ATO Interpretative Decision

ATO ID 2004/870 (Withdrawn)

Excise

Energy Grants (Credits) Scheme: purchase of fuel - replacement of contaminated fuel
FOI status: may be released

This ATO ID is withdrawn due to amendments to the Energy Grants (Credits) Scheme Act 2003 applying after 30 June 2006. Despite its withdrawal the ATO ID continues to be the precedential view in respect of entitlement to an off-road credit for the period 1 July 2003 to 30 June 2006.

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

Status of this decision: Decision Withdrawn 30 April 2010

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Has an entity purchased diesel fuel for use by them as required by subsection 53(1) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) when they are charged the cost of replacing fuel they contaminated while carrying out their contract?

Decision

No. An entity has not purchased diesel fuel for use by them as required by subsection 53(1) of the EGCSA when they are charged the cost of replacing fuel they contaminated while carrying out their contract.

Facts

Entity A is contracted to Entity B to carry out certain maintenance activities.

While carrying out these activities Entity A contaminated diesel fuel which was owned by entity B. Entity B had purchased the diesel fuel for use by it in an activity that was eligible for an energy grant.

Under the terms of the contract between the two entities, Entity A is required to reimburse Entity B for the cost of replacing the contaminated fuel.

The replacement fuel will be purchased and owned by Entity B, placed into tanks belonging to Entity B and will be used by Entity B in carrying out its activities.

Reasons for Decision

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

The Administrative Appeals Tribunal (AAT) considered the issues of 'use' and to a lesser extent 'sale' or 'disposal' in Re Riviera Nautic Pty Ltd v. Federal Commissioner of Taxation [2002] AATA 657; (2002) 50 ATR 1106 (Riviera Nautic) which concerned the hire of a leisure craft. The case was decided in relation to the Diesel Fuel Rebate Scheme which was the precursor to the Energy Grants (Credits) Scheme. In Riviera Nautic, the AAT considered that in determining whether something has been sold, one should consider whether property in it is intended to pass.

In this instance, the contractor (Entity A) is merely fulfilling their contractual obligations to reimburse Entity B for the cost of replacing fuel that entity A had contaminated. The replacement fuel will be placed into tanks belonging to Entity B and will be used by Entity B in carrying out its activities. There is nothing to indicate that property in the fuel has passed, or was intended to pass, to Entity A.

Consequently, following the principle in Riviera Nautic, Entity B has not sold the replacement fuel to Entity A. The fuel is purchased by Entity B and remains the property of Entity B at all times. Given this, it follows that Entity A has not purchased the replacement fuel.

The replacement fuel is to be used by Entity B in the course of its enterprise. Therefore the fuel is not being used by Entity A.

Given this, Entity A has not purchased the replacement fuel, and will not use the fuel. Therefore, Entity A has failed on two grounds to satisfy the requirements of subsection 53(1) of the EGCSA. It is clear that entity A has not purchased diesel fuel for use by them where they are charged the cost of replacing fuel that they contaminated while carrying out their contract.

Date of decision: 28 October 2004

Legislative References:
Energy Grants (Credits) Scheme Act 2003
subsection 53(1)

Case References:
Re Riviera Nautic Pty Ltd v. Federal Commissioner of Taxation
[2002] AATA 657
(2002) 50 ATR 1106

Related ATO Interpretative Decisions
ATO ID 2004/596

Keywords
EGCS purchase
EGCS off-road
Energy grants (credits) scheme

Business Line: Excise

Date of publication: 5 November 2004

ISSN: 1445-2782

history

	Date:	Version:
	28 October 2004	Original statement
You are here →	30 April 2010	Archived

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