ATO Interpretative Decision
ATO ID 2004/830 (Withdrawn)
Excise
Energy Grants (Credits) Scheme: rail transport - incidental use - reefer hooked up to electrical power from a trainFOI status: may be released
-
This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.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Status of this decision: Decision Withdrawn 1 July 2012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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 in a train's generator to power a reefer's refrigeration plant while the reefer is being transported by the 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 in a train's generator to power a reefer's refrigeration plant while the reefer is being transported by the train is 'use in rail transport' as defined in section 38 of the EGCSA.
Facts
An entity is engaged in rail transport.
A reefer is placed on the entity's train (a rail vehicle) and transported between two places.
A reefer is a refrigerated container that ordinarily uses diesel fuel from its own tank to power the reefer's refrigeration plant. The reefer's refrigeration plant must be kept running at all times to ensure that the contents of the reefer are kept at the required temperature. In this case, whilst on the train the reefer is hooked up to electrical power from a large generator that forms part of the train.
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.
Subsection 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', and it includes various uses. The most relevant is set out 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:
- (a)
- in rail transport; or
- (b)
- for any of the purposes mentioned in paragraphs (3)(a) to (f); or
- (c)
- as mentioned in subsection (4);
- is use in rail transport.
In order for the diesel fuel consumed in the train's generator while it is powering the reefer's refrigeration plant to be accepted as being for 'use in rail transport', its use of diesel fuel must be use 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 diesel fuel consumed by the train's generator in powering the reefer, for 'use in equipment in or on a rail vehicle'?
In this instance, the reefer is transported on the entity's train. Whilst on the train the reefer sources its power from the train's generator.
The train's generator is clearly equipment 'on' a rail vehicle (or part of the rail vehicle itself), and therefore this requirement is satisfied.
Is the use of diesel fuel in the train '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 must then 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 reefer's refrigeration plant must be kept running at all times to ensure that the contents of the reefer are kept at the required temperature. The use of diesel fuel in the train's generator to power the reefer's refrigeration plant, while the reefer is being transported by the train, is clearly a use of diesel fuel that is both liable to happen in connection with, and naturally appertaining to the transport of a reefer by a train engaged in rail transport.
Therefore, the diesel fuel used by the train's generator to power the reefer's refrigeration plant is use in equipment on a rail vehicle, for a purpose incidental to using the rail vehicle in rail transport.
Accordingly, the use of diesel fuel in a train's generator to power a reefer's refrigeration plant while the reefer is being transported by the 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 38(5)
subsection 53(1)
subsection 53(3)
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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