ATO Interpretative Decision

ATO ID 2004/640 (Withdrawn)

Excise

• This ATO ID should be withdrawn as the fuel tax credits scheme has replaced the energy grants credit scheme for eligible fuel acquired from 1 July 2006 for the purpose of electricity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.

Issue

Does an entity which carries on a media production and broadcasting enterprise have the retail sale of goods or services or the provision of hospitality as its principal purpose at the place where the mobile broadcast vans are used, as required by subparagraph 53(4)(a)(i) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

No. An entity which carries on a media production and broadcasting enterprise does not have the retail sale of goods or services or the provision of hospitality as its principal purpose at the place where the mobile broadcast vans are used, as required by subparagraph 53(4)(a)(i) of the EGCSA.

Facts

An entity runs an enterprise involved in media production, broadcasting and sundry other activities.

As part of that enterprise, the entity uses mobile media broadcast vans. From these vans the entity carries out media production and/or media broadcast activities.

In some places the vans do not have ready access to a commercial supply of electricity. In these instances, a mobile diesel powered generator is used to generate electricity for air conditioning and lighting for the vans.

Reasons for Decision

Subsection 53(1) of the EGCSA states that 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:

(i)

has, as its principal purpose, the retail sale of goods or services (other than electricity) or the provision of hospitality; and

(ii)

and does not have, at those premises, ready access to a commercial supply of electricity;...

In this instance what must be considered is whether the electricity is for use in the course of carrying on, at those premises, an enterprise that has as its principal purpose the retail sale of goods or services or the provision of hospitality.

Accordingly, although the entity may carry on a range of activities as part of its media enterprise, we need to consider the nature of the activities carried on at the place where the diesel fuel is used to generate electricity, that is, the place where the media broadcast vans are placed, and determine if the principal purpose of those activities is the retail sale of goods or services or the provision of hospitality.

In the Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW,

'Retail' is defined as:

1. the sale of commodities to household or ultimate consumers, usually in small quantities (opposed to wholesale)...

'Hospitality' is defined as:

the reception and entertainment of guests or strangers with liberality or kindness.

At the place where the broadcast vans are positioned, the entity is engaged in the activities of media production and or media broadcasting. These activities clearly do not involve the retail sale of either goods or services. Neither do they constitute hospitality as defined above.

Therefore, the entity cannot be considered to be carrying on, at the place where the electricity is generated, an enterprise that has as its principal purpose the retail sale of goods or services or the provision of hospitality for the purposes of subparagraph 53(4)(a)(i) of the EGCSA.

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   subsection 53(1)
   paragraph 53(4)(a)
   subparagraph 53(4)(a)(i)

Related ATO Interpretative Decisions
ATO ID 2004/421
ATO ID 2004/422
ATO ID 2004/423

Other References:
The Macquarie Dictionary 2001, rev. 3rd edn, The Macquarie University Pty Ltd, NSW

Keywords
EGCS off-road
EGCS use of eligible fuel at certain premises
EGCS use to generate electricity
EGCS use to generate electricity at a retail/hospitality enterprise

Business Line:  Excise

Date of publication:  30 July 2004

ISSN: 1445-2782