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ATO Interpretative Decision

ATO ID 2005/229 (Withdrawn)

Excise

Energy Grants (Credits) Scheme: off-road - agricultural waste activity - chipping waste for use in potting mix
FOI status: may be released
  • This ATO ID has been amended by updating the reference to Product Grants and Benefit Ruling PGBR 2005/3, and deleting reference to paragraph 22(a) and subsection 53(2) of the Energy Grants Act.
    This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.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.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the chipping of vegetative waste on an agricultural property, prior to its removal from the agricultural property, constitute 'the removal of waste products' within the meaning of paragraph 26(a) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

No. The chipping of vegetative waste on an agricultural property, prior to its removal from the agricultural property, does not constitute 'the removal of waste products' within the meaning of paragraph 26(a) of the EGCSA.

Facts

An entity carries on a business of producing commercial products from waste vegetation. Its activities involve the recovery, chipping and bioconversion of the vegetation and the formulation of the processed material into growing media and allied products for the horticulture industry and other industries.

The entity obtains its raw material, such as pruned vine leaves and stems, trees or weeds, from a variety of sources including agricultural properties. The entity chips the waste vegetation either at the properties from which it is sourced, or at its own premises.

When chipping waste on agricultural properties, the entity uses a portable chipping plant. The waste is then transported to the entity's premises.

Reasons for Decision

Under sections 53 of the EGCSA, an entity is entitled to an off-road credit if it purchases off-road diesel fuel for certain qualifying uses, including primary production. Primary production is defined in section 21 of the EGCSA as meaning a number of activities including 'agriculture'.

'Agriculture' is defined in section 22 of the EGCSA to mean a number of activities including an 'agricultural waste activity'. The term 'agricultural waste activity' is in turn defined in section 26 of the EGCSA as follows:

The expression agricultural waste activity means:

(a)
the removal of waste products of an agricultural activity from the agricultural property where the activity is carried on; or
(b)
the disposal of waste products of an agricultural activity on the agricultural property where the activity is carried on.

To qualify as an agricultural waste activity under paragraph 26(a) of the EGCSA, the activity must constitute the removal of waste products of an agricultural activity from the agricultural property.

In this instance, the entity's chipping activities are more properly regarded as a step in the manufacture of various products. This is evidenced by the fact that all waste is chipped, even if it arrives at the entity's premises prior to being chipped. Therefore, the chipping is not regarded as being an integral part of the removal of waste products from agricultural properties. Accordingly the requirements of paragraph 26(a) of the EGCSA are not satisfied.

Date of decision:  22 July 2005

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   section 21
   section 22
   section 26
   section 53

Related Public Rulings (including Determinations)
Product Grant and Benefit Ruling PGBR 2005/3

Related ATO Interpretative Decisions
ATO ID 2004/86

Keywords
EGCS off-road
EGCS agriculture
EGCS agricultural waste activity
EGCS removal of waste products

Business Line:  Indirect Tax

Date of publication:  5 August 2005

ISSN: 1445-2782

history
  Date: Version:
  22 July 2005 Original statement
You are here 1 July 2012 Archived

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