ATO Interpretative Decision

ATO ID 2004/609 (Withdrawn)

Excise

• This ATO ID is withdrawn because it is superseded by paragraph 179 of Product Grants and Benefits Ruling PGBR 2005/1.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the making of a hardstand area in a forest the making of a road that is integral to:

(a)

the planting or tending of trees in a forest or plantation of trees intended for felling

(b)

the thinning or felling, in a forest or plantation, of standing timber, or

(c)

the transportation, milling or processing of timber felled in the forest or plantation

as required by paragraph 35(f) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

Yes. The making of a hardstand area in a forest is the making of a road that is integral to:

(a)

the planting or tending of trees in a forest or plantation of trees intended for felling

(b)

the thinning or felling, in a forest or plantation, of standing timber, or

(c)

the transportation, milling or processing of timber felled in the forest or plantation

as required by paragraph 35(f) of the EGCSA.

Facts

An entity operates a construction company.

The entity makes hardstand areas (also known as log dumps) in a forest by spreading, grading, rolling and compacting rubble road base.

Once the timber has been felled, equipment (such as tractors) pulls the timber out of the coupe and places it in a hardstand area where the timber is then stacked and loaded onto trucks to be taken to a mill.

Reasons for Decision

Subsection 53(1) of the EGCSA states that you are entitled, subject to certain conditions, to an off-road credit if you purchase diesel fuel for a use by you that qualifies, including 'primary production'. Section 21 of the EGCSA provides that the expression 'primary production' means agriculture, fishing operations or forestry.

Section 35 of the EGCSA says:

The expression 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)

the transporting, milling or processing, in a forest or plantation, of timber felled in the forest of plantation; or...

(f)

the making and maintaining in a forest or plantation referred to in paragraph (a) or (b) of a road that is integral to the activities referred to in paragraph (a), (b), or (c).

Paragraph 35(f) of the EGCSA requires that the 'road' being made or maintained must be integral to:

(a)

the planting or tending of trees in a forest or plantation of trees intended for felling

(b)

the thinning or felling, in a forest or plantation, of standing timber, or

(c)

the transporting, milling or processing, in a forest or plantation, of timber felled in the forest or plantation.

'Integral' is not defined in the legislation and therefore takes on its common meaning. It is defined in The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW as:

1.

of or relating to a whole; belonging as a part of the whole; constituent or component: the integral parts of the human body

2.

necessary to the completeness of the whole

3.

made up of parts which together constitute a whole.

Therefore, in the context of paragraph 35(f) of the EGCSA, a 'road' will be integral to:

(a)

the planting or tending of trees in a forest or plantation of trees intended for felling

(b)

the thinning or felling, in a forest or plantation, of standing timber, or

(c)

the transporting, milling or processing, in a forest or plantation, of timber felled in the forest or plantation,

if the road is necessary to and forms a fundamental part of the above activities.

However, the case law has also made it clear that this legislation needs to be read in a practical, commonsense manner (see Re Central Norseman Gold Corporation Limited and Collector of Customs, Western Australia AAT No W84/118; (1985) 8 ALN N288; Abbott Point Bulk Coal Pty Ltd & Anor v. Collector of Customs (1992) 35 FCR 371; (1992) 15 AAR 365; Australian National Railways Commission v. Collector of Customs (1985) 8 FCR 264; (1985) 69 ALR 367).

Accordingly, for the purposes of paragraph 35(f) of the EGCSA, a 'road' will include any part of the road transport network in a forest and may therefore include the making of a hardstand area (or culvert or bridge etc), provided it is necessary to and forms a fundamental part of the above activities.

A hardstand area is the place where standing timber that has been felled is placed to allow it to be transported to the mill. As such, the hardstand area is necessary to and forms a fundamental part of both the felling of standing timber in the forest and the transport of timber in the forest.

Consequently, the making of a hardstand area in a forest is the making of a road that is integral to:

(a)

the planting or tending of trees in a forest or plantation of trees intended for felling

(b)

the thinning or felling, in a forest or plantation, of standing timber, or

(c)

the transporting, milling or processing, in a forest or plantation, of timber felled in the forest or plantation,

as required by paragraph 35(f) of the EGCSA.

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   section 21
   section 35
   paragraph 35(b)
   paragraph 35(a)
   paragraph 35(c)
   paragraph 35(f)
   subsection 53(1)

Case References:
Re Central Norseman Gold Corporation Limited and Collector of Customs, Western Australia AAT No W84/118
   (1985) 8 ALN N288

Other References:
The Macquarie Dictionary 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW

Keywords
EGCS forestry
EGCS forestry road making and maintenance
EGCS off-road

Business Line:  Excise

Date of publication:  30 July 2004

ISSN: 1445-2782