ATO Interpretative Decision
ATO ID 2005/196 (Withdrawn)
Excise
Energy Grants (Credits) Scheme: off-road credit - mining operations - mining construction activityFOI status: may be released
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This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.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.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
In constructing a building on a mining site, where diesel fuel is used in cranes which lift prefabricated components from a delivery vehicle and position them on the construction site, is that diesel fuel used a 'mining construction activity' as defined in paragraph 11(1)(f) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
Yes. In constructing a building on a mining site, where diesel fuel is used in cranes which lift prefabricated components from a delivery vehicle and position them on the construction site, that diesel fuel is used a 'mining construction activity' as defined in paragraph 11(1)(f) of the EGCSA.
Facts
On a mining site, an entity constructs a building that will be used in a mining operation.
The prefabricated components are delivered by vehicle to the construction site.
A crane is used to lift the prefabricated components from the vehicle and manoeuvre them into position.
An entity then levels, aligns and secures the prefabricated components whilst they are held into position by the cranes.
Reasons for Decision
Section 53 of the EGCSA provides that you are entitled to an off-road credit if you purchase off-road diesel fuel for a use by you that qualifies. Use in 'mining operations', otherwise than for the purpose of propelling any vehicle on a public road, is a use that qualifies.
The term 'mining operations' is relevantly defined in subsection 11(1) of the EGCSA and includes:
...
...
The term 'mining construction activity' is relevantly defined in paragraph 15(d) of the EGCSA and includes the construction of buildings, plant or equipment that is for use in a mining operation referred to in paragraph 11(1)(a) or 11(1)(b) of the EGCSA, provided the construction is carried out:
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- at the place where the mining operation is carried on, and
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- the construction is carried out by the person who carries on the mining operation or by a person contracted by that person.
Although the word 'construction' is not defined in the EGCSA, guidance can be had from its ordinary meaning. The Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01 defines the verb 'construct' as:
1. to form by putting together parts; build; frame; devise.
In this case, the use of diesel in lifting and positioning the components is a use that can be described as 'putting together parts' to make the finished building. Once the cranes have lifted and manoeuvred the components into position, the parts are permanently secured there.
Thus the lifting and manoeuvring are integral activities in the 'construction' of the building.
This conclusion is supported by the application of the principle in Collector of Customs v. Pressure Tankers Pty Ltd and Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 the issue for determination was whether or not the operation of loading stock feed from the truck to the storage silos is an operation connected with the rearing of live-stock for the purpose of the off-road rebate provisions. The Court said that such cases always involve a question of degree and where to make the cut-off point. It adopted, for the purposes of the cases before it, the observations of Ryan and Cooper JJ, in Abbott Point Bulk Coal Pty Ltd v. Collector of Customs (1992) 35 FCR 371 at 378 which referred to the need to take 'a commonsense and commercial approach ... to the question having regard to the evident purpose of the legislation...'. It considered that the purpose of the legislation is to encourage the activities for which the off-road credit is payable.
In this case, we consider that the relevant activities are more closely associated with the eligible category of 'mining operations' than with the distribution and delivery of prefabricated building components.
Conclusion
We determine that, on a mining site, the activities of lifting prefabricated components from a vehicle and manoeuvring them into their permanent place are activities which take place in the course of construction.
Date of decision: 24 June 2005
Legislative References:
Energy Grants (Credits) Scheme Act 2003
subsection 11(1)
paragraph 11(1)(a)
paragraph 11(1)(b)
paragraph 11(1)(f)
paragraph 15(d)
section 53
Case References:
Collector of Customs v. Pressure Tankers Pty Ltd and Pozzolanic Enterprises Pty Ltd
(1993) 43 FCR 280
(1992) 35 FCR 371
Keywords
EGCS mining construction activity
EGCS mining operation
EGCS off-road
ISSN: 1445-2782
| Date: | Version: | |
| 24 June 2005 | Original statement | |
| You are here | 1 July 2012 | Archived |
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