ATO Interpretative Decision

ATO ID 2005/262 (Withdrawn)

Excise

Energy Grants (Credits) Scheme: off-road credit - marine transport - vessel used for training purposes
FOI status: may be released

This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.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.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is use in a vessel chartered for voyages for the training of student seafarers 'use in marine transport' as defined in section 36 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?

Decision

Yes. Use in a vessel chartered for voyages for the training of student seafarers is 'use in marine transport' as defined in section 36 of the EGCSA.

Facts

An educational institution charters a vessel in order to take students on training voyages. The students are enrolled in seafaring courses.

The vessel carries groups of students, accompanied by at least two staff members from the institution, on the training voyages for the purpose of furthering their studies.

The vessel's owner operates the vessel during the training voyages and purchases off-road diesel fuel for use in propelling the vessel.

Reasons for Decision

The meaning of the expression use in marine transport is set out in section 36 of the EGCSA in terms of four categories of use:

•: use in a vessel in marine transport (subsection 36(2) of the EGCSA)
•: use in a vessel for various purposes (subsections 36(3) and 36(4) of the EGCSA)
•: use in a vessel or its equipment on certain journeys (subsection 36(5) of the EGCSA), and
•: use in equipment for certain purposes (subsection 36(6) of the EGCSA).

In addition, subsection 36(7) of the EGCSA excludes use in a dredge or its equipment and subsection 36(8) of the EGCSA, to avoid doubt, states that a hire or charter vessel does not need to be operating a scheduled service.

Voyages undertaken for the purpose of education or training are not specifically referred to in section 36 of the EGCSA. Therefore it is necessary to consider whether the voyages undertaken by this entity fall within the more general category of 'use in a vessel in marine transport' in subsection 36(2) of the EGCSA. Subsection 36(2) provides that:

(2): Use in a vessel in marine transport is use in marine transport.

The Federal Court in Port of Brisbane Corporation v. Deputy Commissioner of Taxation (2004) 140 FCR 375; (2004) 57 ATR 545; [2004] FCA 1232 (Port of Brisbane) considered the meaning of the expression 'use... in marine transport' in section 164 of the Customs Act 1901 in relation to the diesel fuel rebate scheme (DFRS) which was the precursor to the Energy Grants Credits Scheme (EGCS). Moore J approved the construction given by the Administrative Appeals Tribunal in Re Port of Brisbane Corporation and Deputy Commissioner of Taxation (2204) 55 ATR 1029; [2004] AATA 222 that 'marine transport' means 'the act of conveying a thing or a person from one place to another through or over water using some kind of vessel or vehicle' (Port of Brisbane).

In Re Allseas Marine Contractors SA and Federal Commissioner of Taxation (2005) 58 ATR 1213; [2005] AATA 7, which also dealt with the DFRS provisions, the Tribunal applied Port of Brisbane in finding that various transport activities, including the laying of the pipe onto the sea floor, were 'marine transport'. However, the Tribunal did not accept that the conveyance of crew and equipment on a survey vessel during survey operations fell within the meaning of the expression. The Tribunal stated:

Of course, crew and equipment were on board the vessel while the surveying was performed. But the vessel was not then carrying them as part of an activity of marine transport or ancillary to marine transport. The immediate purpose in carrying them was to perform the survey work, which I find is not marine transport.

The EGCSA is intended to reflect the same entitlements as the former DFRS (except in specific instances). This view is confirmed in the Explanatory Memorandum to the Energy Grants (Credits) Scheme Bill 2003, paragraphs 2.14-2.16. Therefore cases addressing entitlement under the former DFRS remain relevant under the EGCSA.

The key issue here is whether the purpose of the vessel in undertaking the charter voyages is to transport persons or to perform some other function.

Although it could be argued that the purpose is to train students and transporting them is merely incidental to this purpose, the better view is that the main purpose is to place the students in a maritime environment - in other words, to convey them by sea. The educational institution charters the vessel so that it can provide training to the students. The fact that the voyage assists this activity does not overshadow the fact that the vessel's principal purpose in undertaking the voyage is to convey the students (and staff members).

Therefore, use in a vessel chartered for voyages for the training of student seafarers is 'use in marine transport' as defined in section 36 of the EGCSA.

Date of decision: 13 September 2005

Legislative References:
Energy Grants (Credits) Scheme Act 2003
   section 36
   subsection 36(2)
   subsection 36(3)
   subsection 36(4)
   subsection 36(5)
   subsection 36(6)
   section 53

Customs Act 1901
section 164(7)

Case References:
Re Port of Brisbane Corporation and Deputy Commissioner of Taxation
(2004) 55 ATR 1029
[2004]) AATA 222

Port of Brisbane Corporation v. Deputy Commissioner of Taxation
   (2004) 140 FCR 375
   (2004) 57 ATR 545
   [2004]) FCA 1232

Re Allseas Marine Contractors SA and Federal Commissioner of Taxation
(2005) 58 ATR 1213
[2005] AATA 7

Related ATO Interpretative Decisions
ATO ID 2005/57

Other References:
Explanatory Memorandum to the Energy Grants (Credits) Scheme Bill 2003

Keywords
EGCS in a vessel
EGCS charter
EGCS marine transport
EGCS off-road
Energy grants (credits) scheme

Business Line: Indirect Tax

Date of publication: 16 September 2005

ISSN: 1445-2782

history

	Date:	Version:
	13 September 2005	Original statement
You are here	1 July 2012	Archived

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