ATO Interpretative Decision
ATO ID 2003/814 (Withdrawn)
Excise
Energy Grants (Credits) Scheme: Off-road entitlements - forestry - wood chipping of environmentally destructive trees in a forestFOI status: may be released
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This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.
Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of the period the Act was in force, 1 July 2003 up to and including 30 June 2012.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the processing of trees that are regarded as weeds, into woodchip in the forest where the trees are felled 'forestry' as defined in section 35 of the Energy Grants (Credits) Scheme Act 2003?
Decision
Yes. The processing of trees that are regarded as weeds into woodchip in the forest where the trees are felled is 'forestry' as defined in section 35 of the EGCSA.
Facts
Various government departments and agencies are attempting to commercialise the removal of large trees that are regarded as pests.
The trees have formed a natural large forest.
The trees are being harvested in a trial designed to test their potential commercial value. In the first phase of the trial, a forestry organisation has been managing the harvesting, chipping and transport of the trees from a number of properties. During the trial, suitable logs will be processed into sawn timber or veneer in local timber mills. Chips will be used for generating electricity.
The client is contracted by the forestry organisation to undertake mobile chipping of logs and tree heads (fuel logs). The client does not fell the trees. Under the contract, a portion of the forests is made available to the client for infield (mobile) chipping operations. The client has access to fuel logs stockpiled after harvesting operations. The client is only allowed to chip fuel logs within such parts of the harvest area notified by the forestry organisation.
The client uses a rotary action chipping machine to chip the trees and feed the chipped product directly into containers for transport.
Reasons for Decision
Section 35 of the EGCSA defines 'forestry' as:
- (a)
- the planting or tending, in a forest or plantation, of trees intended for felling; or
- (b)
- the thinning or felling, in a forest or plantation, of standing timber.
- and includes
- (c)
- the transporting, milling or processing, in a forest or plantation, of timber felled in the forest or plantation; ...
To fall within paragraph (c) of the definition of forestry:
1. the timber must have been felled in a 'forest or plantation'; and,
2. the transporting, milling or processing of that timber must occur in the 'forest or plantation' where it was felled.
Given:
- (a)
- the extensive size of the area of land covered
- (b)
- the density of trees within that area
- (c)
- the size of the trees
- (d)
- the timber is being harvested as part of a trial to determine the commercial value of the timber; and
- (e)
- the State forestry service refers to the land in the area as a forest
it is accepted that this area of land is a forest, and that the timber is being felled in a forest.
In T J Depiazzi & Sons v. Collector of Customs (1993) 17 AAR 557 the Administrative Appeals Tribunal (AAT) considered the meaning of 'milling' and 'a mill' under the Diesel Fuel Rebate Scheme, which was the precursor to the Energy Grants (Credits) Scheme, and was administered under the Excise Act 1901 and the Customs Act 1901. The Customs Act contained a definition of 'forestry' in subsection 164(7). That definition is the same as the definition in section 35 of the EGCSA.
The AAT accepted that milling is the process of subjecting something to the operation of a mill and that a mill is a machine which does its work by rotary motion. Accordingly, the activity of the client constitutes milling.
As the client is milling, in a forest, timber which has been felled in the forest the client's activity meets the definition of 'forestry' under paragraph (c) of the definition.
Date of decision: 29 August 2003
Legislative References:
Energy Grants (Credits) Scheme Act 2003
section 35
subsection 164(7) Excise Act 1901
Table of Content
Case References:
T J Depiazzi and Sons v. Collector of Customs
(1993) 17 AAR 557
Keywords
Energy Grants (Credits) Scheme
EGCS forest
EGCS forestry
EGCS milling
EGCS off-road
EGCS processing
ISSN: 1445-2782
| Date: | Version: | |
| 29 August 2003 | Original statement | |
| You are here | 1 July 2012 | Archived |