ATO Interpretative Decision

ATO ID 2004/558 (Withdrawn)

Excise

• This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.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 a vessel engaged in bed levelling a 'dredge' for the purposes of subsection 36(7) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

No. A vessel engaged in bed levelling is not a 'dredge' for the purposes of subsection 36(7) of the EGCSA.

Facts

An entity uses a vessel for bed levelling activities. 'Bed levelling' involves the vessel dragging a 'bed levelling bar' across the seabed to move sediment from shallow areas into deeper areas by levelling off the seabed.

The 'bed levelling bar' is similar in appearance to a grader blade and hangs on two beams behind the vessel, using adjustable wires from the shoulder. To start the 'bed levelling', the blade is lowered to the sea bed using winches and the height is adjusted to allow for the rise and fall of the tide.

Reasons for Decision

Subsection 53(1) of the EGCSA states that subject to certain prescribed conditions, a person is entitled to an off-road credit if they purchase diesel fuel for a use by them that qualifies.

Under subsection 53(3) of the EGCSA 'use in marine transport' is a use that qualifies. The phrase 'use in marine transport' is defined in section 36 of the EGCSA. However, the meaning of the term 'use in marine transport' is restricted by subsection 36(7) of the EGCSA which states:

The expression use in marine transport does not include any use in a dredge or equipment in or on a dredge.

Consequently, if a vessel engaged in bed levelling activities is considered to be a dredge, diesel fuel used in the vessel, or in equipment in or on the vessel would not be for 'use in marine transport'.

The term dredge is not defined in the legislation. The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd NSW, defines 'dredge' as:

1.

a dragnet or other contrivance for gathering material or objects from the bed of a river etc.

2.

any of various powerful machines for dredging up or removing earth, etc., as from the bottom of a river, by means of a scoop, a series of buckets, a suction pipe, or the like.

The phrase '... dredge or equipment in or on a dredge' in subsection 36(7) of the EGCSA indicates that the legislation is referring to those vessels that can be regarded as a dredge, and not just the equipment in and on such vessels.

An examination of industry information shows that the industry use the terms 'dredge' and 'dredger' interchangeably, and that both are used to describe those vessels involved in dredging activities on waterways (see: Cresswell, J 'Waterway', Work Boat World, 2002, Hong Kong, vol. 21, no. 9, p.16; 'Brisbane wins Australian dredging contracts', Asia Pacific Shipping, 2002, Hong Kong, vol. 3, no. 2, p.33; 'IHC Holland announces new orders worth 75 million', Asia Pacific Shipping, 2002, Hong Kong, vol. 3, no. 2, p.33; 'Mackay moves ahead', Asia Pacific Shipping, 2002, Hong Kong, vol.3, no. 1 p.20; 'Port upgrade at Esperance', Asia Pacific Shipping, 2003, Hong Kong, vol. 3, no. 7, p32).

This accords with the ordinary meaning of the term 'dredger', which is defined in The Macquarie Dictionary, 2001 as 'a barge, boat etc. equipped for dredging' where 'dredging' means:

3.

to clear out with a dredge; remove sand, silt, mud etc., from the bottom of.

4.

to take, catch, or gather with a dredge; obtain or remove by a dredge.

5.

to use a dredge.

Consequently, a vessel will be a 'dredge' for the purposes of subsection 36(7) of the EGCSA if it is equipped or fitted out with specialised machinery or apparatus used to extract and remove sand, silt, mud etc from the sea or river bed.

In this instance the vessel is not equipped or fitted out with specialised machinery and/or apparatus to extract and remove sand, silt, mud etc from the sea bed. Rather the vessel simply drags a 'bed levelling bar' across the seabed to move sediment from shallow areas into deeper areas by levelling off the seabed.

Consequently, a vessel engaged in bed levelling is not a 'dredge' for the purposes of subsection 36(7) of the EGCSA.

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   subsection 53(1)
   subsection 53(3)
   section 36
   subsection 36(7)

Other References:
The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd NSW
Cresswell, J 'Waterway', Work Boat World, 2002, Hong Kong, vol. 21, no. 9, p.16 'Brisbane wins Australian dredging contracts', Asia Pacific Shipping, 2002, Hong Kong, vol. 3, no. 2, p.33
'IHC Holland announces new orders worth 75 million', Asia Pacific Shipping, 2002, Hong Kong, vol. 3, no. 2, p.33
'Mackay moves ahead', Asia Pacific Shipping, 2002, Hong Kong, vol.3, no. 1 p.20 'Port upgrade at Esperance', Asia Pacific Shipping, 2003, Hong Kong, vol. 3, no. 7, p. 32

Keywords
EGCS dredge
EGCS in a vessel
EGCS marine transport
EGCS off-road
Energy grants (credits) scheme

Business Line:  Indirect Tax

Date of publication:  9 July 2004

ISSN: 1445-2782