Fuel Tax Ruling

FTR 2006/1

Fuel tax: fuel tax credits for taxable fuel acquired or manufactured in, or imported into Australia for use in carrying on an enterprise involving 'agriculture' as defined in section 22 of the Energy Grants (Credit) Scheme Act 2003

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What this Ruling is about

1. This Ruling explains an entity's^[1] entitlement to a fuel tax credit under the Fuel Tax Act 2006 (FT Act) for taxable fuel it acquires or manufactures in, or imports into, Australia to the extent that it does so for use in carrying on an enterprise, which involves activities that are within the meaning of 'agriculture' in Subdivision C of Division 3 of Part 2 (Subdivision 3C) of the Energy Grants (Credits) Scheme Act 2003 (Energy Grants Act).

2. The Ruling also explains:

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the fuel tax credit system^[2] under the FT Act, and the relevant transitional provisions;

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the meaning of each of the activities in the definition of 'agriculture' in section 22 of the Energy Grants Act;

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the application of those provisions in the meaning of 'agriculture' that require that an activity be 'solely' for a purpose;

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the meaning of the expression 'gathering in of crops' in paragraph 22(1)(b) of the Energy Grants Act; and

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the effect of the exclusion in subsection 53(2) of the Energy Grants Act of diesel fuel purchased for use in propelling a road vehicle on a public road, including:

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the definition of 'road vehicle'; and

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the definition of a 'public road'.

3. Unless otherwise stated, all legislative references in this Ruling are to the Energy Grants Act, and all references to the Energy Grants regulations are to the Energy Grants (Credits) Scheme Regulations 2003.

4. This Ruling does not deal with your entitlement to a fuel tax credit if you acquire, manufacture in, or import into, Australia taxable fuel for use in electricity generation for domestic use. Nor does this Ruling deal with entitlement to a fuel tax credit if you acquire, manufacture or import taxable fuel for use in a vehicle with a gross vehicle mass (GVM) of more than 4.5 tonnes travelling on a public road.

Definitions

5. In this Ruling, unless otherwise stated:

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a reference to:

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fuel or diesel fuel is a reference to off-road diesel fuel as defined in section 4;

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taxable fuel is a reference to taxable fuel as defined in section 110-5 of the FT Act;

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alternative fuel is a reference to on-road alternative fuel as defined in section 4;

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the diesel fuel rebate scheme is a reference to the diesel fuel rebate scheme as provided for in section 164 of the Customs Act 1901 and section 78A of the Excise Act 1901;

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an eligible activity or activities is a reference to a use that qualifies for the purposes of the Energy Grants Act;

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a core agricultural activity or activities is a reference to paragraphs (a) to (d) of the definition of agriculture in subsection 22(1);

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a farm is a reference to an agricultural property on which a core agricultural activity is carried on;

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a farmer is a reference to an entity that carries on a core agricultural activity;

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horticultural produce is a reference to all or any one of, fruit, vegetables, flowers, herbs, edible fungi, nuts, trees, shrubs, plants, seeds, bulbs, corms, tubers or rhizomes grown, propagated or produced by horticulture;

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the subsection 53(2) primary production exclusion is a reference to the exclusion, in subsection 53(2), from use in primary production of diesel fuel purchased for the purposes of propelling a road vehicle on a public road;

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'GST' is a reference to the goods and services tax;

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GST Act is a reference to the A New Tax System (Goods and Services Tax) Act 1999;

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'you' in relation to provisions of the FT Act and the Fuel Tax (Consequential and Transitional Provisions) Act 2006 applies to entities generally, unless its application is expressly limited;^[3]

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the Transitional Act is a reference to the Fuel Tax (Consequential and Transitional Provisions) Act 2006;

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the transitional provisions is a reference to the relevant provisions in Schedule 3 of the Transitional Act; and

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acquire taxable fuel or taxable fuel acquired is a reference to 'taxable fuel that you acquire or manufacture in, or import into, Australia';

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it is assumed:

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that if you are entitled to a fuel tax credit you meet the requirements that entitle you to the credit and are not disentitled by the disentitlement rules^[4] in the FT Act;

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during the period 1 July 2006 to 30 June 2009, if you claimed more than $3 million each financial year in fuel tax credits you met the requirements of the Greenhouse Challenge Plus Programme or another programme determined, by legislative instrument, by the Environment Minister for the purposes of section 45-5 (as at 30 June 2009) of the FT Act;^[4A] and

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that if an entity is carrying on an enterprise of agriculture it is carrying on an enterprise in the form of a business^[5] which involve the activities that are within the meaning of agriculture.

6. In this Ruling, a reference to you being entitled to a fuel tax credit if you acquire taxable fuel for use in an activity that falls within the meaning of 'agriculture' in Subdivision 3C of the Energy Grants Act, assumes that the requirements of either item 10 or 11 of Schedule 3 of the Transitional Act (where relevant) are met.

Core agricultural activity

7. A number of the provisions within the meanings of activities included in the definition of agriculture refer to a person who carries on a core agricultural activity or an agricultural property where a core agricultural activity is carried on.

8. Section 31 defines the expression 'core agricultural activity' as meaning:

... an activity referred to in paragraph (a), (b), (c) or (d) of the definition of agriculture in subsection 22(1) if that activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

9. A core agricultural activity is an activity undertaken in:

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the cultivation of the soil;

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the cultivation or gathering in of crops;

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the rearing of live-stock; or

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viticulture, horticulture, pasturage or apiculture,

provided the activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

Carrying on a core agricultural activity

10. You carry on a core agricultural activity if you carry on one or more of the activities set out in paragraph 9 of this Ruling provided the activities are carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

Agricultural activities

11. Subsection 28(1) defines the term 'agricultural activity' as:

... an activity referred to in any one of the paragraphs of the definition of agriculture in subsection 22(1) (other than an activity referred to in paragraph (i) or (j) of the definition of sundry agricultural activity in section 27) if that activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

12. The term 'agricultural activity' includes other activities which are discussed in section 23 to section 26 and paragraph 27(a) to paragraph 27(h).

Agricultural property

13. The term 'agricultural property' is used in sections 23 to 27. In some sections, reference is made to the 'agricultural property where the core agricultural activity is carried on'. In other sections, reference is made to the 'agricultural property'.

14. The term 'agricultural property' is not defined in the Energy Grants Act. Whether a property is an agricultural property is a matter of fact and degree having regard to the totality of the activities carried out on the property.

15. The Commissioner considers that an agricultural property is a property on which the activities of cultivation of the soil, the growing and gathering in of crops or the rearing of live-stock or a mixture of more than one of these activities are carried out, provided those activities are carried out for the purpose of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.^[6]

16. The term 'agricultural property' also includes a property on which cultivation of soil or of grapes as part of viticulture or of horticultural produce takes place provided those activities are carried out for the purpose of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

17. It is not expected that every hectare of a farm will be used for a core agricultural activity at any one time. Some paddocks may remain fallow or uncleared, some may be devoted to dams and structures (for example, sheds and stockyards), and some land may be occupied by the owner's residence. The property and activities must be considered as a whole.

18. However, a property will not be an agricultural property, if the only agricultural activities conducted on the property are minor relative to the main use of the land.

19. In Re Raymond Cedric and Brian Richard Wallace v. CEO of Customs^[7] (Wallace), the applicant was contracted by a sanctuary to carry out certain earthworks associated with the construction of the first stage of a wetland. Approximately 35 to 40 hectares of the sanctuary was used to grow gum trees, which were sold as koala fodder. The applicant claimed a rebate under the diesel fuel rebate scheme, in respect of diesel fuel used in earthworks. To be eligible under the diesel fuel rebate scheme the activities had to be conducted on an agricultural property.

20. The AAT held that the growing of eucalyptus leaves was only a small part of the activities carried out within the sanctuary. Therefore, while the cultivation of eucalyptus leaves constituted a core agricultural activity, it was not carried out on an agricultural property. Deputy President Forgie SA said:

Taking into account the limitations in interpretation imposed by the Customs Act, I have concluded that the expression 'agricultural property' means a property on which there are carried out the activities of the cultivation of soil, the growing and gathering of crops or the rearing of livestock or of a mixture of more than one of these activities provided that those activities are carried out for the purpose of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.^[8]

21. The Commissioner considers that the comments made by the AAT in Wallace are equally applicable to the meaning of 'agricultural property' for the purposes of the energy grants scheme (and therefore the fuel tax credit system).

'At a place adjacent to' an agricultural property

22. The phrase 'at a place adjacent to' an agricultural property is used in paragraphs 24(b), 24(d), 24(e), 25(b) and 27(d).

23. In these paragraphs, the word 'adjacent' takes its ordinary meaning of lying near, close or contiguous.^[9]

24. A place is adjacent if it is abutting, close or near, and is not distant or remote from the agricultural property. It is not possible to give precise measurements or distances between places to determine their adjacency. It is a question of fact and impression in each case as to whether a place is adjacent to the agricultural property.

