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ATO Interpretative Decision

ATO ID 2004/105 (Withdrawn)

Excise

Diesel Fuel Rebate Scheme: forestry - thinning and felling of trees under power lines
FOI status: may be released
  • This ATO ID is withdrawn from the database because it contains a view in respect of the diesel fuel rebate provisions of the Excise Act 1901 and or the Customs Act 1901 that were repealed with effect from 1 July 2003. Despite its withdrawal from the database, this ATO ID continues to be a precedential view in respect of decisions for fuel purchased before 1 July 2003.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 thinning and felling of trees under power lines carried out on behalf of a commercial power authority within the definition of 'primary production' under subsection 164(7) of the Customs Act 1901 for the purposes of the diesel fuel rebate scheme?

Decision

No. The thinning and felling of trees under power lines carried out on behalf of a commercial power authority is not within the definition of 'primary production' under subsection 164(7) of the Customs Act for the purposes of the diesel fuel rebate scheme.

Facts

The client is contracted by a commercial power authority to carry out the trimming and cutting of trees which are under a commercial power authority's power lines. This contract includes stump grinding, chipping and removal of tree debris and site clean up.

Reasons for Decision

Subsections 78A (1) of the Excise Act 1901 and 164(1) of the Customs Act provide that, subject to certain conditions, a rebate is payable to a person who purchases diesel fuel for use off-road 'in primary production'.

The expression 'primary production' is defined in section 164(7) of the Customs Act as follows:

Primary production means:

(a)
agriculture;
(b)
fishing operations; or
(c)
forestry.

In the context of the phrase 'in primary production', the preposition 'in' means 'in the course of' or 'in the process or act of'. Therefore, if an activity can be said to have taken place 'in the course of' primary production, whether that primary production is agriculture, fishing operations or forestry, it can be concluded that it takes place 'in' primary production.

A person who purchases off-road diesel fuel for use in an eligible primary production activity is entitled to an off-road rebate. This remains the case where an eligible forestry activity is carried out by a person in performance of a contract with a person or entity engaged in forestry as a primary production activity.

In this case, the relevant contract requires the contractor to 'carry out tree clearing, including stump grinding' in a specified distribution area of an electricity distribution corporation. The contract is expressed to be for the purpose of 'Maintenance of tree Clearances'. The work to be performed under the contract includes 'Trimming and cutting of trees clear of the overhead service line including the disposal of all debris'.

The commercial power authority is engaged in the distribution and sale of electricity. The authority is not engaged in a primary industry.

This view is supported by the explanatory memorandum to the Diesel Fuel Taxes Legislation Amendment Bill (No 1) 1982, which established the off-road scheme. It says that the legislation was designed to 'introduce . . . a new system providing rebates of duty paid on diesel fuel used for off-road purposes by persons engaged in the agriculture, mining and fishing industries'. The measures were intended to encourage the primary industries to which they applied.

In performing the contract on behalf of an electricity corporation, a contractor is performing an activity in the course of the distribution and sale of electricity, and is not engaged in primary production. Accordingly, the thinning and felling of trees under power lines when carried out on behalf of a commercial power authority is not within the definition of 'primary production' under subsection 164(7) of the Customs Act for the purposes of the diesel fuel rebate scheme.

Date of decision:  23 January 2004

Legislative References:
Customs Act 1901
   subsection 164(7)
   subsection 164(1)

Excise Act 1901
   subsection 78A(1)

Other References:
Explanatory memorandum to the Diesel Fuel Taxes Legislation Amendment Bill (No 1) 1982

Keywords
DFRS forestry
Diesel fuel rebate scheme
Excise payments

Business Line:  Excise

Date of publication:  6 February 2004

ISSN: 1445-2782

history
  Date: Version:
  23 January 2004 Original statement
You are here 8 January 2010 Archived

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