ATO Interpretative Decision
ATO ID 2003/816 (Withdrawn)
Excise
Energy Grants (Credits) Scheme: Off-road entitlements - agriculture - production of mushroom substrate for use in mushroom growingFOI 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This ATO ID is withdrawn as it has been superseded by Product Grants and Benefits Ruling PGBR 2005/3This document incorporates revisions made since original publication.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 production of mushroom substrate, by a commercial mushroom grower, wholly for their own use, 'horticulture' as defined in section 33 of the Energy Grants (Credits) Scheme Act 2003?
Decision
Yes. The production of mushroom substrate, by a commercial mushroom grower, wholly for their own use, is 'horticulture' as defined in section 33 of the EGCSA.
Facts
The client is a commercial mushroom grower who produces mushroom substrate and then uses the substrate as a growth medium for mushrooms in their business. The client uses all the mushroom substrate they produce in their own mushroom growing business. None of the substrate is made available for sale.
Reasons for Decision
Section 33 of the EGCSA defines 'horticulture' as including:
- (a)
- the cultivation or gathering in of fruit, vegetables, herbs, edible fungi, nuts, flowers, trees, shrubs or plants; or
- (b)
- the propagation of trees, shrubs or plants; or
- (c)
- the production of seeds, bulbs, corms, tubers or rhizomes
As horticulture is defined inclusively in the legislation, an activity can be considered 'horticulture' if it falls within any of the activities specified in the definition of horticulture or the common meaning of the term.
The cultivation, propagation or production of fruit, trees, seeds etc. involve a number of activities undertaken over a period of time to arrive at the end product. It is evident from the Federal Court case Australian Native Landscapes Pty Ltd v. Collector of Customs 24 AAR 353; (1997) 44 ALD 531; (Australian Native Landscapes' Case) that certain activities undertaken separately are not horticulture, but when they are undertaken as part of an overall process to cultivate, propagate or produce fruit, trees, seed etc by the person who ultimately grows the final product, they are horticulture.
In Australian Native Landscapes' Case, the Federal Court considered whether the commercial manufacture of potting mix was 'horticulture' 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 'horticulture' in subsection 164(7). That definition was the same as the definition contained in section 33 of the EGCSA and the findings from that decision remain relevant.
The Federal Court held that the manufacture of potting mix for commercial sale was not 'horticulture' and confirmed the distinction made by the Administrative Appeals Tribunal (AAT) between commercial production of potting mix for sale (which is not horticulture) and the production of potting mix by a grower for his or her own purposes (which is horticulture).
Later, in Elf Farm Supplies Pty Ltd v. Chief Executive Officer of Customs [1998] AATA 929, the AAT applied the distinction made in Australian Native Landscapes' Case, to determine that the commercial production of mushroom substrate that is sold to a mushroom farmer was not 'horticulture'.
In this case the mushroom substrate is produced by a commercial mushroom grower for use by him in growing mushrooms. It is not sold to a mushroom grower. Therefore, the production of the substrate is an activity that is part of the process of cultivating the mushrooms.
Accordingly, the production of mushroom substrate by a commercial mushroom grower that he or she uses for the purpose of cultivating mushrooms is 'horticulture'.
Date of decision: 29 August 2003
Legislative References:
Energy Grants (Credits) Scheme Act 2003
section 33
subsection 164(7) Excise Act 1901
Table of Content
Case References:
Australian Native Landscapes Pty Ltd v. Collector of Customs
24 AAR 353
(1997) 44 ALD 531
[1998] AATA 929 Related ATO Interpretative Decisions
ATO ID 2003/817
Keywords
EGCS agriculture
EGCS core agricultural activity
EGCS horticulture
EGCS off-road
EGCS primary production
ISSN: 1445-2782
| Date: | Version: | |
| 29 August 2003 | Original statement | |
| You are here | 2 September 2005 | Archived |