ATO Interpretative Decision

ATO ID 2004/380 (Withdrawn)

Excise

• This ATO ID is withdrawn as it has been superseded by Product Grants and Benefits Ruling PGBR 2005/3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

Issue

Is the production of steam to harvest honey 'apiculture' for the purposes of the definition of agriculture in section 22 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

Yes. The production of steam to harvest honey is 'apiculture' for the purposes of the definition of agriculture in section 22 of the EGCSA.

Facts

The client operates a honey-producing business, consisting of six apiaries comprised of many hives. Boxes containing frames of honeycomb are taken from the hives and brought to the extraction plant.

The client generates steam in a diesel-fired boiler for use in the honey extraction process. Steam is used to heat the honey to 35-40 degrees Celsius to facilitate the extracting, cleaning, pumping and settling of the honey in tanks.

Reasons for Decision

Section 53 of the EGCSA provides that a claimant is entitled to an off-road credit, if they purchase diesel fuel for a use by them that qualifies, including 'agriculture'. 'Agriculture' is defined in subsection 22(1) of the EGCSA to mean a number of activities including:

... (d) ... apiculture

However, subsection 22(2) of the EGCSA qualifies the circumstances under which an activity will comprise agriculture:

(2)

The expression agriculture does not include: ...

(b)

an activity referred to in subsection (1)... 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.

Therefore, in order to be 'agriculture' for the purposes of the Energy Grants (Credits) Scheme, the generation of steam must not only constitute apiculture, but must also be carried on for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

The client is clearly conducting their bee-keeping and honey production activities in the form of a business. Therefore, the generation of steam will constitute agriculture provided it can be regarded as apiculture.

The term 'apiculture' is not defined in the EGCSA. In City of Nunawading v. Comptroller of Customs (1994) AAT No. 5798; (1994) 36 ALD 628, the Tribunal concluded that 'apiculture' means the breeding and care of bees for the production of honey and/or beeswax.

As apiculture is the keeping of bees to obtain honey, it includes activities undertaken to extract honey from honeycomb by methods such as heat extraction or use of a centrifuge. However, it does not include activities that are better described as the 'manufacture' of honey and/or beeswax such as blending, the addition of preservatives or bottling.

In this instance, the client uses a diesel-fired boiler to generate steam which is used to heat the honey to facilitate the extracting, cleaning, pumping and settling of the honey in tanks. Accordingly, the use of steam in this manner to obtain the produce (honey) is 'apiculture'. As the client's activities are conducted in the form of a business, the client's apiculture activities in turn constitute agriculture as defined in section 22 of the EGCSA.

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

Case References:
City of Nunawading v. Comptroller of Customs
    (1994) AAT No 5798
    (1994) 36 ALD 628

Keywords
EGCS agriculture
EGCS apiculture
EGCS primary production

Business Line:  Excise

Date of publication:  7 May 2004

ISSN: 1445-2782