ATO Interpretative Decision

ATO ID 2003/576 (Withdrawn)

Excise

Diesel Fuel Rebate Scheme: Agriculture - production of mushroom substrate for use in mushroom growing
FOI status: may be released

This ATO ID is withdrawn from the database because it contains a view in respect of the diesel fuel rebate provisions of the Excise Act 1901 and or the Customs Act 1901 that were repealed with effect from 1 July 2003. Despite its withdrawal from the database, this ATO ID continues to be a precedential view in respect of decisions for fuel purchased before 1 July 2003.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is the production of mushroom substrate, by a commercial mushroom grower, wholly for their own use, 'horticulture' as defined in subsection 164(7) of the Customs Act 1901 for the purposes of the diesel fuel rebate scheme?

Decision

Yes. The production of mushroom substrate, by a commercial mushroom grower wholly for their own use, is 'horticulture' as defined in subsection 164(7) of the Customs Act for the purposes of the diesel fuel rebate scheme.

Facts

The client is a commercial mushroom grower who produces mushroom substrate and then uses the substrate as a growth medium for mushrooms in their business.

All the substrate produced is used in the business and is not made available for commercial sale.

Reasons for Decision

Paragraph 78A(1)(aa) of the Excise Act 1901 and corresponding paragraph 164(1)(aa) of the Customs Act provide that a rebate is payable to a person who purchases diesel fuel for use by them in primary production (otherwise than for the purpose of propelling a road vehicle on a public road). 'Primary production' includes, among other things, agriculture.

Subsection 164(7) of the Customs Act defines 'agriculture' as meaning:

(d): viticulture, horticulture, pasturage or apiculture; ...; but does not include:; ...
(zd): an activity referred to in any one of paragraphs (a) to (za) or paragraph (zba) unless the activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

Subsection 164(7) of the Customs Act provides that 'horticulture' includes:

(a): the cultivation or gathering in of fruit, vegetables, herbs, edible fungi, nuts, flowers, trees, shrubs or plants; ...

As horticulture is defined inclusively in the legislation, an activity can be considered 'horticulture' if it is within any of the activities specified in the definition of horticulture and is carried out for the purpose of, or will directly benefit a business undertaken to obtain produce for sale.

In Australian Native Landscapes Pty Ltd v. Collector of Customs (1997) 24 AAR 353; (1997) 44 ALD 531 (Australian Native Landscape Case) the Federal Court held that commercial manufacture of potting mix was not 'horticulture' and confirmed the distinction made by the Administrative Appeals Tribunal (AAT) between this commercial production and the production of potting mix by a grower for his or her own purposes, which may be regarded as horticulture.

Later, in Elf Farm Supplies Pty Ltd v. CEO of Customs [1998] AATA 929; (1998) 28 AAR 485 (Elf Farm's Case) the AAT applied the distinction made in the Australian Native Landscape Case, to determine that the commercial production of mushroom substrate used in the cultivation of edible fungi was not 'horticulture'.

The production of mushroom substrate by a commercial mushroom grower is not the specific set of facts considered by the AAT in Elf Farm's Case - rather it is analogous to the production of potting mix by a commercial grower for his or her own purposes, which the Federal Court was inclined to regard as 'horticulture' in Australian Native Landscape Case.

Accordingly the production of mushroom substrate by a commercial mushroom grower used for his or her own purpose of growing mushrooms for sale is 'horticulture' and the client is eligible for rebate.

Date of decision: 24 June 2003

Legislative References:
Customs Act 1901
paragraph 164(1)(aa)
subsection 164(7)

Excise Act 1901
paragraph 78A(1)(aa)

Case References:
Australian Native Landscapes Pty Ltd v. Collector of Customs
(1998) 24 AAR 353
(1997) 44 ALD 531

Elf Farm Supplies Pty Ltd v. Chief Executive Officer of Customs
[1998] AATA 929

Keywords
Excise
Excise Payments
Diesel fuel rebate scheme
DFRS Agriculture
DFRS Claims

Business Line: Excise

Date of publication: 18 July 2003

ISSN: 1445-2782

history

	Date:	Version:
	24 June 2003	Original statement
You are here	8 January 2010	Archived

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).