ATO Interpretative Decision
ATO ID 2003/1002 (Withdrawn)
Excise
Energy Grants (Credits) Scheme: fishing operations - catching of fish for sale to pet stores and aquariumsFOI status: may be released
-
This ATOID is withdrawn as it is superseded by Fuel Tax Ruling FTR 2006/4.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a business of catching fish for sale to pet shops and aquariums undertaken for purposes connected with recreation sport or tourism and therefore excluded from the definition of 'fishing operations' in subsection 34(1) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
No. A business of catching fish for sale to pet shops and aquariums is not undertaken for purposes connected with recreation sport or tourism and therefore is not excluded from the definition of 'fishing operations' in subsection 34(1) of the EGCSA.
Facts
The client carries on a business of catching fish for sale to pet shops and aquariums.
Reasons for Decision
Under the Energy Grants (Credits) Scheme, a person is entitled to an energy grant if they purchase diesel fuel for use by them in primary production.
The definition of primary production in section 21 of the EGCSA includes 'fishing operations'.
The term 'fishing operations' is defined in subsection 34(1) of the EGCSA as:
- (a)
- the taking, catching or capturing of fish; or
- ...
- but does not include any activity referred to in any of the preceding paragraphs that is conducted, in whole or in part:
- (h)
- otherwise than for the purposes of a business; or
- (i)
- for business purposes connected with recreation, sport or tourism.
The catching of fish falls under (a) of the definition of 'fishing operations'. However, the client's activities will be excluded from the definition of 'fishing operations' if they are conducted in whole or in part, for purposes other than a business, or for 'business purposes connected with recreation, sport or tourism'.
The client is catching fish. The catching of fish is ordinarily associated with the business purpose of selling the fish for profit. In this case, the client's services are provided to pet stores and aquariums for profit. This also constitutes business purposes. Therefore, the first of the above exclusionary tests is satisfied, and the client's activities will constitute fishing operations provided they are not carried on for business purposes connected with recreation, sport or tourism.
As pet stores and aquariums are often operated for the sale of animals to people seeking pets for recreational purposes, it must be determined whether the client's business purpose is 'connected with recreation, sport or tourism' for the purposes of the definition of 'fishing operations'.
Prior to 1995 the meaning of the phrase 'in connection with' was much discussed by the Courts, generally in the context of determining if an activity was undertaken 'in connection with' agriculture or mining, as then defined, for the purposes of the diesel fuel rebate scheme.
In several key cases the Federal Court accepted that the phrase 'in connection with' was wide and imprecise in meaning, and capable of describing a wide range of relationships. Most notably, in Collector of Customs v. Pressure Tankers Pty Ltd and Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280, the Court considered whether the unloading of stockfeed from trucks to silos was an operation connected with the rearing of livestock. In that case the Court gave direction on how the phrase should be considered. They said 'The question is whether they are connected to the extent contemplated by the Act'.
It is evident that the legislators were contemplating the distinction between commercial fishing operations and fishing for sport, recreational or tourism purposes in directing the rebate towards primary production activities. As such it is clear that fuel used for fishing charters and by recreational or sports fishermen will be excluded.
The activity of catching fish carried out for the business purposes of selling the species for profit is farther removed than the above examples in its connection with recreation and as such is not connected with recreation, sport or tourism to the extent contemplated by the EGCSA.
Therefore, the catching of fish is a business activity that is undertaken for the purpose of selling them for profit. The ultimate purchaser of the fish is not relevant as the fishing activity itself is a business activity. Although pet stores and aquariums may be considered recreational businesses, the 'fishing operations' are not undertaken as part of such a business.
Accordingly, the client is considered to be undertaking 'fishing operations' for business purposes not connected with recreation, sport or tourism.
Date of decision: 2 October 2003
Legislative References:
Energy Grants (Credits) Scheme Act 2003
subsection 34(1)
section 21
Case References:
Customs, Collector of v. Pozzolanic Enterprises Pty Ltd
(1993) 43 FCR 280
ATO ID 2003/1003
ATO ID 2003/1004
Keywords
EGCS fishing operations
EGCS fishing operations business
EGCS fishing operations for recreation, sport or tourism
EGCS off-road
Energy grants (credits) scheme
Excise
Excise payments
ISSN: 1445-2782
| Date: | Version: | |
| 2 October 2003 | Original statement | |
| You are here | 12 March 2010 | Archived |