25. In Federal Commissioner of Taxation v. BHP Minerals Ltd^[10] (BHP Minerals), the Court was called upon to decide whether residential accommodation was 'at a place adjacent to the site of prescribed mining operations'. In their majority judgment, Toohey and Lockhart JJ, in relation to the concept of adjacency, said:

In our view the inquiry as to the definition of the expression 'at a place adjacent to, the site of prescribed mining operations ...' calls for a broad approach and not one that is narrow or pedantic. ...The expression is not one which is capable of a precise or uniform meaning. ...

An ordinary and natural meaning of the word 'adjacent' is 'near' or 'close'. ...But to be provided at a place adjacent to the site of mining operations does not require contiguity or abutment. Nor does it necessarily require very close proximity. It is sufficient that it is near or close to the site.^[11]

26. The comments of Toohey and Lockhart JJ in BHP Minerals are relevant in determining the meaning of the phrase 'at a place adjacent to' an agricultural property for the purposes of the definition of agriculture in the Energy Grants Act.

First-mentioned agricultural activity

27. Some of the activities listed in the definition of agriculture are eligible only if they are conducted by an entity that carries on the first-mentioned agricultural activity or by an entity contracted by that entity. Examples include:

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searching for groundwater solely for use in an agricultural activity (paragraph 24(b));

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the pumping of water solely for use in an agricultural activity (paragraph 24(d));

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the supply of water solely for use in an agricultural activity (paragraph 24(e));

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the construction or maintenance of sheds, pens, silos or silage pits for use in an agricultural activity (paragraph 25(c)); and

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the service, maintenance or repair of vehicles or equipment for use in an agricultural activity (paragraph 27(e)).

28. The term 'first-mentioned agricultural activity' is interpreted as meaning the agricultural activity, usually a core agricultural activity, to which the activity outlined in the particular provision relates. For example, searching for groundwater, (this being the activity outlined in paragraph 24(b)), will be eligible if it is solely for use in another agricultural activity, such as rearing of live-stock (this being the 'first-mentioned agricultural activity'), and is undertaken by you in the rearing of live-stock activity, or an entity contracted by you or by a subcontractor.

Class of entities

29. This Ruling applies to the class of entities who acquire or manufacture in, or import into, Australia, taxable fuel to the extent they do so for use in carrying on an enterprise which involves activities that are within the meaning of 'agriculture' in section 22 of the Energy Grants Act.

How to read this Ruling

30. The Ruling section sets out the Commissioner's view on entitlement to a fuel tax credit for taxable fuel acquired or manufactured in, or imported into Australia for use in carrying on an enterprise that involves activities within the meaning of 'agriculture'.

31. If you desire a more detailed analysis and explanation of the issues covered in the Rulings section, you should refer to the Explanation section in Appendix 1 of this Ruling.

32. This is followed by the Background section in Appendix 2 of this Ruling which provides an overview of the fuel tax credit system. Appendix 3 of this Ruling sets out a comparison table of the energy grants scheme and fuel tax credit system.

33. The Ruling is in this format so you can access more easily your specific areas of interest.

Ruling

General entitlement rules for a fuel tax credit

34. You are entitled to a fuel tax credit for taxable fuel that you acquire or manufacture in, or import into, Australia^[12] to the extent that you do so for use in carrying on your enterprise.^[13]

35. However, you are only entitled to the fuel tax credit if, at the time you acquire the taxable fuel, you are registered for GST, or required to be registered for GST.^[14] This is regardless of your turnover.^[15]

36. The fuel tax credit to which you are entitled is taken into account in calculating your net fuel amount. The net fuel amount must be calculated for each tax period. If your net fuel amount is a positive figure, you must pay this amount to the Commissioner. If the net fuel amount is a negative figure, the Commissioner must pay this amount to you.

37. During the period 1 July 2006 to 30 June 2009 your net fuel amounts for tax periods ending in a financial year were not to take into account more than $3 million of fuel tax credits unless you were a member of the Greenhouse Challenge Plus Programme (GCPP) or another programme determined by the Minister for the Environment, Heritage and the Arts.^[16] If you became a member of the GCPP within four years of the end of the financial year that you were unable to take such fuel tax credits into account, you could claim the entitlements as a decreasing fuel tax adjustment in the tax period you became a member of the GCPP.^[16A]

37A. Division 45 of the FT Act has been repealed from 1 July 2009. Consequently, you are no longer required to be a member of the GCPP in order to take into account more than $3 million in fuel tax credits in your net fuel amount for tax periods ending in a financial year.

37B. In addition, if you were not a member of the GCPP on 30 June 2009 then you are deemed to have been a member of the GCPP on that date.^[16B] This means that you can take into account fuel tax credits in excess of $3 million in your net fuel amount for any financial year between 1 July 2006 and 30 June 2009.^[16C] These credits are claimed as a decreasing fuel tax adjustment. The decreasing fuel tax adjustment is attributable to the tax period ending 30 June 2009. You will have four years from the end of that tax period to claim the entitlement.^[16D]

38. Taxable fuel means fuel on which customs or excise duty is payable.^[17]

39. You must be 'carrying on an enterprise' within the meaning of section 9-20 of the GST Act to be able to claim a fuel tax credit. The expression 'carrying on an enterprise' includes doing anything in the course of the commencement or termination of the enterprise.^[18]

40. The words 'to the extent that'^[19] in subsection 41-5(1) of the FT Act allow for apportionment between a use that entitles you to a fuel tax credit and one that does not. You can use any fair and reasonable basis for working out the amount of taxable fuel in respect of which you are entitled to a fuel tax credit.

41. The Commissioner's view is that the 'fair and reasonable' principle applies in determining the extent of your entitlement to a fuel tax credit if the fuel is acquired for a number of uses, some of which qualify for a fuel tax credit and some of which do not.

42. The apportionment method you choose needs to:

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be fair and reasonable;

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reflect the planned use of the taxable fuel if you are claiming a fuel tax credit on the basis of intended uses some of which qualify for the credit; and

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be appropriately documented in your individual circumstances.^[20]

Fuel tax credits arising between 1 July 2006 and 30 June 2008

43. Under the transitional provisions, if you acquire taxable fuel (namely diesel fuel) between 1 July 2006 and 30 June 2008 for use in carrying on your enterprise, you are entitled to a fuel tax credit under section 41-5 of the FT Act if you would have been entitled to an off-road credit in respect of the fuel.^[21]

44. In determining whether you would have been entitled to an off-road credit in respect of the fuel, it is assumed that:

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the references to 'purchase or import into Australia' in the Energy Grants Act were instead references to 'acquire or manufacture in, or import into, Australia'; and

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you had disregarded subsection 51(2), section 52 (registration requirements) and section 55A.^[22]

45. Under subsection 65-5(1) of the FT Act, your fuel tax credit is attributable to the same tax period as your input tax credit for the creditable acquisition of the taxable fuel under the GST Act, or the same tax period that an input tax credit would have been attributable under the GST Act if the taxable fuel had been a creditable acquisition or a creditable importation.^[23]

46. However, under item 12A of Schedule 3 to the Transitional Act, you may elect, before 31 December 2006, to receive early payments of fuel tax credits to which you are entitled for taxable fuel acquired between 1 July 2006 and 30 June 2008 (inclusive). If you receive an early payment of your fuel tax credit under these rules, you have an increasing fuel tax adjustment.

47. If you account on a cash basis and you provide part of the consideration for the taxable fuel in a tax period, your increasing fuel tax adjustment for an early payment of your fuel tax credit is attributable to that tax period but only to the extent that you provide the consideration in that tax period. In other cases, the increasing fuel tax adjustment is attributed to the earliest tax period to which your fuel tax credit can be attributed. Paragraphs 171 to 176 of this Ruling provide a detailed explanation of the early payments system.

Example 1 - early payment of fuel tax credits

48. Alex carries on business as a farmer. On 1 September 2006, Alex elects to receive early payments of fuel tax credits. Prior to 1 July 2006, Alex was entitled to energy grants for diesel fuel purchased for use in agriculture. Alex is a quarterly BAS lodger who accounts for GST on a cash basis.

49. On 12 October 2006, Alex purchases and pays for diesel fuel for use in his farming operations. Alex claims an early payment of $1,000 in respect of the taxable fuel he has acquired. The early payment is made to him on 9 November 2006.

50. In his BAS for the tax period ending 31 December 2006, Alex reports a fuel tax credit of a $1,000. Alex must also report an increasing fuel tax adjustment of $1,000 for this tax period.

51. Alex has a net fuel amount of nil for this tax period as his increasing fuel tax adjustment is equal to the amount of fuel tax credit to which he is entitled.

Example 2 - attribution and the early payment of fuel tax credits

52. Further to example 1, Alex acquires another quantity of diesel fuel for use in farming operations on 11 December 2006. Alex pays in full for the fuel on 3 January 2007. However, Alex does not acquire any taxable fuel from 1 January 2007 to 31 March 2007 (inclusive).

53. Alex claims an early payment of another $1,000. The early payment is made to him on 29 December 2006. Alex receives the early payment in the tax period ending 31 December 2006. However, as he pays for the fuel on 3 January 2007, the increasing fuel tax adjustment for the amount of the early payment is attributed to the tax period ending 31 March 2007 and not to the tax period ending on 31 December 2006.

54. For the tax period ending 31 March 2007, Alex has a net fuel amount of nil as his increasing fuel tax adjustment is equal to the amount of his fuel tax credit.

