ATO Interpretative Decision
ATO ID 2004/65
Excise
Energy Grants (Credits) Scheme: on-road credit - vehicle for transporting passengers or goods - drilling rigFOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a vehicle with a permanently mounted drilling rig a 'vehicle for transporting passengers or goods' for the purposes of section 42 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
No, a vehicle with a permanently mounted drilling rig is not a 'vehicle for transporting passengers or goods' for the purposes of section 42 of the EGCSA.
Facts
The entity operates a water well drilling business using a drilling rig permanently mounted on a truck, with a GVM over 20 tonnes.
The truck is licensed for on-road use.
The truck engine supplies power to drive to a drilling site as well as power to operate the hydraulics system drilling the boreholes while the truck is stationary. A separate permanently mounted engine on the truck powers a large volume, high-pressure, air compressor.
Reasons for Decision
Section 42 of the EGCSA specifies a number of circumstances when a client will be entitled to an on-road credit for the use of diesel or alternative fuel in a registered vehicle that has a GVM of 20 tonnes or more. The section specifies two different levels of entitlement, depending on the nature of the vehicle.
If the vehicle is a vehicle for transporting passengers or goods, an on-road credit is available for eligible fuel used in operating the vehicle on a road in Australia.
However, if the vehicle is not a vehicle for transporting passengers or goods, the on-road credit only applies to the movement of the vehicle to a place (whether or not on a road) where it is to operate, and from a place (whether or not on a road) where it has operated.
In determining whether a vehicle is a 'vehicle for transporting passengers or goods', the Explanatory Memorandum to the Diesel and Alternative Fuels Grants Scheme Bill 1999 should be considered, as the Bill contains very similar terminology to the EGCSA. When discussing the eligibility of 'vehicles for transporting passengers or goods', the Explanatory Memorandum refers to vehicles that are;
...
designed
for transporting passengers or goods... (emphasis added).
The Explanatory Memorandum to the Energy Grants (Credits) Scheme Bill 2003 and the Energy Grants (Credits) Scheme (Consequential Amendments) Bill 2003 provides an example of a vehicle that is not for transporting goods or passengers:
Paragraph 2.8 of the Explanatory Memorandum states:
...If a vehicle is not for transporting goods or passengers (e.g. special purpose vehicles such as mobile cranes), it will only be eligible for the movement to or from the place where it is to be, or has been used.
A vehicle will be a vehicle for transporting passengers or goods if:
- (a)
- the vehicle is designed for the purpose of transporting goods or passengers; and
- (b)
- the vehicle is not a special purpose vehicle.
A standard truck is clearly a vehicle designed to carry passengers or goods. However, in this case, the truck has a permanently mounted drilling rig. Therefore, the permanent installation of specialised equipment on the truck has changed the truck's essential nature. The vehicle's 'design' must be considered taking into account all modifications made to the vehicle. In this case, the truck is no longer designed to carry passengers or goods and is not suitable for this purpose. Rather, the vehicle with a permanently mounted drilling rig is designed to carry out water well drilling work.
Accordingly, a vehicle with a permanently mounted drilling rig is a special purpose vehicle and is not a vehicle for transporting passengers or goods for the purposes of section 42 of the EGCSA.
Date of decision: 5 January 2004
Legislative References:
Energy Grants (Credits) Scheme Act 2003
section 42
ATO ID 2003/884
ATO ID 2004/63
Other References:
Explanatory Memorandum to the Diesel and Alternative Fuels Grants Scheme Bill 1999
Explanatory Memorandum to the Energy Grants (Credits) Scheme Bill 2003
Explanatory Memorandum to the Energy Grants (Credits) Scheme (Consequential Amendments) Bill 2003
Keywords
EGCS on-road
Energy grants (credits) scheme
Vehicle for transporting passengers or goods
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 5 January 2004 | Original statement |
| 1 July 2012 | Archived |