ATO Interpretative Decision

ATO ID 2004/101 (Withdrawn)

Excise

Diesel Fuel Rebate Scheme: forestry - the milling of timber at a sawmill or chipmill
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This ATO ID is withdrawn from the database because it contains a view in respect of the diesel fuel rebate provisions of the Excise Act 1901 and or the Customs Act 1901 that were repealed with effect from 1 July 2003.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 loading of timber into a wood-splitter to cut firewood and the subsequent loading of firewood onto trucks the milling of timber at a sawmill or chipmill for the purposes of the definition of 'forestry' under subsection 164(7) of the Customs Act 1901?

Decision

No. The loading of timber into a wood-splitter to cut firewood and the subsequent loading of firewood onto trucks is not the milling of timber at a sawmill or chipmill for the purposes of the definition of 'forestry' under subsection 164(7) of the Customs Act.

Facts

The client fells trees and cuts logs into blocks in the forest.

The client transports the timber, consisting of the blocks and smaller logs, via road, to their wood-yard.

In the wood-yard, a diesel-powered front-end loader is used to load the timber into an electrically operated hydraulic splitter. The timber is split by this machine into smaller pieces of timber suitable for firewood.

The wood-splitter has an electric motor to drive the hydraulic pump that operates two hydraulic rams. These rams push the timber onto fixed blades which split smaller pieces of firewood off the blocks or logs. On the return path, the hydraulic rams pull back the remaining uncut portion of the blocks and the process starts again.

The firewood is then stockpiled and later loaded onto trucks and trailers for sale, using the diesel-powered front-end loader.

Reasons for Decision

Under subsection 78A(1) of the Excise Act 1901 and subsection 164(1) of the Customs Act, a diesel fuel rebate is payable to a person who purchases diesel fuel for use by them in forestry as defined. Subsection 164(7) of the Customs Act says that for the purposes of the Excise Act and the Customs Act, 'forestry' means:

(a): the planting or tending, in a forest or plantation, of trees intended for felling; or
(b): the thinning or felling, in a forest or plantation, of standing timber,; and includes:
(c): ...
(d): the milling of timber at a sawmill or chipmill that is not situated in the forest or plantation in which the timber is felled; or...

In TJ Depiazzi & Sons v. Collector of Customs (1993) 17 AAR 557 (Depiazzi), the Administrative Appeals Tribunal accepted the description of 'milling' and 'mill' adopted by the Tribunal in Westfi Pty Ltd v. Collector of Customs (1984) 7 ALN N8. It said that 'milling' is the process of subjecting something to the operation of a mill and a mill is a machine which does its work by rotary motion. Depiazzi also established that a mill can be either fixed and housed in a building or it can be moveable and designed to function at different locations. The emphasis is on function rather than the environment in which the function occurs and it is not necessary that to be a mill, the operation need be of a certain size or take a particular standard form. In essence, a machine which mills must be a mill.

In this case, the chopping of the timber into firewood occurs through the action of hydraulic rams pushing the wood into fixed blades. There is no rotary motion involved in the action. Therefore, the splitting machine is not a mill.

As the machine is not a 'mill', it can be neither a sawmill nor a chipmill within the definition of 'forestry' in subsection 164(7) of the Customs Act.

As the use of diesel fuel in the front-end loader to load the splitting machine and to load the firewood onto trucks for sale does not occur at a sawmill or chipmill, it cannot form part of the process of milling timber at a sawmill or chipmill for the purposes of the definition of 'forestry' under subsection 164(7) of the Customs Act.

Date of decision: 22 January 2004

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

Excise Act 1901
subsection 78A(1)

Case References:
Wesfi Pty Ltd v. Collector of Customs
(1984) 7 ALN N8

T J Depiazzi v. Sons & Collector of Customs
(1993) 17 AAR 557

Related ATO Interpretative Decisions
ATO ID 2002/733
ATO ID 2003/712

Keywords
DFRS forestry
Diesel fuel rebate scheme
Excise payments

Business Line: Excise

Date of publication: 6 February 2004

ISSN: 1445-2782

history

	Date:	Version:
	22 January 2004	Original statement
You are here	8 January 2010	Archived

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