Fuel tax credits arising between 1 July 2008 and 30 June 2012

55. Under the transitional provisions, if you acquire taxable fuel between 1 July 2008 and 30 June 2012 for use in carrying on your enterprise, you are entitled to a fuel tax credit under section 41-5 of the FT Act if you would have been entitled to an off-road credit in respect of the fuel.^[24]

56. In determining whether you would have been entitled to an off-road credit in respect of the fuel, it is assumed that:

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the references to 'purchase or import into Australia' in the Energy Grants Act were instead references to 'acquire or manufacture in, or import into, Australia';

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you had disregarded subsection 51(2), section 52 (registration requirements) and section 55A of the Energy Grants Act; and

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the references to 'off-road diesel fuel' were instead references to the fuel.^[25]

57. From 1 July 2008, eligibility for a fuel tax credit extends to petrol used in off-road qualifying activities that were previously eligible for an off-road credit under the Energy Grants Act.

58. From 1 July 2008, you are also entitled to a fuel tax credit for taxable fuel acquired even if you are not entitled to an off-road credit for a qualifying use under section 53 of the Energy Grants Act. However, the amount of the credit is half of the fuel tax credit calculated under Division 43 of the FT Act (half credit).^[26]

59. From 1 July 2012, irrespective of whether or not the activity was a qualifying use under the Energy Grants Act, you are entitled to the full amount of the fuel tax credit for taxable fuel acquired, manufactured in or imported into Australia for use in carrying on your enterprise.

60. From 1 December 2011, coinciding with bringing alternative fuels^[27] into the fuel tax credit system, if you acquire, manufacture in, or import into, Australia alternative fuel^[28] for use in carrying on your enterprise you are entitled to a fuel tax credit for that fuel.^[29] This entitlement is to the full amount of the credit.

Entitlement to fuel tax credits for fuel acquired for use 'in agriculture'

61. If you carry on an enterprise in agriculture and you acquire taxable fuel for use in an activity that is within the meaning of 'agriculture', in paragraphs 22(1)(a) to 22(1)(i) and the activity is not excluded from being a qualifying use by paragraphs 22(2)(a) and 22(2)(b) you are entitled to a fuel tax credit under section 41-5 of the FT Act.

62. For diesel fuel that you acquire between 1 July 2006 and 30 June 2008 (inclusive) for a use in that activity, you are entitled to the full amount of the fuel tax credit.

63. For diesel fuel and petrol that you acquire between 1 July 2008 and 30 June 2012 (inclusive) for a use in that activity, you are entitled to the full amount of the fuel tax credit for agriculture.

64. For all taxable fuels that you acquire between 1 July 2008 and 30 June 2012 (inclusive), for use in an activity in agriculture for which an off-road credit under the energy grants scheme was not previously available, you are entitled to a half credit.

65. If, between 1 December 2011 and 30 June 2012 (inclusive), you acquire, manufacture or import, into Australia alternative fuel for use in agriculture, that is, in an activity that is within the meaning of agriculture' in paragraphs 22(1)(a) to 22(1)(i) and the activity is not excluded from being a qualifying use by paragraphs 22(2)(a) and 22(2)(b), you are entitled to the full amount of the fuel tax credit under section 41-5 of the FT Act.

The form of the definition of 'agriculture': means, includes, does not include

66. The use of the expressions, 'means', 'includes' and 'does not include' in the definition of 'agriculture' in section 22 means that paragraphs 22(1)(e) to 22(1)(i) do not limit paragraphs 22(1)(a) to 22(1)(d). An activity that does not meet the specific requirements of any of paragraphs 22(1)(e) to 22(1)(i) may still be an activity that satisfies the requirements of one or more of paragraphs 22(1)(a) to 22(1)(d) and, if not excluded by subsection 22(2), may be an eligible activity.

67. An activity mentioned in subsection 22(1) (other than hunting or trapping carried on for the purposes of a business, including the storage of any carcasses from the hunting or trapping) is an eligible activity only if it is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

Status of contractors and subcontractors

68. Where a farmer provides fuel for use by a contractor to carry out, for the farmer, an agricultural activity, as defined in subsection 28(1), and the activity is for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale, the farmer's entitlement to a fuel tax credit is not affected provided that the provision of fuel is not taken to be an acquisition of the fuel by the contractor.

69. A contractor or subcontractor is entitled to a fuel tax credit for taxable fuel they acquire for use in carrying on an agricultural activity as defined in subsection 28(1) provided the activity is for the purpose of, or for purposes that will directly benefit, a business undertaken to obtain, produce for sale.

Example 3: construction of a shed

70. Zeeland Grazing Enterprises Ltd (Zeeland) who carries on an enterprise as a pastoralist, contracts Big Sheds Pty Ltd (Big Sheds) to erect a new fodder shed on their farm. Big Sheds in turn engages Boots Concrete Ltd (Boots) to pour the concrete slab for the shed.

71. Big Sheds is entitled to a fuel tax credit for diesel fuel it purchases for use in the construction of the fodder shed.

72. Boots is entitled to a fuel tax credit for diesel fuel it purchases for use in pouring the concrete slab for the shed.

Replenishment by a farmer of fuel used in a contractor's plant or equipment

73. If you are a contractor and to carry out an agricultural activity for a farmer, you enter into a 'full on/full off' arrangement with the farmer (that is, you will replenish your plant or equipment with taxable fuel provided from the farmer's fuel supply) you are not entitled to a full tax credit for the fuel provided to you by the farmer. The Commissioner takes the view that you do not acquire fuel in these circumstances.

74. Under a full on/full off arrangement, a contractor is entitled to a fuel tax credit in respect of taxable fuel acquired by them for use in an eligible agricultural activity. This is the taxable fuel that they bring on to the farm in their plant or equipment. The farmer is entitled to a fuel tax credit in respect of taxable fuel acquired for use by that farmer in an eligible agricultural activity and that is used by a contractor in carrying out the agricultural activity on that farmer's agricultural property.

Example 4: 'full-on/full-off' arrangement

75. Big Harvesters Ltd (Big Harvesters) carries on an enterprise as a crop harvesting contractor. It agrees to harvest a field of wheat for Greenfarm Enterprises Ltd (Greenfarm). The agreement specifies that Big Harvesters will arrive on Greenfarm's property with a full tank of fuel in their combine harvester. All additional fuel required for the job will be provided by Greenfarm from the farm tank. At the end of the job, Big Harvesters is entitled to refill the combine harvester's tank prior to leaving the farm.

76. Big Harvesters is entitled to a fuel tax credit in respect of the taxable fuel it has acquired and used in harvesting the wheat for Greenfarm. This is the fuel that it brings onto the farm in its tank.

77. Greenfarm is entitled to a fuel tax credit for the taxable fuel that it has acquired for use in agriculture and that is used by Big Harvesters in the harvesting activity.

78. Greenfarm is not entitled to a fuel tax credit in respect of the taxable fuel it acquires to replenish Big Harvesters' combine harvester at the end of the agricultural activity. This taxable fuel is acquired by Big Harvesters for use in carrying on its enterprise and, if the fuel is subsequently used in an agricultural activity, Big Harvesters will be entitled to a fuel tax credit in respect of this fuel.

Activities that are agriculture

Cultivation of the soil

79. You are entitled to a fuel tax credit if you acquire taxable fuel for use in the cultivation of the soil provided the cultivation is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

Cultivation or gathering in of crops

80. You are entitled to a fuel tax credit if you acquire taxable fuel for use in the cultivation or gathering in of crops provided the cultivation or gathering in is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

Crop

81. The Commissioner takes the view that a 'crop' is the product of a harvest of cultivated plants, cereals, fruit and the like. The term 'crop' does not include goods produced from those harvested plants.

Gathering in of crops capable of being stored

82. In relation to crops that are capable of being stored, the 'gathering in' of the crop ceases when it is physically collected together for the first time on a farm.

83. If the crop is loaded directly from a harvester into a road vehicle^[30] that will take it away for processing or permanent storage, the gathering in ceases once the crop has been fully loaded onto the road vehicle for transport off the farm.

Gathering in of crops that cannot be stored

84. In relation to crops that are required to be processed soon after harvesting, that is, crops that cannot be stored (for example, parsley or sugar cane), the 'gathering in' of the crop ceases when it is physically collected together for the first time on a farm prior to its processing on or off the farm. If a crop is processed on the farm immediately after harvesting, the gathering in ceases when the crop is taken to the site of the processing plant or when it is first stockpiled ready for processing.

85. In some instances, a crop is taken directly by agricultural machinery (for example, a tractor and trailer combination) that is used as an integral part of the harvesting process from the field where it is grown to a processing plant or mill, or a central collection area located off the farm. In those cases, the crop is not gathered in until it is taken to the central collection area at the processing plant or mill or to another central collection area off the farm. However, this does not apply if the crop is taken from the farm to the processing plant or mill, or to another collection area off the farm, by road vehicles.

Rearing of live-stock

86. You are entitled to a fuel tax credit if you acquire taxable fuel for use in the rearing of live-stock provided the rearing of live-stock is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

87. For the purposes of paragraph 22(1)(c), rearing of live-stock means the breeding or raising of, and caring for, animals for the production of food, fibres, skins, fur or feathers, or for their use in the farming of land.

