ATO Interpretative Decision
ATO ID 2004/890
Excise
Energy Grants (Credits) Scheme: off-road use - agriculture - operation of heater in hothousesFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 diesel fuel used in 'horticulture' as defined in section 33 of the Energy Grants Credits Scheme Act 2003 (EGCSA) if the diesel fuel is used to heat hothouses in which vegetables are grown?
Decision
Yes. Diesel fuel is used in 'horticulture' as defined in section 33 of the EGCSA if the diesel fuel is used to heat hothouses in which vegetables are grown.
Facts
An entity operates a vegetable growing business. The vegetables are grown inside plastic hothouses.
During winter, the entity uses diesel fuel to power boilers to heat the hot houses at night in order to maintain a certain temperature within the hothouses, as well as for the purpose of frost abatement.
Reasons for Decision
Under the Energy Grants (Credits) Scheme, an entity is entitled to an off-road credit in the form of an energy grant if they purchase diesel fuel for use in certain defined activities, including 'primary production'. 'Primary production' is defined in section 21 of the EGCSA as meaning a number of activities including 'agriculture'. The term 'agriculture' is defined in section 22 of the EGCSA, which states in part:
- (1)
- ...the expression 'agriculture' means:...
- (d)
- ...horticulture...
Section 33 of the EGCSA then defines horticulture in the following terms:
The expression horticulture includes:
The phrase 'cultivation .... of fruit, vegetables, herbs, edible fungi, nuts, flowers, trees, shrubs or plants' is not defined in the EGCSA. It therefore takes its ordinary meaning. The term cultivate is relevantly defined in The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW as:
1. to bestow labour upon (land) in raising crops; till; improve by husbandry...
3. to promote or improve the growth of (a plant etc) by labour and attention
Therefore, in the context of 'horticulture', the phrase 'cultivation...of fruit, vegetables etc' means to bestow labour on the land in raising this produce.
Where diesel fuel is used to power boilers to ensure a constant temperature within the hothouse where vegetables are grown, and to prevent frost within the hothouse, the diesel fuel is clearly being used in 'horticulture' as that term is defined in section 33 of the EGCSA.
Date of decision: 5 November 2004
Legislative References:
Energy Grants (Credits) Scheme Act 2003
section 22
section 33
paragraph 33(a)
ATO ID 2003/816
Other References:
The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW
Keywords
EGCS agriculture
EGCS core agricultural activity
EGCS horticulture
EGCS off-road
Energy grants (credits) scheme
ISSN: 1445-2782
| Date: | Version: | |
| You are here → | 5 November 2004 | Original statement |
| 2 September 2005 | Archived |