ATO Interpretative Decision

ATO ID 2004/452 (Withdrawn)

Excise

• This ATO was amended to include legal references to section 42, paragraphs 42(2)(a), 42(2)(b) and 42(2)(c) and subsection 56(1) to the Energy Grants (Credits) Scheme Act.
  This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.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.

Issue

Is an entity entitled to an on-road credit under paragraph 42(2)(c) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) for on-road diesel fuel purchased for use in a vehicle, which is not a vehicle for transporting passengers or goods, while that vehicle is stationary and carrying out its special purpose work?

Decision

No. An entity is not entitled to an on-road credit under paragraph 42(2)(c) of the EGCSA for on-road diesel fuel purchased for use in a vehicle, which is not a vehicle for transporting passengers or goods, while that vehicle is stationary and carrying out its special purpose work.

Facts

As part of their enterprise, an entity operates a vehicle (a special purpose vehicle) with a gross vehicle mass (GVM) of 20 tonnes or more. The special purpose vehicle is not a vehicle for transporting passengers or goods.

The special purpose vehicle has arrived at the place where it is to be operated.

The vehicle carries out its special purpose work while it is stationary.

Reasons for Decision

Subsection 56(1) of the EGCSA provides that if you are entitled to an on-road credit or an off-road credit, you are entitled to an energy grant.

Section 42 of the EGCSA deals with entitlement to an on-road credit for vehicles with a GVM of 20 tonnes or more.

Subsection 42(1) of the EGCSA provides that a claimant is entitled to an on-road credit if they purchase diesel or alternative fuel for:

(a)

use in a registered vehicle that has a gross vehicle mass of 20 tonnes or more; or

(b)

incidental use in relation to such a vehicle.

However, the extent of the entitlement is limited by subsection 42(2) of the EGCSA which, in part, separates entitlement based on whether or not the vehicle is a vehicle for transporting passengers or goods.

Paragraph 42(2)(a) of the EGCSA details the circumstances under which a vehicle for transporting passengers or goods will be eligible for an on-road credit. As this vehicle is not a vehicle for transporting passengers or goods, the entity has no entitlement under this paragraph.

Paragraph 42(2)(b) of the EGCSA details the circumstances under which a vehicle that is not a vehicle for transporting passengers or goods will be eligible for an on-road credit. A vehicle of this nature is only eligible for an on-road credit under paragraph 42(2)(b) to the extent that it is operated on a road in Australia for the purpose of moving it to a place where it is to operate (whether or not on a road); or from a place where it has operated (whether or not on a road).

As paragraph 42(2)(b) of the EGCSA restricts entitlement to the movement of the vehicle to and from its place of operation, the entity will have no entitlement under this paragraph while it is stationary and performing its special purpose work.

Regardless of whether the vehicle is a vehicle for transporting passengers or goods, paragraph 42(2)(c) of the EGCSA provides that entitlement to an on-road credit extends to incidental use, or any other use, of the vehicle that is integral to operating the vehicle as mentioned in paragraphs 42(2)(a) or 42(2)(b) of the EGCSA.

Therefore the entity may still be entitled to an on-road credit under section 42(2)(c) of the EGCSA if the use of the vehicle while it is stationary and carrying out its special purpose work is an incidental use of the vehicle; or any other use of the vehicle that is integral to operating the vehicle as mentioned in paragraph 42(2)(a) or 42(2)(b) of the EGCSA.

Regardless of whether the use of the vehicle while it is performing its special purpose work is an incidental use of the vehicle or any other use of the vehicle, eligibility for an on-road credit under paragraph 42(2)(c) of the EGCSA depends on that use being integral to operating the vehicle as mentioned in paragraphs 42(2)(a) or 42(2)(b) of the EGCSA. Paragraph 42(2)(a) of the EGCSA is not relevant, as the vehicle is not a vehicle for transporting passengers or goods.

Therefore, the use of the vehicle while it is stationary and carrying out its special purpose work will only be eligible for an on-road credit under paragraph 42(2)(c) of the EGCSA if it is integral to operating the special purpose vehicle on a road in Australia for the purpose of moving it to a place where it is to operate (whether or not on a road) or from a place where it has operated (whether or not on a road).

'Integral' is not defined in the legislation and therefore takes on its common meaning. It is defined in The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW as:

1.

of or relating to a whole; belonging as a part of the whole; constituent or component: the integral parts of the human body

2.

necessary to the completeness of the whole

3.

made up of parts which together constitute a whole

While stationary, the vehicle is performing its special function. The function does not have the necessary connection to the movement of the vehicle to the place where it is to operate or from the place where it has operated. Therefore, the use of the vehicle does not satisfy the requirements of paragraph 42(2)(c) of the EGCSA.

This position is supported by the Explanatory Memorandum to the Energy Grants (Credits) Scheme Bill 2003 which states:

2.8 The stationary use provisions in DAFGS were developed to counter the situation where vehicles over 20 tonnes could arrive at a location, remain on a public road and commence operations unrelated to the movement or transport operations of the vehicle (e.g. stationary construction activities such as in operating a crane) which would otherwise all qualify for the grant. In order to ensure these activities do not qualify for a credit, a requirement has been introduced that vehicles of 20 tonnes or more must be for transporting goods or passengers in order to be eligible for an on-road credit for all of their operations. If a vehicle is not for transporting goods or passengers (e.g. special purpose vehicles such as mobile cranes), it will only be eligible for the movement to or from the place where it is to be, or has been used. [Clause 42]

That is, the Explanatory Memorandum shows a clear intent not to allow an on-road credit for the non-transport operations of a vehicle that is not a vehicle for transporting passengers or goods.

Consequently, an entity is not entitled to an on-road credit under paragraph 42(2)(c) of the EGCSA for on-road diesel fuel purchased for use in a vehicle, which is not a vehicle for transporting passengers or goods, while that vehicle is stationary and carrying out its special purpose work

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   subsection 42
   subsection 42(1)
   subsection 42(2)
   paragraph 42(2)(a)
   paragraph 42(2)(b)
   paragraph 42(2)(c)
   subsection 56(1)

Related ATO Interpretative Decisions
ATO ID 2004/18
ATO ID 2004/216

Other References:
Explanatory Memorandum to the Energy Grants (Credits) Scheme Bill 2003
The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW

Keywords
EGCS gross vehicle mass
EGCS incidental use
EGCS on-road
Energy grants (credits) scheme

Business Line:  Indirect Tax

Date of publication:  4 June 2004

ISSN: 1445-2782