Viticulture

88. You are entitled to a fuel tax credit if you acquire taxable fuel for use in viticulture provided the viticulture is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

Horticulture

89. You are entitled to a fuel tax credit if you acquire taxable fuel for use in horticulture provided the horticulture is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

90. For the purposes of paragraph 22(1)(d), horticulture has its ordinary meaning, which is illustrated and expanded by section 33.

91. For the purposes of the energy grants scheme, horticulture does not extend to the commercial manufacture of goods produced for use by others in horticulture.

Gathering in of horticultural produce

92. If the horticultural produce is not transported immediately after picking or harvesting, but is stored on the agricultural property, for the purposes of the energy grants scheme, the 'gathering in' of the produce ceases when it is physically brought together for the first time. If the horticultural produce is transported immediately after picking or harvesting, the gathering in of the horticulture produce ceases when it is physically collected for the first time on the farm prior to its transport.^[31]

Pasturage

93. You are entitled to a fuel tax credit if you acquire taxable fuel for use in pasturage provided the pasturage is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

94. Pasturage includes agistment activities. Agistment activities are 'agriculture' for the purposes of the energy grants scheme, provided they are carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.^[32]

Example 5: pasturage - agistment carried on as part of a farming business

95. Shep Herd Enterprises Ltd (Shep Herd) carries on an enterprise as a pastoralist, it runs a sheep station in northern New South Wales. Shep Herd has a number of paddocks that are superfluous to its current requirements. Shep Herd, for a fee, allows Baa Bar Ltd, a neighbouring sheep farmer affected by drought, to graze sheep on its paddocks.

96. Shep Herd is entitled to a fuel tax credit for diesel fuel it purchases for use in pasturage activities it undertakes. The agistment activity that it undertakes is a qualifying use as pasturage.

Example 6: not pasturage - agistment that does not directly benefit a business undertaken to obtain produce for sale

97. Clover Land Enterprises Ltd (Clover Land) carries on an enterprise as a property developer. It has ten acres of fallow land outside a major rural town. It acquired the land for future housing development. Clover Land, for a small fee, allows Tony and Tania, who operate a horse-riding business to graze their horses on its land. Clover Land uses diesel fuel in the maintenance of fencing to prevent the horses from straying.

98. The agistment fee Clover Land receives is very small, and there is no prospect of profit from these activities in the future. Clover Land's agistment activities do not amount to a business and are not an enterprise, nor are they part of its enterprise of property development and are excluded from being an agricultural activity.

99. Tony and Tania are not undertaking a business to obtain produce for sale. The agistment activity is neither for the purposes of, nor for purposes that will directly benefit, a business undertaken to obtain produce for sale.

100. Clover Land is not entitled to a fuel tax credit in respect of the diesel fuel that it purchases for use in the agistment activities.

Apiculture

101. You are entitled to a fuel tax credit if you acquire taxable fuel for use in apiculture provided the apiculture is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

102. For apiculture to qualify as agriculture, it is not necessary that it be carried out on an agricultural property.^[33] However, the fact that an activity in apiculture is carried out on a property that is not ordinarily used for an agricultural activity does not have the effect of converting that property into an agricultural property.

Activities included as agriculture

Solely

103. Some activities included in the definition of agriculture must be ' solely' for a particular purpose.^[34]

104. The Commissioner considers that if you acquire taxable fuel for use in a number of activities, an apportionment can be made as to its intended use in the different activities. If a portion of the fuel is acquired for use in a qualifying activity that has the 'solely' requirement, an entitlement to a fuel tax credit arises for the portion of the fuel that is acquired for use in the activity that qualifies as agriculture.

Live-stock activity

105. You are entitled to a fuel tax credit if you acquire taxable fuel for use in a live-stock^[35] activity, as defined in section 23, provided the activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

106. For the purposes of the energy grants scheme the Commissioner takes the view that the term live-stock takes on its ordinary meaning, which is affected by the definition of 'live-stock' in subsection 23(2).

Agricultural soil/water activity

107. You are entitled to a fuel tax credit if you acquire taxable fuel for use in an agricultural soil or water activity provided the activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

Agricultural construction activity

108. You are entitled to a fuel tax credit if you acquire taxable fuel for use in an agricultural construction activity provided the activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

Agricultural waste activity

109. You are entitled to a fuel tax credit if you acquire taxable fuel for use in an agricultural waste activity, provided the activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

110. For the purposes of section 26, a waste product of an agricultural activity is a by-product of an agricultural activity that is useless, rejected, not wanted or economically unusable and which is to be discarded.

Sundry agricultural activity

111. You are entitled to a fuel tax credit if you acquire taxable fuel for use in a sundry agricultural activity as defined in section 27 provided the activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.^[36]

Use of taxable fuel 'at' residential premises

112. For the purposes of paragraph 27(j), the use of taxable fuel is 'at' residential premises if the plant or equipment in which it is to be used is appurtenant to and coherent with premises sufficient for it to be said that it belongs to the premises.

Activities excluded from the definition of agriculture

Forestry or fishing operations

113. You are not entitled to a fuel tax credit under the category of agriculture for activities that constitute fishing operations^[37] or forestry^[38] (paragraph 22(2)(a)).

Activities not undertaken as part of a business to obtain produce for sale

114. You are not entitled to a fuel tax credit for taxable fuel you acquire for use in an activity mentioned in subsection 22(1), unless the activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.^[39]

115. The exclusion in paragraph 22(2)(b) does not apply to hunting or trapping, including the storage of any carcasses or skins obtained from the hunting or trapping, that is carried out for the purposes of a business.

116. An activity will directly benefit a business undertaken to obtain produce for sale if there is a close and immediate positive effect or benefit from the activity in question to the business.

Example 8: activity not excluded from agriculture - vineyard

117. Marcwines Ltd (Marcwines) has 50 acres of land in the Adelaide Hills and has erected trellises and planted pinot noir grapevines on five acres of the property. Marcwines, through its managing director, has grape growing expertise, and has undertaken a scientific study to ensure the suitability of the land for the intended activity. A business plan has been prepared, which allows for gradual expansion of the area under vine, and should result in profitability being achieved within five years.

118. Marcwines has been accepted as carrying on an enterprise and is registered for GST. It has also been accepted as carrying on a business for the purpose of obtaining produce for sale. Marcwines is entitled to fuel tax credits for taxable fuel it acquires for use in its agricultural activities.

Example 9: activity excluded from agriculture - hobby farm

119. Jo, a retired accountant, owns 2 acres of land at Clare in South Australia's mid north. Jo has no experience in relation to farming. She grazes 6 ewes on the property. She uses diesel fuel for pumping water on the property, and cultivating pasture for the sheep. She plans to increase the size of the flock, and believes her operations will be profitable once she has a flock of 300 sheep. A contract shearer is hired each year to shear the sheep.

120. The Department of Agriculture has advised that the carrying capacity of the land is only 20 sheep. Jo's current and prospective operations will not be capable of achieving profitability.

121. Jo cannot be registered for GST as she is not carrying on an enterprise. Jo's activities on the property are not for the purpose of a business or for purposes that will directly benefit a business undertaken to obtain produce for sale.

122. Jo is not entitled to a fuel tax credit for taxable fuel she acquires for use in any of the activities she carries on.

Example 10: activities not excluded from agriculture - church owned farm

123. The Welcome Church is a religious institution. One of its activities is conducting a farming business that involves running three hundred head of cattle on 2,000 acres of prime grazing land that it owns. The Church's farming business is very profitable. The Church puts some of the profit toward the development of the farm, and the remaining profit is used to fund the Church's outreach programme.

124. Given the scale and profitability of the Church's agricultural activities, the Church is conducting a business (and therefore an enterprise) undertaken to obtain produce for sale. The agricultural activities that it carries out on the farm are not excluded from the definition of agriculture by paragraph 22(2)(b).

Example 11: activities excluded from agriculture - agricultural college

125. Agricola College (Agricola), which carries on an enterprise as an agricultural college, runs horticulture courses. The majority of its expenditure is directed toward providing education. However, some plants are propagated by the college in the course of the educational activities, and are sold at its annual open day.

126. Agricola is not concerned with making a profit from the sale, which improves attendances at its open day and offsets some of the expenses of propagation. The college does not sell the plants at any other time of the year and the potential revenue from the sale of the plants is minimal relative to the expense of the propagation of the plants.

127. Although Agricola is carrying on an enterprise as an agricultural college, which provides courses in horticulture and carrying on some agricultural activities, its agricultural activities would not be considered a business to obtain produce for sale. The agricultural activities of the college are excluded from the definition of agriculture by paragraph 22(2)(b).

128. However, from 1 July 2008 as Agricola is carrying on an enterprise which involves conducting some agricultural activities, Agricola will be entitled to a half credit for taxable fuel that it acquires for use in its carrying on its enterprise.

The exclusion from the qualifying use 'in primary production' of taxable fuel acquired for use in propelling a road vehicle on a public road

129. You are not entitled to a fuel tax credit under the qualifying activity of agriculture for taxable fuel acquired for use in propelling a road vehicle^[40] on a public road.

