ATO Interpretative Decision
ATO ID 2004/60 (Withdrawn)
Excise
Diesel Fuel Rebate Scheme: retail/hospitality industry - ready accessFOI 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This ATO ID is withdrawn from the database because it contains a view in respect of the diesel fuel rebate provisions of the Excise Act 1901 and or the Customs Act 1901 that were repealed with effect from 1 July 2003.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.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Does an enterprise that could potentially connect to a commercial supply of electricity, but does not do so because it considers the cost is too high and because of access problems over another's property, have 'ready access' to a commercial supply of electricity for the purposes of paragraphs 164(1)(ad) of the Customs Act 1901 or 78A(1)(ad) of the Excise Act 1901?
Decision
No. An enterprise that could potentially connect to a commercial supply of electricity, but does not do so because it considers the cost too high and because of access problems over another's property does not have 'ready access' to a commercial supply of electricity for the purposes of paragraphs 164(1)(ad) of the Customs Act or 78A(1)(ad) of the Excise Act.
Facts
The client operates an enterprise, providing retail/hospitality services.
The premises used for the enterprise are not on the electricity grid and the client generates electricity from an alternative power source. Diesel fuel is used to run a backup generator that supplies several buildings.
The client has the ability to connect to a commercial supply of electricity, but has elected to generate its own power because of the high cost involved relative to the size of the enterprise.
The high cost is largely due to the distance (over 1 kilometre) between the commercial power source and the premises.
A further impediment is that the power line would have to cross a neighbour's property, which would involve the clearing of a broad, long path through bush. This would have a significant environmental impact and the neighbour is not willing to allow this to happen.
Reasons for Decision
Under subsection 78A(1) of the Excise Act and subsection 164(1) of the Customs Act, a diesel fuel rebate is payable, subject to certain conditions, to a person who purchases diesel fuel for use by them:
- (ad)
- at particular premises to generate electricity for use in the course of carrying on, at those premises, an enterprise that:
- (i)
- has, as its principal purpose, the retail sale of goods or services or the provision of hospitality; and
- (ii)
- does not have, at those premises, ready access to a commercial supply of electricity; ...
The client operates an enterprise providing retail/hospitality services. Therefore, the client will have an entitlement under the above provision provided the business premises do not have ready access to a commercial supply of electricity.
The phrase 'ready access' is not defined in the legislation, but the Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002, says that a business would be regarded as having ready access if:
a commercial supply of electricity was present or
convenient to the business and immediately available for connection
. (emphasis added)
Therefore, where a commercial supply of electricity is not present, the next step is to determine whether one is 'immediately available' i.e. can the business be 'hooked up' to the grid without lapse of time or further work being necessary. If a business can be hooked up to a commercial supply of electricity without lapse of time or further work, we then need to consider if doing so is 'convenient to the business'. This question of convenience largely becomes one of cost to the business.
The client does not have ready access to a commercial supply of electricity as the grid is neither 'immediately available' nor 'convenient' to them. That is, they cannot 'plug' straight in to the commercial supply of electricity because of the size of their property. Even if it was considered that the commercial supply of electricity was 'immediately available' to them on the facts, it would not be considered 'convenient to the business' as the cost is too high relative to the size of their enterprise, and permission from their neighbour to access the grid over the neighbour's property is not forthcoming.
Date of decision: 6 December 2003
Legislative References:
Excise Act 1901
paragraph 78A(1)(ad)
paragraph 164(1)(ad)
Other References:
Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002.
Keywords
Excise
Diesel fuel rebate scheme
ISSN: 1445-2782
| Date: | Version: | |
| 6 December 2003 | Original statement | |
| You are here | 8 January 2010 | Archived |
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