ATO Interpretative Decision

ATO ID 2004/894

Excise

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Issue

Is the use of a four-wheel drive vehicle (other than on a public road) to assist in the catching of fish from shore the 'taking, catching or capturing of fish' for the purposes of section 34 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

Yes. The use of a four-wheel drive vehicle (other than on a public road) to assist in the catching of fish from shore is the 'taking, catching or capturing of fish' for the purposes of section 34 of the EGCSA.

Facts

A client is a licensed commercial fisherman. The client operates small to medium fishing vessels. The vessels are capable of being carried on a trailer towed by a diesel-powered four-wheel drive vehicle.

The client's typical fishing unit consists of a four-wheel drive vehicle, boat trailer, boat, ice boxes, nets and fishing gear.

The client travels on beaches using the four-wheel drive vehicle to search for a suitable school of fish. Long distances may be travelled along the beach before finding any fish. Once found and caught (using a dinghy to drag a net in the water), the fish nets are pulled in either by hand, or using the vehicle from the beach, depending on the area in which the fish have been caught.

The catch is then removed from the nets and placed into the four wheel drive vehicle by hand. The vessel is then re-loaded onto the trailer, and the client continues searching for fish. The four wheel drive may also be used to move the catch to a waiting truck that in turn transports the fish to market.

Reasons for Decision

Section 53 of the EGCSA provides that a person is entitled, subject to certain prescribed conditions, to an off-road credit if they purchase diesel fuel for a use by them that qualifies. Subsection 53(2) provides that use 'in primary production' (otherwise than for the purpose of propelling a road vehicle on a public road), is a use that qualifies. Primary production is defined in section 21 of the EGCSA as meaning amongst other things 'fishing operations'.

'Fishing operations' are defined in subsection 34(1) of the EGCSA as meaning various activities. The activity most pertinent to the entity's circumstances is:

(a)

the taking, catching or capturing of fish; ...

As stated above, for an off-road credit to be available, diesel fuel must be purchased for use in primary production. As primary production includes fishing operations, and fishing operations in turn include 'the taking, catching or capturing of fish', it follows that the client's use of diesel fuel will be eligible for an off-road credit provided travelling off-road by four wheel drive to and from fishing sites is use 'in' the taking, catching or capturing of fish.

In establishing whether a person has used diesel fuel 'in' the taking, catching or capturing of fish, the meaning of the term 'in' must be determined. The preposition 'in' has been accepted as meaning 'in the course of' (see Chief Executive Officer of Customs v. WMC Resources Ltd (as agent for East Spar Alliance) (1998) 87 FCR 482).

In Federal Commissioner of Taxation v. Payne (2001) 202 CLR 93; (2001) 46 ATR 228; 2001 ATC 4027; Chief Executive Officer of Customs v. WMC Resources Ltd (as agent for East Spar Alliance) (1998) 87 FCR 482; Wandoo Alliance Pty Ltd v. Chief Executive Officer of Customs [2001] AATA 801, it was deemed pertinent to consider whether there was a causal, spatial or temporal link present in determining if an activity takes place 'in the course of' something.

Firstly, the existence of a causal link in this case must be considered. A causal link exists if a certain activity is functionally integrated with a fishing operation, thereby forming an essential part of it. The four-wheel drive vehicles, whilst towing a boat and other equipment, are travelling along beaches in search of fish. When the fish are found and caught, the nets are pulled in using the vehicle, or by hand, and then the vehicles are loaded with the fish. Clearly a causal link exists, as the travel to the place where the taking of the fish occurs is functionally integrated with the taking of the fish.

Secondly, for a spatial link to exist, an activity must take place in an area set aside or utilised for a fishing operation. In this case, there is a spatial link, as the entity often has to traverse large areas of the beach in order to find a suitable school of fish. The activity is clearly taking place in an area set aside or utilised for a fishing operation.

Finally, a temporal link exists if the activity takes place in a timely fashion, not prior to, or after the completion of, the fishing operation. A temporal link exists in this case as travel to and from the place where the fish are captured takes place in a timely fashion and forms an integral part of the activity. The moving of caught fish to the waiting truck can be likened to the movement of a vessel full of fish from the ocean, on its return journey back to the shore, and is an integral part of the taking of the fish, occurring immediately after the nets have been pulled in by the vehicle.

Accordingly, the use of a four-wheel drive vehicle in towing a boat and equipment along a beach in search of fish, pulling nets and moving the caught fish to a waiting truck is the 'taking, catching or capturing of fish' for the purposes of section 34 of the EGCSA.

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   section 21
   section 34
   subsection 34(1)
   section 53
   subsection 56(1)

Case References:
Federal Commissioner of Taxation v. Payne
   (2001) 202 CLR 93
   2001 ATC 4027
   (2001) 46 ATR 228

Related ATO Interpretative Decisions
ATO ID 2003/1004

Keywords
EGCS fishing operations
EGCS off-road
EGCS taking, catching or capturing of fish

Business Line:  Indirect Tax

Date of publication:  19 November 2004

ISSN: 1445-2782