ATO Interpretative Decision

ATO ID 2004/826

Excise

Energy Grants (Credits) Scheme: off-road credit - rail transport - generator attached to a reefer on a rail vehicle
FOI status: may be released

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Status of this decision: Decision Current

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.

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 use of diesel fuel to power a reefer's generator, whilst the reefer is being transported on a train, 'use in rail transport' as defined in section 38 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

Yes. The use of diesel fuel to power a reefer's generator, whilst the reefer is being transported on a train, is 'use in rail transport' as defined in section 38 of the EGCSA.

Facts

An entity purchases diesel fuel which is placed in a 'reefer'.

A reefer is a refrigerated container that ordinarily uses diesel fuel from its own tank to power the reefer's refrigeration plant. The reefer's refrigeration plant must be kept running at all times to ensure that the contents of the reefer are kept at the required temperature.

The reefer is placed on a train (a rail vehicle) and transported between two places.

Reasons for Decision

Subsection 53(1) of the EGCSA provides that an entity is, subject to certain conditions, entitled to an off-road credit if they purchase diesel fuel for a use by them 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', and it includes various uses. The most relevant use is set out in subsection 38(5) of the EGCSA, which states that:

Use in equipment in or on a rail vehicle for air-conditioning, heating, lighting or for any purpose incidental to using the rail vehicle:

(a)
in rail transport; or

(b)
for any of the purposes mentioned in paragraphs (3)(a) to (f);or

(c)
as mentioned in subsection (4);

is use in rail transport.

In order for the reefer's use of diesel fuel to be considered 'use in rail transport' under the above subsection, the diesel fuel must be used in equipment in or on the rail vehicle, for any purpose incidental to using the rail vehicle in rail transport. Each test will be considered in turn.

Is the reefer's use of diesel fuel, 'use in equipment in or on a rail vehicle'?

The term 'rail vehicle' is defined in section 39 of the EGCSA and includes a train. In this instance, a reefer is transported on the train, and the reefer uses diesel fuel to power the generator attached to the reefer. The reefer's diesel fuel does not come from the train itself, but rather from its own separate fuel tank.

The reefer's equipment (that is, the generator) is clearly 'on' the rail vehicle, as it is carried by the train. What must then be considered is whether the use of this equipment is 'for any purpose incidental to using the rail vehicle'.

Is the reefer's use of diesel fuel 'for any purpose incidental to using the rail vehicle in rail transport'?

The phrase 'incidental to' is not defined in the EGCSA in relation to rail transport, and its ordinary meaning should be considered.

The phrase 'incidental to' is defined in The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW as:

...liable to happen in connection with; naturally appertaining to.

The reefer and its generator are carried on the train, and the use of diesel fuel in the generator is necessary to enable perishable goods to be transported by the train.

Therefore, in this case, the diesel fuel used to power the refrigerated trailer's generator is used in equipment in a rail vehicle for a purpose incidental to using the rail vehicle in rail transport.

Accordingly, the use of diesel fuel to power a reefer's generator, whilst the reefer is being transported on a train, is 'use in rail transport' as defined in section 38 of the EGCSA.

Date of decision: 7 October 2004

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   section 38
   section 39
   subsection 38(5)
   subsection 53(1)
   subsection 53(3)

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

Keywords
EGCS rail transport
EGCS rail transport incidental use

Business Line: Indirect Tax

Date of publication: 15 October 2004

ISSN: 1445-2782

history

	Date:	Version:
You are here →	7 October 2004	Original statement
	1 July 2012	Archived

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