ATO Interpretative Decision
ATO ID 2005/55 (Withdrawn)
Excise
Energy Grants (Credits) Scheme: mining - extraction of shaleFOI status: may be released
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This ATO ID is withdrawn from the database as it is potentially misleading. It relies on a fact that is not always correct.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is the quarrying of shale for use in brick-making excluded from being a 'mining operation' by paragraph 11(2)(a) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
No. The quarrying of shale for use in brick-making is not excluded from being a 'mining operation' by paragraph 11(2)(a) of the EGCSA.
Facts
An entity is contracted by a manufacturer of bricks to quarry shale from an open cut pit situated on a mining lease.
The entity uses diesel powered excavators to extract the shale.
The shale is tested to ensure that its mineral content meets the required standard and that there are minimal corrosive elements in the deposit. If the material does not meet the required standards it is not extracted.
Shale is a mineral for the purposes of the EGCSA.
Reasons for Decision
The term 'mining operations' is relevantly defined in paragraph 11(1)(b) of the EGCSA as operations for the recovery of minerals being the mining of those minerals.
However, subsection 11(2) of the EGCSA excludes from the definition of 'mining operations':
...
...
Therefore, the term 'mining operations' excludes quarrying or dredging operations, if the purpose of the operations is to obtain materials that will be used in building, roadmaking, landscaping, construction or for similar purposes.
A note at the end of subsection 11(2) of the EGCSA provides a number of examples of quarrying or dredging operations that are excluded from being mining operations by paragraph 11(2)(a) of the EGCSA. The examples are operations for obtaining materials for use as concrete aggregate, road base materials, railway ballast, fill materials, building stone or monumental stone.
In this instance, the shale is being quarried with a view to being used in manufacturing bricks. Although the bricks may ultimately be used in construction (or landscaping or building), the manufacture of the bricks is one step removed. Therefore, the shale is more properly regarded as being an input to manufacture. It is also not being quarried to obtain material for use in a similar purpose to building, roadmaking, landscaping or construction as these are not manufacturing operations.
Therefore the quarrying of shale for use in brick-making is not excluded from the definition of 'mining operations' by paragraph 11(2)(a) of the EGCSA.
Date of decision: 11 February 2005
Legislative References:
Energy Grants (Credits) Scheme Act 2003
subsection 11(1)
paragraph 11(1)(b)
subsection 11(2)
paragraph 11(2)(a)
Keywords
EGCS minerals
EGCS mining operation
EGCS off-road
EGCS recovery of minerals
Energy grants (credits) scheme
ISSN: 1445-2782
| Date: | Version: | |
| 11 February 2005 | Original statement | |
| You are here | 25 July 2008 | Archived |