ATO Interpretative Decision
ATO ID 2004/827 (Withdrawn)
Excise
Energy Grants (Credits) Scheme: off - road credit - rail transport - refrigerated trailer transported as part of a trainFOI status: may be released
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This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.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.
Status of this decision: Decision Withdrawn 1 July 2012
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 use of diesel fuel to power a refrigerated trailer's generator, whilst the trailer is being transported as part of a train, 'use in rail transport' as defined in section 38 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
Yes. The use of diesel fuel to power a refrigerated trailer's generator, whilst the trailer is being transported as part of a train, is 'use in rail transport' as defined in section 38 of the EGCSA.
Facts
An entity purchases diesel fuel which is used by a refrigerated trailer.
The refrigerated trailer can be lifted onto a train bogie allowing it to travel as a rail wagon.
Whilst engaged in rail transport, the refrigerated trailer draws diesel fuel from its own independent fuel tank to power its generator in order to maintain the quality of the goods being transported.
The refrigerated trailer's generator must be kept running at all times to ensure that the temperature of the trailer and its contents remains constant.
Reasons for Decision
Subsection 53(1) of the EGCSA provides that an entity is, subject to certain conditions, entitled to an off-road credit if they purchase diesel fuel for a use by them that qualifies.
Section 53(3) of the EGCSA provides that use in rail transport (otherwise than for the purpose of propelling a road vehicle on a public road) in the course of carrying on an enterprise, is a use that qualifies.
Section 38 of the EGCSA sets out the meaning of the expression 'use in rail transport'. The most pertinent provision that needs to be considered is contained in subsection 38(5) of the EGCSA, which states that:
Use in equipment in or on a rail vehicle for air-conditioning, heating, lighting or for any purpose incidental to using the rail vehicle:
is use in rail transport.
In order for the refrigerated trailer's use of diesel fuel to be considered 'use in rail transport', the diesel fuel must be used in equipment in or on the rail vehicle, for any purpose incidental to using the rail vehicle in rail transport. Each test will be considered in turn.
Is the refrigerated trailer's use of diesel fuel, 'use in equipment in or on a rail vehicle'?
In Serco Australia Pty Ltd v. Commissioner of Taxation [2003] AATA 737, it was held that rail vehicles are vehicles which are controlled by the direct influence of the rails on the wheels and the bogies or wheelsets located under the vehicles. In this case the refrigerated trailer is lifted onto a train bogie allowing it to travel as a rail wagon.
The term 'rail vehicle' is defined in section 39 of the EGCSA as
a train, tram or any other vehicle operating on rails
In this instance, the refrigerated trailer is part of a train which in turn is a rail vehicle.
Whilst engaged in rail transport, the refrigerated trailer uses its own diesel fuel from a separate fuel tank to power its generator in order to maintain the quality of the goods being transported. Therefore the generator is 'equipment in or on a rail vehicle'.
Is the generator's use of diesel fuel 'for any purpose incidental to using the rail vehicle in rail transport'?
The phrase 'incidental to' is not defined in the EGCSA in relation to rail transport. The ordinary meaning of the term 'incidental' must therefore be considered.
The phrase 'incidental to' is defined in The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW as:
...liable to happen in connection with; naturally appertaining to.
In this case, the refrigerated trailer forms part of the train which is a rail vehicle. To enable the perishable goods to arrive at their destination in good condition, the refrigerated trailer uses diesel fuel in its generator. Therefore the use of diesel fuel in the generator is incidental to using the rail vehicle in rail transport.
Accordingly, the use of diesel fuel to power a refrigerated trailer's generator, whilst being transported as part of a train, is 'use in rail transport' as defined in section 38 of the EGCSA.
Date of decision: 7 October 2004
Legislative References:
Energy Grants (Credits) Scheme Act 2003
section 38
section 39
subsection 38(5)
subsection 53(1)
subsection 53(3)
Case References:
Serco Australia Pty Ltd v. Commissioner of Taxation
[2003] AATA 737
(2003) 76 ALD 223
Other References:
The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW
Keywords
EGCS rail transport
EGCS rail transport incidental use
ISSN: 1445-2782
| Date: | Version: | |
| 7 October 2004 | Original statement | |
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