 | Original statement |
| 1 July 2012 | Archived |