ATO Interpretative Decision
ATO ID 2004/628 (Withdrawn)
Excise
Energy Grants Credits Scheme: off-road credit - generation of electricity - retail/hospitality - ready access - emergency backup generatorsFOI status: may be released
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This ATO ID should be withdrawn as the fuel tax credits scheme has replaced the energy grants credit scheme for eligible fuel acquired from 1 July 2006 for the purpose of electricity generation.
This decision is applicable to eligible fuel purchased between 1 July 2003 and 30 June 2006 for the purposes of the Energy Grants (Credits Scheme) Act 2003. Entitlement to a credit for eligible fuel acquired from 1 July 2006 for use in generating electricity is dealt with under the Fuel Tax Act 2006 and Fuel Tax (Consequential and Transitional Provisions) Act 2006.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Does an entity that conducts a retail/hospitality enterprise have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) if it is connected to a commercial supply of electricity but there is a temporary disruption to that power supply?
Decision
Yes. An entity that conducts a retail/hospitality enterprise does have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the EGCSA if it is connected to a commercial supply of electricity but there is a temporary disruption to that power supply.
Facts
An entity operates an enterprise that has, as its principal purpose, the retail sale of goods or services.
At the place where the enterprise is carried on, they are connected to a commercial supply of electricity.
There is a temporary disruption to the commercial supply of electricity, during which diesel fuel is used in a backup generator at the place where the retail/hospitality enterprise is carried on.
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.
Paragraph 53(4)(a) of the EGCSA provides that the following is a use that qualifies:
use at particular premises to generate electricity for use in the course of carrying on, at those premises, an enterprise that:
The requirements of subparagraph 53(4)(a)(i) of the EGCSA have been met. What must then be considered is whether the entity has 'ready access' to a commercial supply of electricity, even though there is a temporary disruption to that supply.
The phrase 'ready access' is not defined in the legislation, but the Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002 (the Explanatory Memorandum) says a business would be regarded as having 'ready access' if:
A commercial supply of electricity was present or convenient to the business and immediately available for connection.
The Diesel Fuel Rebate Scheme was the precursor to the Energy Grants (Credits) Scheme, and was administered under the Customs Act 1901 and the Excise Act 1901. The Customs Act and the Excise Act both contained similar provisions to that contained in paragraph 53(4)(a) of the EGCSA. Consequently, the Explanatory Memorandum remains relevant.
The Explanatory Memorandum also states:
The amendment does not extend to businesses ... who operate an emergency backup generator.
In this case, the electricity supply is 'present' to the business, in term of the business already being connected to it. The entity is only using the back up generator due to a temporary disruption to the power supply. The Explanatory Memorandum specifically states that entitlement does not extend to businesses in these circumstances.
In other words, an entity has ready access to a commercial power supply even when temporary disruptions to that supply require a back-up generator to be used.
Date of decision: 13 May 2004
Legislative References:
Energy Grants (Credits) Scheme Act 2003
subsection 53(1)
subsection 53(4)
subparagraph 53(4)(a)(i)
subparagraph 53(4)(a)(ii)
ATO ID 2004/421
ATO ID 2004/422
Other References:
Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002
Keywords
EGCS off-road
EGCS use to generate electricity
EGCS use to generate electricity at a retail/hospitality enterprise
EGCS use to generate electricity for ready access
ISSN: 1445-2782
| Date: | Version: | |
| 13 May 2004 | Original statement | |
| You are here | 26 March 2010 | Archived |