ATO Interpretative Decision
ATO ID 2005/48 (Withdrawn)
Excise
Excise: removal of wasteFOI status: may be released
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This ATOID is withdrawn as it is superseded by FTR 2006/2 Fuel Tax : fuel tax credits for taxable fuel acquired or manufactured in or imported into Australia for use in carrying on an enterprise involving 'mining operations' as defined in section 11 of the Energy Grants(Credit) scheme Act 2003.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the loading, carting and stockpiling of overburden taken from a mine site on a mining lease to a construction site outside the borders of the mining lease (where it is to be used as fill material) constitute 'mining operations' under paragraph 164(7)(s) of the Customs Act 1901?
Decision
Yes. The loading, carting and stockpiling of overburden (fill material) taken from a mine site on a mining lease to a construction site outside the borders of the mining lease (where it is to be used as fill material) constitutes mining operations under paragraph 164(7)(s) of the Customs Act.
Facts
Overburden was removed by the operators of a mine site (the mining company) and stockpiled in an area near the mine site on the mining lease.
At the mine site, the mining company used a loader to loosen the material from the stockpile and load it onto trucks which carted the material away from the mine site to a construction site.
The construction site is not located on the mining lease where mining operations are carried on.
Reasons for Decision
Subsection 164(1) of the Customs Act provides that a rebate is available (subject to certain conditions) for diesel fuel purchased for use in a number of activities. One eligible activity, set out in paragraph 164(1)(a) of the Customs Act is use:
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The definition of 'mining operations' in subsection 164(7) of the Customs Act states in part:
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'mining operations' ... includes:
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Paragraph 164(7)(s) of the Customs Act effectively contains two tests that must be satisfied for an activity to constitute mining operations:
- 1.
- the overburden must be waste materials of a mining operation referred to in paragraph (a) or (b) of the definition of mining operations in subsection 164(7) of the Customs Act, and
- 2.
- the overburden must be removed from the place where the mining operation is carried on.
Each test will be considered in turn.
Is overburden waste material of a mining operation?
A waste product can be regarded as a material produced in a process and discarded as useless when that process is complete. It can be described as something that is an excess material, or is unproductive and superfluous. The concept of waste embraces all unwanted and economically unusable or rejected by-products and the fact that something may at some later time be reused does not necessarily preclude it from being waste.
However, a claimant must be able to prove that the waste products have been produced as a result of the relevant mining operation. The waste products must be a product of a mining operation referred to in paragraphs (a) or (b) of the definition of mining operations in subsection 164(7) of the Customs Act.
Paragraph (a) of the definition of mining operations in subsection 164(7) of the Customs Act states that mining operations include:
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In this instance, the overburden meets the concept of 'waste' product for the purposes of the diesel fuel rebate scheme because it resulted from an operation described in paragraph (a) of the definition of mining operations in subsection 164(7) of the Customs Act, that is, the 'removal of overburden'. As explained above, the overburden can still be classed as a waste product, notwithstanding that it may be put to some subsequent use (in this case as fill material at the construction site).
Is the waste removed from the place where the mining operation is carried on?
Removal in the context of paragraph (s) of the definition of mining operations in subsection 164(7) of the Customs Act means the taking away of, or the movement of, the waste product away from 'the place' where the relevant mining operation is carried on.
In this instance, the waste is being taken to a site outside the borders of the mining lease. Therefore there is no doubt that the waste is being removed from the place where the mining operation is carried on.
A further test
As previously mentioned, subsection 164(1) of the Customs Act provides for a rebate, subject to certain conditions, for use 'in mining operations (otherwise than for the purpose of propelling any vehicle on a public road)'. Therefore, even though the waste removal activities may constitute mining operations as defined in subsection 164(7) of the Customs Act, no rebate will be available to the extent to which diesel fuel is used in propelling a vehicle on a public road.
Conclusion
The loading, carting and stockpiling of overburden taken from a mine site to a construction site outside the borders of the mining lease (where it is to be used as fill material) constitutes the removal of waste products of a mining operation from a place where the mining operation is carried on for the purposes of paragraph (s) of the definition of mining operations in section 164(7) of the Customs Act. However, it should be noted that a diesel fuel rebate is not available to the extent to which diesel fuel is used to propel any vehicle on a public road.
Date of decision: 7 February 2005
Legislative References:
Customs Act 1901
subsection 164(1)
paragraph 164(1)(a)
subsection 164(7)
paragraph 164(7)(s)
Keywords
DFRS mining
Diesel fuel rebate scheme
Excise
Excise payments
ISSN: 1445-2782
| Date: | Version: | |
| 7 February 2005 | Original statement | |
| You are here | 23 October 2009 | Archived |