ATO Interpretative Decision
ATO ID 2005/95
Excise
Energy Grants (Credits) Scheme - Off-road credit - is straw considered to be hayFOI status: may be released
This version is no longer current. Please follow this link to view the current version. |
-
This ATO ID has been amended to include legal reference to Section 21 of the Energy Grants (Credits) Scheme Act and to update references to PGBR 2005/3.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Current
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 straw considered to be hay for the purposes of paragraph 27(b) of the Energy Grants (Credits) Scheme Act 2003 (EGCS Act)?
Decision
Yes. Straw is considered to be hay for the purposes of paragraph 27(b) of the EGCS Act.
Facts
An entity conducts farming activities producing oaten hay and/or straw
The entity operates a facility for baling and packing hay and/or straw.
Reasons for Decision
Subsection 56(1) of the EGCS Act states that if you are entitled to an off-road credit, you are entitled to an energy grant.
Subsection 53(1) of the EGCS Act provides that you are entitled to an off-road credit if you purchase or import into Australia off-road diesel fuel for a use by you that qualifies. Use in primary production is a use that qualifies under subsection 53(2) of the EGCS Act. The definition of 'primary production' in section 21 of the EGCS Act includes agriculture.
'Agriculture' is defined in subsection 22(1) of the EGCS Act which states in part:
- ...
- the cultivation or gathering in of crops; or
- ...
- viticulture, horticulture, pasturage or apiculture
- ...
a sundry agricultural activity.
Agriculture includes 'cultivation or gathering in of crops' and 'pasturage'. These activities have occurred prior to the hay and/or straw being received at the hay baling, packing and storage facility, and therefore the most relevant activities to consider is sundry agricultural activities.
Sundry agricultural activity
A 'sundry agricultural activity' is relevantly defined in section 27 of the EGCS Act. Activities that constitute sundry agricultural activities can broadly be described as:
- ...
- hay baling on the agricultural property where the hay was cultivated; ...
We now need to consider whether straw is considered to be hay. The EGCS Act does not have a definition of hay nor straw and therefore take on their ordinary meaning.
The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW defines
hay as 1. grass cut and dried for use as fodder.
straw as 1. a single stalk or stem, especially of certain species of grain, chiefly wheat, rye, oats, and barley, and 2. a mass of such stalks, especially after drying and threshing, used as fodder, as material for hats, etc.
fodder as 1. food for livestock, especially dried food, as hay, straw, etc.
The energy grants credits scheme (EGCS) was introduced on 1 July 2003 to replace the entitlement provisions of the diesel fuel rebate scheme (the previous off-road scheme) administered under the Customs Act 1901 and the Excise Act 1901 and the diesel and alternative fuels grants scheme (the previous on-road scheme). The previous off-road scheme and the previous on-road scheme ceased on 1 July 2003.
Similar to the previous off-road scheme, the EGCS is a beneficial scheme that confers benefits on persons that undertake certain activities. We take the view that, as for the previous off-road scheme, the entitlement provisions of the EGCS are intended to be read in a practical, commonsense manner.
In Australian National Railways Commission v. Collector of Customs, SA, (1985) 8 FCR 264; (1985) 69 ALR 367 (ANR), Davies J stated:
Although the diesel fuel rebate provisions use simple language, they are intended to be applied in a practical, commonsense manner to commercial operations.
We consider that the views expressed by Davies J in ANR are equally applicable to the provisions of the EGCS.
Where there is doubt as to the meaning and application of the qualifying provisions, we take the view that they are to be liberally construed unless the text or context requires a narrow construction.
While straw and hay may be technically different we consider that in this instance a practical commonsense approach is to treat the baling as a major consideration. The activity of baling is the same whether it is straw or hay.
Therefore we consider straw to be hay for the purposes of 'sundry agricultural activity' as defined in subsection 27(b) of the EGCS Act.
Date of decision: 30 March 2005
Legislative References:
Energy Grants (Credits) Scheme Act 2003
Subsection 56(1)
Subsection 53(1)
Subsection 53(2)
Subsection 22(1)
Section 27
Paragraph 27(b)
section 21
Case References:
Australian National Railways Commission v. Collector of Customs, SA
(1985) 8 FCR 264
(1985) 69 ALR 367
Related Public Rulings (including Determinations)
Product Grant and Benefit Ruling PGBR 2005/3
ATO ID 2005/94
Other References:
The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW
Keywords
EGCS agriculture
EGCS hay baling
EGCS primary production
EGCS sundry agricultural activity
Energy grants (credits) scheme
ISSN: 1445-2782
| Date: | Version: | |
| You are here → | 30 March 2005 | Original statement |
| 1 July 2012 | Archived |