ATO Interpretative Decision

ATO ID 2004/740

Excise

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the formation of unsealed cattle tracks and dairy laneways on an agricultural property 'earthworks' as defined in section 32 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

Yes. The formation of unsealed cattle tracks and dairy laneways on an agricultural property is 'earthworks' as defined in section 32 of the EGCSA.

Facts

An entity operates a construction company.

The entity is contracted by a farmer to form unsealed cattle tracks and dairy laneways on the agricultural property where the farmer undertakes the core agricultural activity of rearing livestock.

The entity's work involves the levelling and grading of existing land, and the spreading, grading and initial rolling of rubble placed at the site. The entity uses a bulldozer which runs on diesel fuel to complete such work.

Reasons for Decision

Section 53 of the EGCSA provides that, subject to the conditions and restrictions specified in the Energy Grants (Credits) Scheme Regulations 2003, 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'.

'Agriculture' is defined in section 22 of the EGCSA to include an 'agricultural construction activity', which is defined in turn in section 25 of the EGCSA.

The most pertinent activity in section 25 of the EGCSA is set out in paragraph 25(e), which states that the expression 'agricultural construction activity' includes the 'carrying out of earthworks', provided certain conditions are met.

Section 32 of the EGCSA defines 'earthworks' as:

(a)

the forming or maintenance of levee banks or windbreaks

(b)

contour banking, or

(c)

land levelling or land grading.

'Land levelling or land grading' are not defined in the EGCSA. The ordinary meaning of 'levelling' as defined in The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW is:

to make (a surface) level or even: to level ground before building;

to raise or lower to a particular level, or position...

The ordinary meaning of 'grading' is:

to reduce to a level or to practicable degrees of inclination: to grade a road.

In this case, the entity is land levelling and land grading to form unsealed cattle tracks, and dairy laneways. The activities include the spreading, grading, and initial rolling of the rubble placed at the site. Accordingly, these activities fall within the definition of 'earthworks' in section 32 of the EGCSA.

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   section 22
   section 25
   paragraph 25(e)
   section 32
   section 53

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

Keywords
EGCS agricultural construction activity
EGCS agricultural earthworks
EGCS agriculture
EGCS off-road
EGCS off-road diesel

Business Line:  Indirect Tax

Date of publication:  10 September 2004

ISSN: 1445-2782