ATO Interpretative Decision

ATO ID 2003/817 (Withdrawn)

Excise

Energy Grants (Credits) Scheme: Off-road entitlements - agriculture - production of mushroom substrate for commercial sale
FOI status: may be released

This ATO ID is withdrawn as it has been superseded by Product Grants and Benefits Ruling PGBR 2005/3

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 commercial production of mushroom substrate for sale 'horticulture' as defined in section 33 of the Energy Grants (Credits) Scheme Act 2003?

Decision

No. The commercial production of mushroom substrate for sale is not 'horticulture' as defined in section 33 of the EGCSA.

Facts

The client operates a business that produces mushroom substrate for sale to mushroom growers and others.

Reasons for Decision

Section 33 of the Act defines 'horticulture' as including:

(a): the cultivation or gathering in of fruit, vegetables, herbs, edible fungi, nuts, flowers, trees, shrubs or plants; or
(b): the propagation of trees, shrubs or plants; or
(c): the production of seeds, bulbs, corms, tubers or rhizomes

As horticulture is defined inclusively in the legislation, an activity can be considered 'horticulture' if it falls within any of the activities specified in the definition of horticulture or the common meaning of the term.

The cultivation, propagation or production of fruit, trees, seeds etc. involve a number of activities undertaken over a period of time to arrive at the end product. It is evident from the Federal Court case Australian Native Landscapes Pty Ltd v. Collector of Customs (1998) 24 AAR 353; (1997) 44 ALD 531 (Australian Native Landscapes' Case) that certain activities undertaken separately are not horticulture, but when undertaken as part of an overall process to cultivate, propagate or produce fruit, trees, seed etc by the person who ultimately grows the final product are horticulture.

In Australian Native Landscapes' Case, the Federal Court considered whether the commercial manufacture of potting mix was 'horticulture' under the Diesel Fuel Rebate Scheme , which was the precursor to the Energy Grants (Credits) Scheme, and was administered under the Excise Act 1901 and the Customs Act 1901. The Customs Act contained a definition of 'horticulture' in subsection 164(7). That definition was the same as the definition contained in section 33 of the EGCSA and the findings from that decision remain relevant.

The Federal Court held that the manufacture of potting mix for commercial sale was not 'horticulture' and confirmed the distinction made by the Administrative Appeals Tribunal (AAT) between the commercial production of potting mix for sale 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 the AAT [1998] AATA 929 (Elf's Case) applied the distinction made in Australian Native Landscapes' Case, to determine that the commercial production of mushroom substrate for sale to mushroom growers to be used in the cultivation of edible fungi was not 'horticulture'.

In this case the mushroom substrate is produced for sale and is analogous to the commercial production of potting mix in Australian Native Landscapes' Case and the commercial production of mushroom substrate in Elf's Case.

Accordingly the production of mushroom substrate for sale is not 'horticulture'.

Date of decision: 29 August 2003

Legislative References:
Energy Grants (Credits) Scheme Act 2003
section 33

Customs Act 1901
subsection 164(7)

Excise Act 1901
Table of Content

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

Related ATO Interpretative Decisions
ATO ID 2003/816

Keywords
EGCS agriculture
EGCS core agricultural activity
EGCS horticulture
EGCS off-road
EGCS primary production

Business Line: Excise

Date of publication: 12 September 2003

ISSN: 1445-2782

history

	Date:	Version:
	29 August 2003	Original statement
You are here	2 September 2005	Archived

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