ATO Interpretative Decision

ATO ID 2003/877 (Withdrawn)

Excise

Energy Grants (Credits) Scheme: On-road entitlements - is diesohol (a blend of diesel and ethanol) an on-road diesel fuel?
FOI status: may be released

This ATO ID is withdrawn due to amendments to the Energy Grants (Credits) Scheme Act 2003 applying after 30 June 2006. Despite its withdrawal the ATO ID continues to be the precedential view in respect of entitlement.
This ATO ID was amended on 9 September. References to Clause 6 of the EGCS Regulations was changed to Regulation 8.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 diesohol (as defined by the Australian Greenhouse Office) 'on-road diesel fuel' for the purposes of section 4 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

Yes. Diesohol (as defined by the Australian Greenhouse Office) is 'on-road diesel fuel' for the purposes of section 4 of the EGCSA.

Facts

A client conducts a road transport enterprise. The client purchases 'diesohol' for use as a fuel in the client's road transport vehicles that have diesel engines.

Diesohol, as defined by the Australian Greenhouse Office, is a blend of diesel (84.5%), hydrated ethanol (15%) and an emulsifier (0.5%). Hydrated ethanol is ethyl alcohol that contains approximately 5% water.

The diesel is derived from petroleum. The ethanol is manufactured from biomass feedstock.

Reasons for Decision

Section 4 of the EGCSA defines on-road diesel fuel as having the meaning given by the Energy Grants (Credits) Scheme Regulations 2003 (EGCS Regulations).

Regulation 8 of the EGCS Regulations provides that a substance will be on-road diesel fuel if it meets two requirements:

1.: the substance has been purchased for use as fuel for road vehicles powered by diesel engines; and
2.: the substance consists principally of products derived from petroleum or shale.

As the client purchases diesohol for use in road transport vehicles that are powered by diesel engines the first requirement is met.

In Federal Commissioner of Taxation v F.H. Faulding and Co Ltd. (1950) 83 CLR 594; (1950) 9 ATD 201 (Faulding's Case) the High Court considered whether certain fruit juice cordials consisted principally of Australian fruit. In their consideration of 'principally' Judge Latham determined that 'the words "consisting principally of" must be read as referring to quantity expressed in terms of either volume or weight'. The other judges adopted the same view.

Regulation 8 of the EGCS Regulations is drafted in a similar context to the legislation considered by the High Court in Faulding's Case and a determination on whether diesohol consists principally of diesel should be interpreted in a quantitative sense, consistent with the reasoning of the High Court.

The diesohol contains only three components. Diesel is quantitatively more than the other two components both individually and collectively. Accordingly the diesohol blend consists principally of diesel, a derivative of petroleum, and the second requirement is met.

As this blend of diesel and ethanol (diesohol) is purchased for use as fuel for road vehicles, and consists principally of products derived from petroleum or shale, the fuel is on-road diesel fuel for the purposes of section 4 of the EGCSA.

Date of decision: 16 September 2003

Legislative References:
Energy Grants (Credits) Scheme Act 2003
section 4

Energy Grants (Credits) Scheme Regulations 2003
regulation 8

Case References:
Federal Commissioner of Taxation v F.H. Faulding and Co Ltd.
(1950) 83 CLR 594
(1950) 9 ATD 201

Keywords
EGCS on-road
EGCS on-road diesel fuel

Business Line: Excise

Date of publication: 3 October 2003

ISSN: 1445-2782

history

	Date:	Version:
	16 September 2003	Original statement
You are here	30 April 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).