130. However, you are entitled to a fuel tax credit under section 41-5 of the FT Act for taxable fuel you acquire for use in a vehicle^[41] with a GVM greater than 4.5 tonnes, travelling on a public road.^[42]

What is a road vehicle?

131. A vehicle is a 'road vehicle' if it is of a kind commonly or regularly used on roads for the transport of persons or goods. The Commissioner considers that tray trucks, dump trucks and truck and trailer combination vehicles, which are vehicles ordinarily used to transport agricultural produce, are road vehicles for the purposes of the subsection 53(2) primary production exclusion.

132. The Commissioner is of the view that tractors, tractor and trailer combinations, fertiliser spreaders, harvesters and sprayers are not vehicles of a kind ordinarily used on roads for the transport of persons or goods. They are not road vehicles for the purposes of the subsection 53(2) primary production exclusion.

133. However, tractors, tractor/trailer combinations, fertiliser spreaders, harvesters and sprayers with a GVM of 4.5 tonnes or less are vehicles for the purposes of section 41-20 of the FT Act. Under section 41-20 of the FT Act, you are not entitled to a fuel tax credit for taxable fuel acquired for use in a vehicle with a GVM of 4.5 tonnes^[43] or less travelling on a public road.

Example 12: transportation of sugar cane from a farm to a collection pad next to a railway siding by a tractor/trailer combination

134. Abel and Kane carry on an enterprise of sugar cane farming and are registered for GST. Abel and Kane's farm adjoins a public road and is located a short distance (two kilometres) from a cane railway siding. Abel and Kane deliver their sugar cane directly to a collection pad next to the railway siding. They use their own tractor and trailer combination, which has a GVM greater than 4.5 tonnes, to transport the sugar cane from the cane field to the collection pad. The sugar cane is subsequently hauled by rail to the sugar cane mill.

135. The tractor and trailer combination is predominantly used on the agricultural property and is an integral part of the harvesting equipment, and is not a road vehicle, as it is not a vehicle of a kind ordinarily used on roads for the transport of goods.

136. Taxable fuel acquired for use in propelling the tractor and trailer combination on a public road to take the sugar cane to the railway siding is not excluded from being use in primary production by the subsection 53(2) primary production exclusion. As this transport is prior to the completion of the gathering in of the crop, and the travel of the tractor and trailer combination on the public road is incidental to its main use, Abel and Kane are entitled to a fuel tax credit in respect of this taxable fuel. The amount of the fuel tax credit is not reduced by the road user charge.

Example 13: transportation of sugar cane from a farm to a collection pad next to a railway siding by a road vehicle

137. Drawing on the facts in Example 12, Abel and Kane decide to use the services of transport contractor, George Transport Enterprises Ltd (George Transport) to transport, via the public road, the harvested sugar cane from a central collection area on the farm to the collection pad next to the railway siding.

138. Abel and Kane deliver the harvested sugar cane to the central collection area on the farm by their tractor and trailer combination. George Transport uses a prime mover and trailer to transport the harvested sugar cane from the central collection area on the farm to the collection pad next to the railway siding. The prime mover and trailer is modified to transport the harvested sugar cane in canetainers and has a GVM greater than 4.5 tonnes.

139. The prime mover and trailer used by George Transport is a vehicle of a kind ordinarily used in transporting of goods. It is a road vehicle. As the transport of sugar cane by George Transport involves travel on a public road, taxable fuel acquired for use in propelling the prime mover and trailer is excluded from being use in primary production by the subsection 53(2) primary production exclusion.

140. If the subsection 53(2) primary production exclusion did not apply in relation to the use of the prime mover and trailer, the transport of sugar cane undertaken by George Transport would still not be an eligible activity in agriculture as the transport from farm to the collection pad next to the railway siding is after the crop has been gathered in.

141. George Transport is entitled to a fuel tax credit for use in a vehicle with a GVM greater than 4.5 tonnes, travelling on a public road under section 41-5 of the FT Act. The amount of the fuel tax credit is reduced by the amount of the road user charge.

142. Abel and Kane are entitled to fuel tax credit for taxable fuel acquired for use in propelling the tractor and trailer combination as the taxable fuel is used in the gathering in of the crop.

Example 14: travel of a self-propelled mechanical grape harvester on a public road between two vineyards

143. Jake carries on an enterprise as a grape grower. Jake has two parcels of land a kilometre apart under vines. The two vineyards adjoin a public road. Jake contracts the harvesting of his grapes to Fine Vine Harvesters (Fine Vine).

144. Fine Vine picks the grapes by use of a self-propelled mechanical grape harvester which has a GVM greater than 4.5 tonnes. The harvester travels as required between the two vineyards to harvest the different grape varieties in a continuous process.

145. Taxable fuel acquired for use in propelling the mechanical grape harvester on the public road is a qualifying use for an off-road credit under paragraph 22(1)(d). The grape harvester is not a 'road vehicle' for the purposes of the subsection 53(2) primary production exclusion and the travel is undertaken in carrying out an agricultural activity, being the gathering in of crops. Jake is therefore entitled to a fuel tax credit for the fuel used in the mechanical grape harvester. As the grape harvester's travel on the public road is incidental to its main use, the amount of the fuel tax credit is not reduced by the road user charge.

Meaning of 'public road'

Roads that are public roads

146. For the purposes of the subsection 53(2) primary production exclusion, the Commissioner considers that a road is a public road if:

•

it is opened, declared or dedicated as a public road under a statute;

•

it is vested in a government authority having statutory responsibility for the control and management of public road infrastructure; or

•

it is dedicated as a public road at common law.

Roads that are not public roads

147. The Commissioner considers that the following are not public roads for the purposes of the subsection 53(2) primary production exclusion:

•

a road constructed or maintained under a statutory regime by a public authority that is not an authority responsible for the provision of road transport infrastructure, in circumstances where the statutory regime provides that public use of, or access to, the road is subordinate to the primary objects of the statutory regime; or

•

a road that has not been dedicated as a public road over privately owned land.

Date of effect

148. This Ruling applies from 1 July 2006.

149. However, the Ruling does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Ruling (see paragraphs 75 to 77 of Taxation Ruling TR 2006/10 Income tax, fringe benefits tax and product grants and benefits: Public Rulings).

Note: the Addendum to this Ruling that issued on 15 August 2007 explains our view of the law as it applied as follows:

•

paragraph 3 of the Addendum apply on and from 1 July 2006; and

•

paragraphs 1, 2 and 4 of the Addendum apply on and from 1 July 2007.

Withdrawal

150. This Ruling is withdrawn and ceases to have effect on 1 July 2012. The Ruling continues to apply, in respect of the fuel tax law ruled upon, to all taxpayers within the specified class who acquire, manufacture in, or import into Australia, taxable fuel before 1 July 2012. Thus, the Ruling continues to apply to those taxpayers, even following its withdrawal, who acquire taxable fuel prior to the withdrawal of the Ruling (see paragraph 46 of TR 2006/10).

Commissioner of Taxation
4 October 2006

Appendix 1 - Explanation

151. The fuel tax credit system commenced on 1 July 2006. Prior to the commencement of the fuel tax credit system, claims for an energy grant for off-road credits for diesel fuel purchased for the qualifying use of primary production (the definition of which in section 21 includes agriculture) were made under the energy grants scheme.

General entitlement rules for a fuel tax credit

152. You are entitled to a fuel tax credit^[44] for taxable fuel that you acquire or manufacture in, or import into, Australia to the extent that you do so for use in carrying on your enterprise.^[45]

153. However, you are only entitled to the fuel tax credit if, at the time you acquire the taxable fuel, you are registered for GST, or required to be registered for GST.^[46] This is regardless of your turnover.

154. You must be 'carrying on an enterprise' within the meaning of section 9-20 of the GST Act to be able to claim a fuel tax credit. The expression 'carrying on an enterprise' includes doing anything in the course of the commencement or termination of the enterprise.

155. The expressions 'fuel tax', 'taxable fuel', 'acquire or manufacture in', and for 'use in carrying on your enterprise' are concepts that differ to terms used in the Energy Grants Act.

156. Fuel tax^[47] means duty that is payable on fuel under the Excise Act 1901 or the Customs Act 1901 and the respective Tariff Acts^[48], other than any duty that is expressed as a percentage of the value of fuel for the purposes of section 9 of the Customs Tariff Act 1995.

