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ATO Interpretative Decision

ATO ID 2003/1163 (Withdrawn)

Excise

Energy Grants (Credits) Scheme: on-road- incidental use - use of prime mover to power auxiliary equipment on semi-trailer
FOI status: may be released
  • This ATO ID has been amended to update legislative references
    This ATO ID is withdrawn from 1 July 2012, the date the Energy Grants (Credits) Scheme Act 2003 was repealed.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 has changed over time. View its history.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 an entity entitled to an on-road credit under section 42 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) for on-road diesel fuel used in a prime mover to operate auxiliary equipment on a semi-trailer hitched to the prime mover where the auxiliary equipment is used to load goods onto the semi-trailer?

Decision

Yes. An entity is entitled to an on-road credit under section 42 of the EGCSA for on-road diesel fuel used in a prime mover to operate auxiliary equipment on a semi-trailer hitched to the prime mover where the auxiliary equipment is used to load goods onto the semi-trailer.

Facts

An entity purchases on-road diesel fuel for use in carrying on their enterprise which includes operating a fleet of trucks that collect produce from farms.

Each truck consists of a prime mover attached to a semi-trailer that contains a receptacle for holding produce.

The prime mover and the semi-trailer are 'registered vehicles' as defined in the EGCSA, and each has a gross vehicle mass (GVM) of 20 tonnes or more. At each farm, an auxiliary pump on the semi-trailer is used to pump the produce from the farm storage facility into the receptacle on the semi-trailer. This auxiliary pump is powered by an hydraulic motor, which is in turn driven by an hydraulic pump located on the prime mover. As the hydraulic pump is driven directly by the prime mover's engine, the hydraulic motor and auxiliary pump will only operate while the prime mover's engine is running.

Reasons for Decision

Subsection 56(1) of the EGCSA provides that if you are entitled to an on-road credit or an off-road credit, you are entitled to an energy grant.

Section 42 of the EGCSA deals with the entitlement to an on-road credit for vehicles with a GVM of 20 tonnes or more.

Subsection 42(1) of the EGCSA provides that a claimant is entitled to an on-road credit if they purchase on-road diesel fuel or on-road alternative fuel for:

(a)
use in a registered vehicle that has a gross vehicle mass of 20 tonnes or more; or
(b)
incidental use in relation to such a vehicle.

'Incidental use' is defined in section 8 of the EGCSA which states in part:

Each of the following, whether or not it takes place on a road, is an incidental use in relation to a vehicle:

(a)
powering the vehicle, or auxiliary equipment in or on the vehicle, while:
(i)
goods to be transported in or on the vehicle are loaded or goods that have been so transported are unloaded ...

There is nothing in either subsection 42(1) of the EGCSA, or the definition of incidental use in section 8 of the EGCSA that requires the power for the auxiliary equipment on the vehicle that is being loaded to come from that particular vehicle.

That is, there is no requirement that the fuel used to power the auxiliary equipment on the semi-trailer must come from the semi-trailer itself. It will be sufficient if the client has purchased on-road diesel fuel for incidental use in relation to a registered vehicle with a gross vehicle mass of 20 tonnes or more.

In this instance, the client has purchased on-road diesel fuel for use in powering auxiliary equipment on the semi-trailer while goods to be transported in the semi-trailer are loaded.

Therefore, the use of diesel fuel in a prime mover to operate auxiliary equipment on a semi-trailer hitched to the prime mover where the auxiliary equipment is used to load goods onto the semi-trailer is an incidental use in relation to the semi-trailer as defined in section 8 of the EGCSA.

However, subsection 42(2) of the EGCSA restricts the entitlement given in subsection 42(1). For vehicles that are vehicles for transporting passengers or goods, the entity is only entitled to an on-road credit to the extent that the on-road diesel fuel has been purchased for use in carrying on their enterprise:

(a)
... in operating the vehicle on a road in Australia;.... or
(c)
... an incidental use ... of the vehicle that is integral to operating the vehicle as mentioned in paragraph (a) ...

In this instance:

(i)
The semi-trailer is a vehicle for transporting passengers or goods
(ii)
the on-road diesel fuel has been purchased by the entity for use in carrying on their enterprise; and
(iii)
the use of the equipment on the semi-trailer is an incidental use in relation to the semi-trailer.

Therefore, the entity will be entitled to an on-road credit for this fuel if this incidental use is considered 'integral' to operating the semi-trailer on a road in Australia.

'Integral' is not defined in the legislation and therefore takes on its common meaning. It is defined in The Macquarie Dictionary (rev. 3rd. ed) 2001, Macquarie Sydney as:

1.
of or relating to a whole; belonging as a part of the whole; constituent or component: the integral parts of the human body
2.
necessary to the completeness of the whole
3.
made up of parts which together constitute a whole

Therefore an incidental use of the vehicle will be integral to operating the vehicle on a road in Australia where it is necessary to and forms a fundamental part of the operation of the registered vehicle on a road in Australia.

In this particular example, the semi-trailer is operated to transport produce on roads in Australia. The loading of the semi-trailer with produce forms a fundamental part of the operation of the semi-trailer on a road in Australia.

Therefore, the use of equipment on the semi-trailer is an incidental use of the semi-trailer that is integral to operating the semi-trailer on a road in Australia.

Consequently, the entity is entitled to an on-road credit under section 42 of the EGCSA for on-road diesel fuel used in a prime mover to operate auxiliary equipment on a semi-trailer hitched to the prime mover where the auxiliary equipment is used to load goods onto the semi-trailer.

Date of decision:  6 December 2003

Legislative References:
Energy Grants Credits Scheme Act 2003
   subsection 56(1)
   section 42
   subsection 42(1)
   subsection 42(2)
   section 8

Other References:
The Macquarie Dictionary (rev. 3rd. Ed) 2001, Macquarie Sydney

Keywords
EGCS incidental use
EGCS on-road
Energy grants (credits) scheme
Vehicle for transporting passengers or goods

Business Line:  Indirect Tax

Date of publication:  24 December 2003

ISSN: 1445-2782

history
  Date: Version:
  6 December 2003 Original statement
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