ATO Interpretative Decision

ATO ID 2004/221

Excise

Energy Grants (Credits) Scheme: off-road - agriculture - rearing of livestock - breeding stud rams
FOI status: may be released

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 breeding of stud rams the 'rearing of livestock' for the purposes of paragraph 22(1)(c) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

Yes. The breeding of stud rams is the 'rearing of livestock' for the purposes of paragraph 22(1)(c) of the EGCSA.

Facts

An entity operates a stud farm and breeds stud rams. The stud rams are raised by the entity until they are mature enough to be sold.

The rams on the farm are sold after semen testing. They are sold to farmers who use them to breed sheep for food and wool production.

Reasons for Decision

Section 53 of the EGCSA provides that, subject to the conditions and restrictions specified in the regulations, an entity is entitled to an off-road credit if they purchase or import into Australia off-road diesel fuel for a use by them that qualifies, including 'agriculture'.

Subsection 22(1) of the EGCSA states, in part, that 'agriculture' means:

(c): the rearing of live-stock

'Rearing' is not defined in the EGCSA, and therefore its ordinary meaning must be considered.

'Rear' is defined in the Macquarie Dictionary 2001 rev. 3rd edn, The Macquarie Library Pty Ltd, NSW as

to care for and support up to maturity: to rear a child

The entity in this case is 'rearing' stud rams, as it is caring for them and supporting them until they are mature enough to be sold to farmers. What must then be considered is whether the rams are 'livestock' for the purposes of the EGCSA.

The term 'livestock' is defined in section 4 of the EGCSA as having a meaning 'affected by subsection 23(2).'

Subsection 23(2) of the EGCSA defines live-stock in the following terms:

The expression live-stock includes any animal reared for the production of food, fibres, skins, fur or feathers, or for its use in the farming of land.

Subsection 23(2) of the EGCSA affects the meaning of live-stock in two ways. Firstly, it clarifies that the term includes 'any animal'. This accords with the ordinary meaning of the term 'live-stock', as per the Australian Oxford Dictionary 1999, Oxford University Press, Melbourne which defines the term 'live-stock' as:

animals, esp. on a farm, regarded as an asset...

Secondly, subsection 23(2) of the EGCSA limits the definition by requiring that the animal be reared for the production of food, fibres, skins, fur or feathers, or for its use in the farming of the land.

In the context of the definition of 'live-stock' in subsection 23(2), the term 'includes' clarifies but does not expand the meaning of live-stock. It clarifies that only those animals that are reared for the production of food, fibres, skins, fur or feathers, or for their use in the farming of land, qualify as live-stock for the purposes of the off-road credits scheme.

Therefore, in the context of section 23 of the EGCSA, the term 'live-stock' means any animal kept for the production of food, fibres, skins or fur, or for its use in the farming of land. Stud rams are farm animals, regarded as an asset, which are kept for the production of food (lamb/hogget) and fibres (wool). Even though the stud rams may not produce food whilst owned by the entity, they will be used to produce food and wool (both directly and via their progeny) by the farmer that ultimately buys them.

Accordingly, the breeding of stud rams is the 'rearing of livestock' for the purposes of paragraph 22(1)(c) of the EGCSA.

Date of decision: 1 March 2004

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   section 4
   paragraph 22(1)(c)
   section 23
   subsection 23(2)
   section 53

Other References:
The Australian Oxford Dictionary 1999, Oxford University Press, Melbourne.
The Macquarie Dictionary 2001 rev. 3rd edn, The Macquarie Library Pty Ltd, NSW

Keywords
EGCS agriculture
EGCS livestock
EGCS off-road
EGCS rearing of livestock
Energy grants (credits) scheme

Business Line: Excise

Date of publication: 5 March 2004

ISSN: 1445-2782

history

	Date:	Version:
You are here →	1 March 2004	Original statement
	2 September 2005	Archived

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