ATO Interpretative Decision
ATO ID 2007/81 (Withdrawn)
Excise
Cleaner Fuels Grants: reductions resulting from refunds of dutyFOI status: may be released
-
This ATO ID is withdrawn from 31 December 2008, the end date for a cleaner fuel grant for ultra low sulphur diesel (ULSD) as set out in regulation 5 of the Energy Grants (Cleaner Fuels) Scheme Regulations 2004.
Despite its withdrawal, the ATO ID continues to be a precedential ATO view in respect of claims for a cleaner fuel grant in relation to ULSD during the period the 1 January 2007 up to and including 31 December 2008 being the period in which ULSD was a cleaner fuel for the purposes of the Energy Grants (Cleaner Fuels) Scheme Act 2004.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Where a refund of duty has been paid for a quantity of cleaner fuel, by how much is the cleaner fuel grant reduced in accordance with subsection 8(2) of the Energy Grants (Cleaner Fuels) Scheme 2004 (EGCFSA)?
Decision
Where a refund of duty has been paid for a quantity of cleaner fuel, the cleaner fuel grant is reduced by the amount of cleaner fuel grant attributable to the quantity of cleaner fuel subject to the refund.
Facts
An entity manufactured a quantity of a cleaner fuel. The entity claimed a cleaner fuel grant for the fuel.
The cleaner fuel grant was paid at the rate of 1 cent per litre.
The entity paid excise duty on the fuel at a rate of 38.143c per litre.
The entity subsequently received a refund of duty of 38.143c per litre for a portion of the fuel.
Reasons for Decision
Subsection 8(2) of the EGCFSA provides that where a drawback, refund, rebate or remission is payable in respect of the cleaner fuel that gave rise to an entitlement to a grant, the amount of the grant 'is reduced by the amount of the drawback, refund, rebate or remission'.
The issue is the amount that the grant is reduced by.
The Macquarie Dictionary 2001 rev. 3rd edn, The Macquarie Library Pty Ltd, NSW defines 'reduce' to mean:
1. to bring down to a smaller extent, size, amount, number, etc.
While the word 'reduce' by definition means to bring down to a 'smaller extent, size, amount, number etc.', the phrase, 'by the amount of the' in subsection 8(2) of the EGCFSA suggests that the amount of the reduction may exceed the amount of the grant itself so that a negative amount will result.
The following example illustrates the possible outcomes.
- An entity manufactured 1,000 litres of ultra low sulphur diesel (a cleaner fuel) giving rise to an entitlement to a cleaner fuel grant of 1 cent per litre. Total grant of $10.00.
- The entity entered the fuel for home consumption and paid duty of 38.143 cents per litre. Total duty of $381.43.
- The entity subsequently became entitled to a refund of the duty for 100 litres of the ultra low sulphur diesel. Total refund of $38.14.
Consequently, the wording in subsection 8(2) of the EGCFSA may lead to the following outcomes depending on how the provision is interpreted:
- 1.
- the entity's grant of $10.00 is reduced, but only to the extent of the grant on the 100 litres, that is by $1.00, resulting in the total grant being $9.00; or
- 2.
- the entity's grant of $10.00 may be reduced by the total refund of duty, that is by $38.14, resulting in negative $28.14; or
- 3.
- the entity's grant of $10.00 would be reduced (but not below zero) by the amount of the refund of duty of $38.14. This would result in a zero grant being payable.
The Commissioner considers that the second and third outcomes are contrary to the legislative objects of the EGCFSA which include encouraging the manufacture and importation of cleaner fuels. This is because these outcomes would result either in a negative amount which may indicate a liability for the entity, or the entity would forgo any entitlement in respect of the entire 1,000 litres merely because they received a refund of duty in respect of a proportion of the fuel.
In determining the correct interpretation of subsection 8(2) of the EGCFSA a purposive approach is required.
The first of the above outcomes is considered to deliver on the objectives of the EGCFSA. The reduction of the entity's entitlements should only apply to the amount of fuel to which the refund relates, and only serve to reduce the grant by the grant rate multiplied by the quantity of fuel subject to the refund.
Accordingly, the reduction of a grant entitlement on a quantity of fuel is limited to the amount of grant entitlement on that quantity of fuel for the purposes of subsection 8(2) of the EGCFSA.
Date of decision: 23 April 2007
Legislative References:
Energy Grants (Cleaner Fuels) Scheme Act 2004
subsection 8(2)
Keywords
Payment of fuel grants
Refunds
Excise remissions
Customs
ISSN: 1445-2782
| Date: | Version: | |
| 23 April 2007 | Original statement | |
| You are here | 17 October 2014 | Archived |