157. Taxable fuel means fuel on which customs or excise duty is payable.^[49]

158. You will not be considered to have used the taxable fuel if you sell the taxable fuel to another entity.^[50]

159. You only need to acquire taxable fuel with the intention of using it for an eligible purpose to become entitled to a fuel tax credit. It is not necessary for the taxable fuel to have been used by you at the time you make the claim. However, if you acquire the taxable fuel with the intention of using it for a particular purpose but subsequently use the taxable fuel for a different purpose and the amount of fuel tax credit worked out on the basis of the intended use is different from the amount you are actually entitled to worked out on the basis of actual use, you will have a fuel tax adjustment.^[51]

160. Under the FT Act, you are required to calculate your net fuel amount^[52] for each tax period.^[53] Your net fuel amount is worked out using the formula^[54] set out in subsection 60-5(1) of the FT Act. The net fuel amount is claimed on your Business Activity Statement (BAS). If the net fuel amount is positive, you must pay that amount to the Commissioner. If the net fuel amount is negative, the Commissioner must pay that amount to you. The attribution rules in Division 65 of the FT Act determine the tax period to which your fuel tax credit is attributed.^[55]

161. During the period 1 July 2006 to 30 June 2009 your net fuel amounts for tax periods ending in a financial year were not to take into account more than $3 million of fuel tax credits unless you were a member of the Greenhouse Challenge Plus Programme (GCPP) or another programme determined by the Minister for the Environment, Heritage and the Arts.^[56] If you became a member of the GCPP within four years of the end of the financial year that you were unable to take such fuel tax credits into account, you could claim the entitlements as a decreasing fuel tax adjustment in the tax period you became a member of the GCPP.^[56A]

161A. Division 45 of the FT Act has been repealed from 1 July 2009. Consequently, you are no longer required to be a member of the GCPP in order to take into account more than $3 million in fuel tax credits in your net fuel amount for tax periods ending in a financial year.

161B. In addition, if you were not a member of the GCPP on 30 June 2009 then you are deemed to have been a member of the GCPP on that date.^[56B] This means that you can take into account fuel tax credits in excess of $3 million in your net fuel amount for any financial year between 1 July 2006 and 30 June 2009.^[56C] These credits are claimed as a decreasing fuel tax adjustment. The decreasing fuel tax adjustment is attributable to the tax period ending 30 June 2009. You will have four years from the end of that tax period to claim the entitlement.^[56D]

General principles of apportionment

162. The words 'to the extent that'^[57] in subsection 41-5(1) allow for apportionment between a use that qualifies and one that does not. You can use any reasonable basis for apportionment to work out your entitlement to a fuel tax credit if you acquire taxable fuel that you use for qualifying and non-qualifying uses.

163. An apportionment can be made on the basis of an intended use even if precise quantification cannot be made at the time that the taxable fuel is acquired.

164. In Collector of Customs v. Pozzolanic Enterprises Pty Limited,^[58] in relation to the facts of that case, the Court stated:

The fact that only a proportion of the fuel so purchased was intended for that use and the fact that it might not be precisely quantified at the point of sale does not take the purchase outside the rebate provisions. So long as there is some means of establishing that a proportion of the fuel is to be used for an exempt purpose, the precise quantification can await the actual use.^[59]

165. If you acquire taxable fuel partly for use in carrying on your enterprise of agriculture, apportionment of the fuel tax credit referable to that acquisition is required. In practice, this will usually involve an initial decision about whether the acquisition of the fuel is 'solely' for a particular purpose (in which case apportionment will not be required).

166. The principles to be applied in identifying situations where apportionment is appropriate in an income tax context, and the method to be employed where apportionment is required, were considered by the High Court in Ronpibon Tin NL v. FC of T^[60]. In that case, the High Court considered what part of management and administrative expenses incurred by a taxpayer (whose principal business activity had been interrupted by World War II), were referable to gaining or producing assessable income. The High Court considered both the allocation of distinct expenditure to specific activities, and also apportionment, and said:

In applying the foregoing test or standard separate and distinct items of expenditure should be dealt with specifically. To begin with there are the payments by Ronpibon Tin No Liability to the dependants of members of that company's Eastern staff. ...from the point of view of the income-tax law they could not be regarded as business expenditure...

In the next place the cost incurred by the same company in cables and other communications with reference to the buffer stock scheme cannot be deducted. ... Sufficient details do not appear to say what other distinct and severable items are wholly incapable of reference to the gaining of assessable income.

The charges for management and the directors' fees are entire sums which probably cannot be dissected. But the provision contained in s.51(1) [of the ITAA 1936], as has already been said, contemplates apportionment. The question what expenditure is incurred in gaining or producing assessable income is reduced to a question of fact when once the legal standard or criterion is ascertained and understood. This is particularly true when the problem is to apportion outgoings which have a double aspect, outgoings that are in part attributable to the gaining of assessable income and in part to some other end or activity. It is perhaps desirable to remark that there are at least two kinds of items of expenditure that require apportionment.

One kind consists in undivided items of expenditure in respect of things or services of which distinct and severable parts are devoted to gaining or producing assessable income and distinct and severable parts to some other cause. In such cases it may be possible to divide the expenditure in accordance with the applications which have been made of the things or services. The other kind of apportionable items consists in those involving a single outlay or charge which serves both objects indifferently. Of this directors' fees may be an example. With the latter kind there must be some fair and reasonable assessment of the extent of the relation of the outlay to assessable income. It is an indiscriminate sum apportionable, but hardly capable of arithmetical or rateable division because it is common to both objects. ^[61]

167. The High Court therefore emphasised the necessity of considering the facts of individual cases. Where items of expenditure ('acquire, manufacture in, or import into, Australia' in the context of the FT Act) are not referable to a particular object, then apportionment is required using a method which results in a fair and reasonable reflection of the relation of the expenditure to assessable income.

168. Following the principles set out by the High Court, the method you choose to apportion the taxable fuel that you acquire between a qualifying use and a non-qualifying use needs to:

•

be fair and reasonable;

•

reflect the planned use of the taxable fuel if you are claiming on the basis of intended use; and

•

be appropriately documented in your individual circumstances.

Fuel tax credits arising between 1 July 2006 and 30 June 2008

169. Under the transitional provisions, if you acquire taxable fuel between 1 July 2006 and 30 June 2008 (inclusive) for use in carrying on your enterprise, you are entitled to a fuel tax credit under section 41-5 of the FT Act if you would have been entitled to an off road credit under the energy grants scheme in respect of the fuel.^[62]

170. In determining whether or not you would have been entitled to an off-road credit in respect of the fuel, it is assumed that:

•

the references to 'purchase or import into Australia' in the Energy Grants Act were instead references to 'acquire or manufacture in, or import into, Australia'; and

•

you had disregarded subsection 51(2), section 52 (registration requirements) and section 55A of the Energy Grants Act.^[63]

Early payments of fuel tax credits

171. Under the transitional provisions, you may elect to receive an early payment of fuel tax credit for taxable fuel acquired between 1 July 2006 and 30 June 2008.^[64]

172. The Commissioner must make an early payment^[65] to you, if:

•

you elect before 31 December 2006 (on the approved form) to receive early payments of the fuel tax credit;

•

you were previously entitled an energy grant under the Energy Grants Act;

•

you acquire taxable fuel between 1 July 2006 and 30 June 2008 (inclusive);

•

you are entitled to a fuel tax credit under section 41-5 of the FT Act as affected by the Transitional Act;

•

the fuel tax credit or part of the fuel tax credit is attributable to:

•

if you account on a cash basis - the tax period in which the claim for the early payment is made or a later tax period;^[66]

•

if you do not account for the GST on a cash basis - the tax period in which the claim for early payment is made;^[67] and

•

you have not previously received an early payment of the fuel tax credit for the taxable fuel.^[68]

173. The amount of the early payment is the amount of the fuel tax credit to which you are entitled.^[69]

174. If you:

•

receive an early payment;

•

account on a cash basis; and

•

in a tax period provide part of the consideration for the taxable fuel,

you have an increasing fuel tax adjustment for the amount of the early payment, but only to the extent that the you provide the consideration in that tax period. The increasing fuel tax adjustment is attributable to that tax period.^[70]

175. If you:

•

receive an early payment; and

•

account on a non-cash basis,

you have an increasing fuel tax adjustment for the amount of the early payment. The increasing fuel tax adjustment is attributable to the earliest tax period to which the credit can be attributed.^[71]

176. If you elect to receive early payments you are not obligated to claim all fuel tax credits as an early payment. Fuel tax credits not claimed as any early payment can be claimed on your BAS in the relevant tax period.

Fuel tax credits arising between 1 July 2008 and 30 June 2012

177. Under the transitional provisions, if you acquire taxable fuel between 1 July 2008 and 30 June 2012 (inclusive) for use in carrying on your enterprise, you are entitled to a fuel tax credit under section 41-5 of the FT Act if you would have been entitled to an off-road credit in respect of the fuel.^[72]

178. From 1 July 2008, eligibility for a fuel tax credit also extends to petrol used in off-road activities that were previously eligible for an off-road credit under the Energy Grants Act.

179. In determining whether or not you would have been entitled to an off-road credit in respect of the fuel, it is assumed that:

•

the references to 'purchase or import into Australia' in the Energy Grants Act were instead references to 'acquire or manufacture in, or import into, Australia' and references to 'off-road diesel fuel' were instead references to taxable fuel;

•

you had disregarded subsection 51(2), section 52 (registration requirements) and section 55A of the Energy Grants Act; and

•

the references to 'off-road diesel fuel' were instead references to the fuel.^[73]

180. From 1 July 2008, under the transitional provisions, if you are not entitled to an off-road credit for a qualifying use under section 53 of the Energy Grants Act, you are entitled to a fuel tax credit for taxable fuel (includes diesel and petrol) under section 41-5 of the FT Act. However, your entitlement is limited to a half credit.^[74]

181. From 1 July 2012, irrespective of whether or not the activity was a qualifying use under the Energy Grants Act, you will be entitled to the full amount of the fuel tax credit for taxable fuel.

