ATO Interpretative Decision

ATO ID 2004/746 (Withdrawn)

Excise

• This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.
  Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of the period the Act was in force, 1 July 2003 up to and including 30 June 2012.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is a vehicle that does not usually operate on rails a 'rail vehicle' for the purposes of subsection 38(3) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA), when the vehicle is fitted with equipment that enables it to operate on train tracks, and is actually physically present on train tracks?

Decision

Yes. A vehicle that does not usually operate on rails is a 'rail vehicle' for the purposes of subsection 38(3) of the EGCSA, when it is fitted with equipment that enables it to operate on train tracks, and is actually physically present on train tracks.

Facts

An entity is an earthmoving contractor.

The entity is involved in rail track maintenance and repair. The machinery used in track maintenance includes excavators and loaders. The excavators and loaders are usually fitted with tyres or caterpillar treads and would normally not be capable of operating on rails.

However, the excavators and loaders can be fitted with equipment that enables them to travel on train tracks to the site of maintenance or repair. When the equipment is engaged, the vehicle is controlled by the direct influence of the train tracks on the wheels and the bogies or wheel-sets under the vehicle which operate on the train tracks.

The vehicle is not regarded as a 'train' or a 'tram'.

Reasons for Decision

Subsection 53(1) of the EGCSA provides that subject to such conditions and restrictions as are specified in the Energy Grants (Credits) Scheme Regulations 2003, you are entitled to an off-road credit if you purchase or import into Australia off-road diesel fuel for a use by you that qualifies.

Subsection 53(3) of the EGCSA provides that use in rail transport (other than for the purpose of propelling a road vehicle on a public road) in the course of carrying on an enterprise, is a use that qualifies.

Section 38 of the EGCSA sets out the meaning of the expression 'use in rail transport'. The definition in section 38 sets out a number of activities that amount to use in rail transport. However, a requirement common to all of the activities is that the fuel be used in a rail vehicle (or in some instances in equipment in or on a rail vehicle). Hence, determining whether the vehicle that the fuel is being used in is a 'rail vehicle' is a vital step in establishing whether the fuel is for use in rail transport.

Subsection 38(3) of the EGCSA provides that:

Use in a rail vehicle, or in equipment in or on a rail vehicle, for any of the following purposes is use in rail transport: ...

(c)

repairing or maintaining rails; ...

In this instance, the vehicles are clearly being used to repair and maintain rails. The remaining issue to be determined is whether the vehicles are 'rail vehicles' when they are being used to repair or maintain rails.

Section 39 of the EGCSA states that:

The expression rail vehicle means a train, tram or any other vehicle operating on rails.

As the equipment is not a train or a tram, it will only be a rail vehicle if it can be regarded as a 'vehicle operating on rails'.

The meaning of the term 'rails' was discussed in Re Serco Australia Pty Ltd and Commissioner of Taxation [2003] AATA 737, with the Administrative Appeals Tribunal noting that the ordinary meaning of 'rails' is:

A bar or continuous line of bars (now usu. of iron or steel) laid on or near the ground (commonly in pairs) to bear and guide the wheels of a vehicle, and enable them to run more easily. Usu.pl.

Train tracks clearly constitute 'rails', as they are pairs of continuous lines of bars laid on or near the ground on which the wheels of a vehicle can run more easily.

The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW, defines 'operating' as:

1.

to work or run, as a machine does.

2.

to work or use a machine, apparatus, or the like.

3.

to perform some process of work or treatment...

All three definitions are worded in the present tense. Therefore, in the context of the definition of 'rail vehicle', the term 'operating on rails' in effect means working while physically present on rails. Even if the equipment that enables the vehicles to travel on rails is present on the vehicles at all times, the vehicles will not be operating on rails when they are physically off the rails.

Accordingly, a vehicle that does not usually operate on rails is a 'rail vehicle' for the purposes of subsection 38(3) of the EGCSA, when it is fitted with equipment that enables it to operate on train tracks, and is actually physically present on train tracks.

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   section 38
   subsection 38(3)
   Section 39
   subsection 53(1)
   subsection 53(3)

Case References:
Serco Australia Pty Ltd v. Commissioner of Taxation
   [2003] AATA 737
   (2003) 76 ALD 223

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

Keywords
EGCS off-road
EGCS rail transport
EGCS rail vehicle

Business Line:  Indirect Tax

Date of publication:  10 September 2004

ISSN: 1445-2782