ATO Interpretative Decision
ATO ID 2004/803
Excise
Diesel Fuel Rebate Scheme: marine transport - generation of electricity to power equipment on a vessel used to load goods onto and remove goods from the vesselFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 use of diesel fuel to run generators on a vessel used to power ship based equipment that is used to load goods onto and unload goods from the vessel use 'in marine transport' as required by subsection 164(1) of the Customs Act 1901 and subsection 78A(1) of the Excise Act 1901 for the purposes of the diesel fuel rebate scheme?
Decision
No. The use of diesel fuel to run generators on a vessel used to power ship based equipment that is used to load goods onto and unload goods from the vessel is not use 'in marine transport' as required by subsection 164(1) of the Customs Act and subsection 78A(1) of the Excise Act for the purposes of the diesel fuel rebate scheme.
Facts
An entity owns a vessel. The entity uses diesel fuel to run generators on the vessel.
The generators provide power for a number of functions on the vessel. One function is the powering of equipment on the vessel that is used to load goods onto, and unload goods from, the vessel.
Reasons for Decision
Subsection 78A(1) of the Excise Act and subsection 164(1) of the Customs Act provide that a diesel fuel rebate is payable to a person who purchases diesel fuel for use by them 'in marine transport'.
'Marine transport' is defined for the purposes of both Acts in subsection 164(7) of the Customs Act as including:
transport by vessels in or on fresh water, but does not include any transport relating to forestry.
That is, the definition of 'marine transport' merely contains inclusive and exclusive elements. It includes transport in or on fresh water, but does not include any transport relating to forestry.
Other than the fact that marine transport can take place on fresh water (and excludes transport related to forestry), the term takes on its ordinary meaning. The ordinary meaning of 'marine transport' was considered by the Administrative Appeals Tribunal (AAT) in Re Port of Brisbane Corporation and Deputy Commissioner of Taxation [2004] AATA 222 (Port of Brisbane) which considered whether or not various activities undertaken by dredging vessels constituted 'marine transport' for the purposes of the diesel fuel rebate scheme.
In that case, the AAT determined at paragraph 32 that:
...marine transport should in this instance be interpreted as meaning the act of conveying a thing or person from one place to another through or over water using some kind of vessel or vehicle.
The AAT went on to accept that the word 'in' in this context means 'in the process or act of' (see also Chief Executive Officer of Customs v. Dyno Wesfarmers Limited (1997) 73 FCR 1) before concluding at paragraph 34 that:
For diesel to be used in the process or act of marine transport, the use must be associated with the conveying of a thing or person from one place to another through or over water using some kind of vessel or vehicle.
On this basis, the AAT allowed a rebate to be paid for the movement of dredging vessels to and from the site of dredging operations, and the movement of vessels that carried dredged spoil to and from the site of dredging operations or dumpsites.
However, diesel fuel used in powering dredging activities where there was no conveying by a vessel involved, was not considered to be associated with the 'conveying' of a thing or person from one place to another through or over water using some kind of vessel or vehicle, and therefore was not considered to be diesel fuel used 'in marine transport' for the purposes of the diesel fuel rebate scheme. The various dredging operations for which rebate was not payable included:
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- The use of a vacuum pump to suck spoil from the seabed into a hopper in the hold of the vessel
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- The dumping of dredged spoil through hydraulically operated valves in the bottom of the hopper or pumped ashore through long floating hoses; and
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- The use of a grab bucket fitted to a crane to grab and lift spoil from the seabed and deposit it in a separate hopper barge moored alongside.
When considered collectively, all these activities may be regarded as the loading or unloading of the goods (spoil) being transported by the dredging vessel.
Accordingly, the use of diesel fuel to run generators on a vessel used to power ship based equipment that is used to load goods onto and unload goods from the vessel is not use 'in marine transport' as required by subsection 164(1) of the Customs Act and subsection 78A(1) of the Excise Act for the purposes of the diesel fuel rebate scheme.
Date of decision: 14 September 2004
Legislative References:
Customs Act 1901
subsection 164(1)
subsection 164(7)
subsection 78A(1)
Case References:
Chief Executive Officer of Customs v. Dyno Wesfarmers Limited
(1997) 73 FCR 1
55 ATR 1029
[2004] AATA 222
Keywords
Diesel fuel rebate scheme
DFRS marine
ISSN: 1445-2782
| Date: | Version: | |
| You are here → | 14 September 2004 | Original statement |
| 8 January 2010 | Archived |