ATO Interpretative Decision
ATO ID 2003/1045 (Withdrawn)
Excise
Energy Grants (Credits) Scheme: agriculture - seed cleaning and application of seed treatmentFOI status: may be released
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This ATO ID is withdrawn as it has been superseded by Product Grants and Benefits Ruling PGBR 2005/3This document incorporates revisions made since original publication.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the cleaning of a farmer's seed and application of seed treatment by a person contracted by the farmer, 'cultivation ... of crops' for the purposes of section 22 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
Yes. The cleaning of a farmer's seed and application of seed treatment by a person contracted by the farmer is the 'cultivation ... of crops' for the purposes of section 22 of the EGCSA.
Facts
The client carries on a seed cleaning business.
As part of that business they transport a seed cleaner to farms.
On the agricultural property the seed cleaner is used to
- (a)
- clean the farmer's seed to remove weed seeds, non-viable grain seeds, dirt, and grain pests such as weevils and grain borers, and
- (b)
- add additional associated treatments to protect against reinfestation of grain pests, for the control of smut and bunts, and to provide trace elements as nutrients for the seeds, if required.
The cleaning and any associated seed treatment is carried out in a single process. The seeds are put into the seed cleaner and come out of the mixing chamber into the farmer's auger and into a truck or silo.
Seed cleaning starts soon after harvest and continues until seeding approximately six months later.
The farmer is conducting a farming business undertaken to obtain produce for sale.
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 certain defined activities, including primary production. The term primary production is defined as meaning a number of activities including agriculture. Agriculture is defined in subsection 22(1) of the EGCSA as meaning, subject to certain limitations set out in subsection (2), a number of activities including:
- (b)
- the cultivation or the gathering in of crops
Case law has not highlighted any particular trade meaning of 'cultivation', and therefore the term should be interpreted to take its ordinary, common meaning.
The term 'cultivate' is relevantly defined in the Australian Oxford Dictionary (Melbourne: Oxford University Press, 1999) as to 'raise or produce (crops)'. Therefore, in the context of the EGCSA, the expression 'cultivations of crops' means all activities necessary for the survival and nurturing of crops. It necessarily includes a number of activities undertaken over a period of time to arrive at the end product.
Although the cleaning and treating of seed, may occur sometime before the actual sowing of the seed occurs:
- (a)
- the cleaning of seed in order to remove weed seeds, non-viable grain seeds, dirt, and grain pests such as weevils and grain borers, and
- (b)
- the application of any associated treatments to protect against reinfestation of grain pests, for the control of smut and bunts, and to provide trace elements as nutrients for the seeds,
are a necessary part of ensuring the viability and health of the crop. Furthermore, the activities are carried out on seed owned by the farmer, on the agricultural property where the farmer carries on the cultivation of crops by an entity contracted to the farmer.
Therefore, the cleaning of a farmer's seed and application of seed treatment by a person contracted by the farmer, are considered to be part of the 'cultivation of crops' for the purposes of section 22 of the EGCSA.
Date of decision: 3 November 2003
Legislative References:
Energy Grants (Credits) Scheme Act 2003
subsection 22(1)
Other References:
Australian Oxford Dictionary (Melbourne: Oxford University Press, 1999)
Keywords
EGCS agriculture
EGCS cultivation or gathering in of crops
Energy grants (credits) scheme
ISSN: 1445-2782
| Date: | Version: | |
| 3 November 2003 | Original statement | |
| You are here | 2 September 2005 | Archived |