ATO Interpretative Decision

ATO ID 2005/291 (Withdrawn)

Excise

Energy Grants Credits Scheme - purchase of fuel
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This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Has an entity purchased diesel fuel for a use by them as required by subsection 53(1) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) when they reimburse a contractor for the cost of diesel fuel purchased by the contractor and used by the contractor in the contractor's equipment in fulfilment of a contract with the entity?

Decision

No. An entity has not purchased diesel fuel for a use by them as required by subsection 53(1) of the EGCSA when they reimburse a contractor for the cost of diesel fuel purchased by the contractor and used by the contractor in the contractor's equipment in fulfilment of a contract with the entity.

Facts

An entity engages the services of a contractor to carry out certain services on its behalf.

The contractor purchases fuel, which it uses in its own equipment in the fulfilment of its obligations under the contract.

The agreement between the entity and the contractor stipulates that the entity will be charged a fee for the service, and will also have to reimburse the contractor for the cost of fuel purchased by the contractor and used in the contractor's equipment.

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 pleasure 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.

The contractor has purchased the diesel fuel for use in its equipment. The contractor has retained control over the fuel at all times, and used it in its equipment. There is nothing to indicate that the property in the fuel has passed, or was intended to pass to the entity.

The contract between the parties merely specifies that the contractor is able to charge the entity for the fuel that the contractor ultimately uses in the contractor's equipment in the provision of its services to the entity under the contract.

Consequently, following the principle in Riviera Nautic, the contractor has not sold or otherwise disposed of the fuel to the entity. It follows that the entity has not purchased the fuel from the contractor.

Therefore, the entity has not purchased diesel fuel for a use by them as required by subsection 53(1) of the EGCSA when they reimburse a contractor for the cost of diesel fuel purchased by the contractor and used by the contractor in the contractor's equipment in fulfilment of a contract with the entity.

Date of decision: 5 October 2005

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
ATO ID 2004/791

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

Business Line: Indirect Tax

Date of publication: 21 October 2005

ISSN: 1445-2782

history

	Date:	Version:
	5 October 2005	Original statement
You are here	1 July 2012	Archived

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