182. From 1 December 2011, coinciding with bringing alternative fuels^[75] into the fuel tax system, if you acquire, manufacture in, or import into, Australia alternative fuel^[76] for use in carrying on your enterprise.^[77]

Entitlement to fuel tax credits for taxable fuel acquired between 1 July 2006 and 30 June 2012 for use in agriculture

183. You are entitled to a fuel tax credit^[78] for taxable fuel you acquire for use or used 'in primary production'. Agriculture is included in the definition of 'primary production' in section 21. The expression 'agriculture' is defined in subsection 22(1).

184. In the context of the phrase 'in primary production' in subsection 53(2), the preposition 'in' means 'in the course of' or 'in the process or act of'. Therefore, if an activity can be said to have taken place 'in the course of' primary production, whether that primary production is agriculture, fishing operations or forestry, it can be concluded that it takes place 'in' primary production. As 'agriculture' is included in the definition of primary production, to be entitled to a fuel tax credit under agriculture, your activities must take place 'in' agriculture.

185. In Chief Executive Officer of Customs v. WMC Resources Ltd (as agent for East Spar Alliance),^[79] Nicholson J, stated:

The word 'in' as it appears in para (a) of the definition of 'mining operations' is to be understood in this context as 'inclusion within, or occurrence during the course of...'

186. The Commissioner considers that the following three criteria may be relevant in determining if an activity takes place 'in the course of' agriculture.^[80]

These are:

•

a causal link exists - in other words, a certain activity is functionally integrated with agriculture, thereby forming an essential part of it;

•

a spatial link exists - meaning that an activity takes place in an area set aside or utilised for agriculture; and

•

a temporal link exists - the activity takes place in a timely fashion, not prior to, or after the completion of, the agricultural activity.

187. The relevance or weighting afforded to these criteria will vary depending on the facts in each case.

The form of the definition of 'agriculture': means, includes, does not include

188. The definition of 'agriculture' in section 22 consists of three parts:

•

subsection 22(1), paragraphs (a) to (d) : 'agriculture' means the cultivation of the soil, the cultivation or gathering in of crops, the rearing of live-stock, viticulture, horticulture, pasturage or apiculture;

•

subsection 22(1), paragraphs (e) to (i) : 'agriculture' includes a number of specific activities. Each of these activities is then separately defined in sections 23 to 27; and

•

subsection 22(2), paragraphs (a) and (b) : 'agriculture' does not include the specific operations or activities detailed in these paragraphs.

189. The use of the form 'means ... includes ... does not include' in section 22 means that paragraphs 22(1)(a) to 22(1)(d) contain the central features of 'agriculture', which is then expanded by the specific activities listed in paragraphs 22(1)(e) to 22(1)(i). All activities contained in paragraphs 22(1)(a) to 22(1)(i) are subject to the specific exclusions contained in paragraphs 22(2)(a) and 22(2)(b). If an activity is within one of paragraphs 22(1)(a) to 22(1)(i) and is not excluded by subsection 22(2), you are entitled to a fuel tax credit if you acquire taxable fuel for use in that activity.

190. The use of the expressions, 'means', 'includes' and 'does not include' in the definition of 'agriculture' in section 22 means that activities that are not expressly covered in paragraphs 22(1)(e) to 22(1)(i) may still be eligible if they fit within the broad activities outlined in paragraphs 22(1)(a) to 22(1)(d). Paragraphs 22(1)(e) to 22(1)(i) do not provide an exhaustive list of eligible activities. Rather, they add to the list of eligible activities in paragraphs 22(1)(a) to 22(1)(d).

191. The form of the definition of 'agriculture': means, includes, does not include is substantially the same as that used for the definition of agriculture in the diesel fuel rebate scheme. Decisions of the Courts and the AAT in relation to the diesel fuel rebate provisions are, in the Commissioner's view, relevant to the interpretation of section 22.

192. In the same way that the list of specific activities is not exhaustive in terms of eligibility, an activity does not have to be mentioned in subsection 22(2) to be excluded from the definition of 'agriculture'. This subsection serves merely to exclude particular activities from the definition of 'agriculture', while other activities will be excluded because they do not fall within the meaning of 'agriculture'.

193. In practical terms, in determining whether a certain activity is in 'agriculture' and, therefore, eligible for an off-road credit, it is appropriate to consider:

•

firstly, whether the activity falls within one of paragraphs 22(1)(e) to 22(1)(i). If it does and the activity is not excluded by subsection 22(2), it will be 'agriculture' for the purposes of the off-road credits scheme (and therefore the fuel tax credit system); and

•

secondly, if the provisions of paragraphs 22(1)(e) to 22(1)(i) are not met, whether the activity otherwise comes within paragraphs 22(1)(a) to 22(1)(d) of the definition of 'agriculture'. If it does and the activity is not excluded by subsection 22(2), it will be 'agriculture' for the purposes of the off-road credits scheme (and therefore the fuel tax credit system).

194. This approach ensures that appropriate consideration is given to the specific activities in paragraphs 22(1)(e) to 22(1)(i) in determining whether a particular activity is in 'agriculture' and is a qualifying use under the energy grants scheme.

195. The meaning of 'in agriculture' is not restricted to the physical act of cultivation, gathering in of crops, rearing of live-stock, viticulture, horticulture, pasturage or apiculture. In determining whether an activity takes place 'in the course of' agriculture, the three criteria in paragraph 186 of this Ruling should be applied.

196. The manner in which the definition of agriculture in the Energy Grants Act is structured means that the activities set out in subsection 22(1) are 'in agriculture'.

197. However, paragraph 22(2)(b) has the effect of excluding all the activities set out in subsection 22(1), other than the activity set out in paragraph 27(i),^[81] from being within the definition of agriculture unless those activities are carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

198. This means that, for the purposes of the energy grants scheme, for an activity to be agriculture, it must be carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

199. In determining whether a business is carried on, no one factor is conclusive. Each case must turn on its own particular facts and be determined via a process of evaluation, after weighing all the relevant factors. The courts have held that the following indicators are relevant in determining whether a business is carried on:

•

the activity has a significant commercial purpose or character; this indicator comprises many aspects of the other indicators;

•

the entity has more than just an intention to engage in business;

•

the entity has a purpose of profit as well as a prospect of profit from the activity;

•

there is repetition and regularity of the activity;

•

the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business;

•

the activity is planned, organised and carried on in a businesslike manner such that it is directed at making a profit;

•

the size, scale and permanency of the activity; and

•

the activity is not better described as a hobby, a form of recreation or a sporting activity.^[82]

Status of contractors and subcontractors

200. Unless otherwise specified, if you undertake an eligible agricultural activity that has the requisite connection to a business undertaken to obtain produce for sale you are entitled to a fuel tax credit.

201. A number of activities that are within the definition of agriculture specifically require the relevant activity to be undertaken by either a farmer,^[83] or an entity contracted by the farmer. Examples include:

•

the mustering of live-stock (paragraph 23(1)(d));

•

soil or water conservation activities (paragraphs 24(a) and 24(c));

•

the construction of fences (paragraph 25(a));

•

the construction of firebreaks (paragraph 25(b));

•

the carrying out of earthworks (paragraph 25(e)); and

•

firefighting activities (paragraph 27(d)).

202. Where a farmer provides their fuel for use by a contractor to carry out, for the farmer, an agricultural activity, as defined in subsection 28(1), and the activity is for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale, the farmer's entitlement to a fuel tax credit is not affected provided that the provision of fuel is not taken to be an acquisition for the fuel by the contractor.

203. A contractor is entitled to a fuel tax credit if they acquire taxable fuel for use in carrying out an agricultural activity as defined in subsection 28(1), provided the activity is for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.^[84]

204. The range of entities that are entitled to a fuel tax credit is expanded by subsection 28(2). This subsection provides that in determining whether an activity is an agricultural activity, each of the activities mentioned in paragraphs 28(2)(a) to 28(2)(d), is also an agricultural activity when it is carried on by a subcontractor.

205. A subcontractor is entitled to a fuel tax credit in respect of taxable fuel they acquire for use in any one of the activities mentioned in paragraphs 28(2)(a) to 28(2)(d) provided the activity is for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.^[85]

Replenishment by a farmer of fuel used in a contractor's plant or equipment

206. A contractor is entitled to a fuel tax credit in respect of taxable fuel they acquire for use in agricultural activities, and a farmer is entitled to a fuel tax credit in respect of taxable fuel acquired by them for use in agriculture.

207. Where a contractor carries out an activity for a farmer, it is often agreed between the parties that the contractor will be able to replenish their plant or equipment with fuel from the farmer's fuel supply both throughout the activity and upon its completion. This is commonly referred to as a 'full on/full off' arrangement.

