ATO Interpretative Decision

ATO ID 2004/741

Excise

Energy Grants (Credits) Scheme: off-road - agriculture- earthworks - raising rubble
FOI status: may be released

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Status of this decision: Decision Current

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is the raising of rubble on an agricultural property 'earthworks' as defined in paragraph 25(e) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

No. The raising of rubble on an agricultural property is not 'earthworks' as defined in paragraph 25(e) of the EGCSA.

Facts

An entity operates a construction company.

The entity is contracted by a farmer to raise rubble on an agricultural property, where the farmer is undertaking a core agricultural activity.

The raising of rubble involves the clearing of overburden, and the ripping by a dozer using diesel fuel, to recover the rubble. The rubble is to be placed in various locations on the agricultural property, for use in activities, some of which are earthworks.

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 for use in a core agricultural activity if the earthworks:

(i)
are carried out on an agricultural property where a core agricultural activity is carried on; and

(ii)
are carried out by the person who carries on the core agricultural activity or by a person contracted by that person to carry out the earthworks.

In order to fall within paragraph 25(e) of the EGCSA, the raising of rubble must first constitute 'earthworks'.

Section 32 of the EGCSA defines 'earthworks' as:

(a): the forming or maintenance of levee banks or windbreaks, or
(b): contour banking, or
(c): land levelling or land grading.

The raising of rubble involves clearing overburden, ripping up the ground using a bulldozer, and the actual raising of the rubble. The raising of rubble does not fall within the definition of 'earthworks' set out in section 32 of the EGCSA. Rather it is an activity that occurs prior to any use of the rubble or any earthworks taking place, and for that reason cannot be considered to be 'earthworks'.

Accordingly, the raising of rubble on an agricultural property is not 'earthworks' as defined in paragraph 25(e) of the EGCSA.

Date of decision: 18 June 2004

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

Keywords
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

history

	Date:	Version:
You are here →	18 June 2004	Original statement
	1 July 2012	Archived

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