ATO Interpretative Decision

ATO ID 2004/629 (Withdrawn)

Excise

Energy Grants Credits Scheme: off-road credit - generation of electricity - retail/hospitality - ready access - loss of commercial power supply
FOI status: may be released

This ATO ID should be withdrawn as the fuel tax credits scheme has replaced the energy grants credit scheme for eligible fuel acquired from 1 July 2006 for the purpose of electricity generation.
This decision is applicable to eligible fuel purchased between 1 July 2003 and 30 June 2006 for the purposes of the Energy Grants (Credits Scheme) Act 2003. Entitlement to a credit for eligible fuel acquired from 1 July 2006 for use in generating electricity is dealt with under the Fuel Tax Act 2006 and Fuel Tax (Consequential and Transitional Provisions) Act 2006.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Does an entity that conducts a retail/hospitality business have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) if it is ordinarily connected to a commercial supply of electricity but a natural disaster has caused large scale damage to the infrastructure of the commercial power supply?

Decision

No. An entity that conducts a retail/hospitality business does not have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the EGCSA if it is ordinarily connected to a commercial supply of electricity but a natural disaster has caused large scale damage to the infrastructure of the commercial power supply.

Facts

An entity operates an enterprise that has, as its principal purpose, the retail sale of goods or services.

At the place where the enterprise is carried on, they are connected to a commercial supply of electricity.

A natural disaster has caused large scale damage to the infrastructure of the commercial power supply and the affected area has been declared a disaster area.

The commercial power supplier will not be able to resume its usual commercial supply of electricity until its infrastructure has been rebuilt.

Diesel fuel is used to power a generator at the place where the retail/hospitality business is carried on. The generator will provide electricity for use in the retail/hospitality enterprise until the commercial power provider's infrastructure is rebuilt.

Reasons for Decision

Subsection 53(1) of the EGCSA states that subject to certain prescribed conditions, a person is entitled to an off-road credit if they purchase diesel fuel for a use by them that qualifies.

Paragraph 53(4)(a) of the EGCSA provides that the following is a use that qualifies:

use 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 (other than electricity) or the provision of hospitality; and

(ii)
does not have, at those premises, ready access to a commercial supply of electricity;...

The requirements of subparagraph 53(4)(a)(i) of the EGCSA have been met. What must then be considered is whether the entity has '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 (the Explanatory Memorandum) says 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.

The Diesel Fuel Rebate Scheme was the precursor to the Energy Grants (Credits) Scheme, and was administered under the Customs Act 1901 and the Excise Act 1901. The Customs Act and the Excise Act both contained similar provisions to that contained in paragraph 53(4)(a) of the EGCSA. Consequently, the Explanatory Memorandum remains relevant.

In this instance, the electricity supply is not 'present' to the business, in terms of the business already being connected to it, as the scale of damage means that a commercial supply of electricity from the power company is no longer available. It must therefore be determined whether a commercial power supply of electricity is 'convenient' to the business. If so, it must then be determined whether the electricity supply is 'immediately available' for connection.

In this instance, the large scale damage to the infrastructure of the commercial power supply means that a commercial power supply is neither 'convenient' to the business nor 'immediately available' for connection.

Consequently, an entity that conducts a retail/hospitality business does not have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the EGCSA if it is ordinarily connected to a commercial supply of electricity but a natural disaster has caused large scale damage to the infrastructure of the commercial power supply.

Date of decision: 12 May 2004

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   subsection 53(1)
   subsection 53(4)
   subsection 53(4)(a)(i)
   subsection 53(4)(a)(ii)

Related ATO Interpretative Decisions
ATO ID 2004/421
ATO ID 2004/422

Other References:
Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002

Keywords
EGCS off-road
EGCS use to generate electricity
EGCS use to generate electricity at a retail/hospitality enterprise
EGCS use to generate electricity for ready access

Business Line: Excise

Date of publication: 30 July 2004

ISSN: 1445-2782

history

	Date:	Version:
	12 May 2004	Original statement
You are here	26 March 2010	Archived

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