208. The Commissioner considers that taxable fuel acquired by a farmer for use in agriculture and used by a contractor in carrying out an eligible agricultural activity for that farmer, under a full on/full off arrangement, is not sold or otherwise disposed of by the farmer and therefore not considered to be taxable fuel acquired by the contractor. In circumstances where it is not intended that proprietary interest in the taxable fuel passes from the farmer to the contractor, the contractor is not entitled to a fuel tax credit in respect of this fuel. The farmer provides the fuel for use by a contractor in agriculture. The farmer's entitlement to a fuel tax credit is not affected by the use of the fuel by the contractor in carrying out eligible activities.^[86]

209. However, the farmer's entitlement to a fuel tax credit is affected if the fuel used to replenish the contractor's plant or equipment at the end of the particular activity is not used in agriculture. This occurs when the services are performed and the arrangement between the farmer and the contractor ends. In this situation, the farmer uses the fuel for a purpose other than the eligible use for which it was acquired. Under section 55, an entity is not entitled to an off-road credit if taxable fuel they acquire is used for a purpose other than the eligible activity for which it was acquired, unless that other use is also a qualifying use, or if the fuel is sold or otherwise disposed of.

210. Therefore, under a full on/full off arrangement, a contractor is entitled to a fuel tax credit in respect of taxable fuel acquired by them for use in an eligible agricultural activity. The farmer is entitled to a fuel tax credit in respect of taxable fuel acquired for use by that farmer in an eligible agricultural activity and that is used by a contractor in carrying out the agricultural activity on that farmer's agricultural property.

The meaning of 'agriculture'

211. Paragraphs 22(1)(a) to 22(1)(d) contain the central meaning of 'agriculture'. The activities outlined in these paragraphs are referred to as core agricultural activities.^[87] These core agricultural activities are:

•

the cultivation of the soil;

•

the cultivation and gathering in of crops;

•

the rearing of live-stock; and

•

viticulture, horticulture, pasturage and apiculture.

Cultivation of the soil

212. The definition of 'agriculture' in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture means:

(a)

the cultivation of the soil

213. The phrase 'cultivation of the soil' is not defined in the Energy Grants Act and therefore takes its ordinary meaning. The term 'cultivate' is defined in The Australian Oxford Dictionary^[88] as:

1. a prepare and use (soil etc.) for crops or gardening, b break up (the ground) with a cultivator. 2. a raise or produce (crops).

214. The expression 'cultivation of the soil' in paragraph 22(1)(a) means the preparation of the soil for sowing crops or pasture. The activities that constitute 'cultivation of the soil' include:

•

the ploughing and turning of soil;

•

the spreading of soil conditioners and fertiliser prior to the seeding of a crop;

•

any other activities undertaken to treat the soil to make it more friable and readily able to absorb nutrients; and

•

land clearing immediately prior to ploughing and turning of soil, provided this is undertaken as part of an agricultural business.^[89]

215. 'Cultivation of the soil' includes the felling of trees, clearing of scrub, removal of stones and other actions undertaken in land clearing immediately prior to the ploughing of the soil for the purposes of establishing a farm.^[90] The Commissioner considers that these activities are 'in the course of' or 'in the process of' agriculture and are activities 'in' the cultivation of the soil as the causal, spatial and temporal links with an agricultural activity exist.^[91]

216. Cultivation of the soil does not include the delivery to,^[92] and unloading of,^[93] fertiliser on a farm, or the movement of equipment either between agricultural properties or to an agricultural property by a farmer or contractor. These activities take place prior to cultivation of the soil, and are, therefore, not 'in' agriculture.^[94]

217. In Australian National Railways Commission v. Collector of Customs SA (ANR),^[95] Davies J dismissed the appeal against the refusal of diesel fuel rebate for fuel used in the transportation of fertiliser. In his decision, he said:

The diesel fuel rebate looks to operations within a narrower compass than the operations in respect of which the applicant's claims in this respect were made. The rebate for primary production is concerned with production of primary produce, not with the manufacture and wholesale distribution of superphosphate or with the marketing of primary produce once grown and harvested.^[96]

218. In Re Rylane Pty Ltd and Collector of Customs^[97] (Rylane), the AAT confirmed that the transportation of lime, gypsum and superphosphate by a supply company did not constitute 'cultivation of the soil'. The AAT concluded that:

The ordinary meaning of the phrase 'the cultivation of the soil' is the tilling of the soil; the bestowing of labour upon the soil in raising crops: see The Macquarie Dictionary. The Tribunal has no doubt that the applicant's operations, being in the nature of transporting, delivering and dumping, cannot sensibly be regarded as themselves part of the process of soil cultivation - notwithstanding that the materials so transported, delivered and dumped are, very soon thereafter, used in that process. The Tribunal finds, therefore, that the applicant's abovementioned operations do not fall within paragraph (a) of the statutory definition of 'agriculture'.^[98]

219. The comments made by the AAT in Rylane are equally relevant to the meaning of cultivation of the soil in paragraph 22(1)(a).

Cultivation or gathering in of crops

220. The definition of 'agriculture' in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture means:

(b)

the cultivation or the gathering in of crops

Cultivation of crops

221. The expression 'cultivation of crops' does not have any particular trade or technical meaning and is not defined in the Energy Grants Act and therefore, takes its ordinary meaning. In the context of paragraph 22(1)(b) the relevant meaning of the term 'cultivate' is 'raise or produce crops'.^[99]

222. The expression 'cultivation of crops' in paragraph 22(1)(b) means all the activities necessary for the survival and nurturing of crops. These include:

•

cleaning of seed and the application of seed treatments on an agricultural property prior to sowing;

•

sowing of seeds or planting;

•

fertilising;

•

spraying against pests and diseases;

•

weeding;

•

watering the crop; and

•

thinning and pruning.

Gathering in of crops

223. The expression 'gathering in of crops' is not defined in the Energy Grants Act. To understand what 'gathering in of crops' means, it is necessary to understand both what the phrase 'gathering in' means and the nature of the 'crop' being gathered in.

The meaning of 'crop'

224. In Re Vicmint Partners Pty Ltd and Chief Executive Officer of Customs^[100] (Vicmint), Deputy President Gerber found that the crop in the harvesting of peppermint plants for the extraction of oil was the peppermint oil.

He said:

In my opinion, although the ordinary meaning of 'crop' may include 'crop of plants', the interpretation 'crop of plant oil [or other ultimate produce of a plant]' does not stretch the ordinary meaning of 'crop' so far as to rebut the presumption.^[101]

225. In Re Day and Deputy Commissioner of Taxation^[102] (Day), the AAT considered the meaning of 'crop'. Associate Professor Barton, Member, found that the term 'crop' meant the cultivated produce of the ground, grain, fruit, the annual produce of cultivated plants, whether in the field or gathered, the yield of any natural product which is periodically harvested or a cultivated plant that is grown on a large scale commercially.

226. Associate Professor Barton, Member, held:

The dictionary meaning of 'crop' in the context of agriculture, is 'the cultivated produce of the ground, as grain or fruit, while growing or when gathered', Third edition of The Macquarie Dictionary; 'the annual produce of cultivated plants, esp. the cereals, whether in the field or gathered, the yield of any natural product in a particular season or locality; a plant etc. which is periodically harvested', The New Shorter Oxford English Dictionary (1993); a cultivated plant that is grown on a large scale commercially, especially a cereal, fruit or vegetable, an amount of produce harvested at one time', Second edition of the Oxford Dictionary of English (2003).^[103]

227. The Commissioner takes the view that the definition of the term 'crop' means the product of a harvest of cultivated plants, cereals, fruit and the like. In the Commissioner's view the definition of the term 'crop' does not include goods produced from those harvested plants, for example, sugar produced from sugar cane, juice produced from fruit or oil produced after processing of plant material.

The meaning of 'gathering in'

228. 'Gathering in' means to physically collect together in one place. 'Gathering in' of a crop ceases when the crop is physically brought together. This will not necessarily be a place of permanent storage. A crop may be gathered in when it is brought together and placed in a temporary storage place from which it is sent off for processing or permanent storage.

229. The time when gathering in of a crop ceases differs from crop to crop and may depend on whether or not the crop is:

•

stored or capable of being stored;

•

required to undergo some initial processing at the time of picking or reaping before it can be physically collected together;

•

collected at a central point for transport to a mill or other processing; and

•

transported from the harvester in machinery, plant or equipment which is integral to the harvesting process to a central collection area on or off the farm. However, transport in road vehicles, which are a means of transport for the harvested crop is not an activity in 'gathering in of crops'.

Crops capable of being stored

230. In relation to crops that are capable of being stored, the Commissioner takes the view that the 'gathering in' of the crop ceases when it is physically collected together for the first time on a farm. This may be when it is placed in a storage structure (for example a bin or silo) on a farm even if this is on a temporary basis. Any subsequent storage of the crop on a farm is covered by paragraph 27(f), which deals with the storage of produce of a core agricultural activity on a farm.

231. If the crop is loaded directly from a harvester into a road vehicle^[104] that will take it away for processing or longer-term storage, the Commissioner considers that the gathering in ceases once the crop has been fully loaded onto the road vehicle for transport off the farm. The transport of the crop for processing or to a storage facility (for example a silo) is not a qualifying activity as it occurs after the crop has been gathered in.

Crops that cannot be stored

232. In relation to crops that are required to be processed soon after harvesting, that is, crops that cannot be stored (for example parsley or sugar cane), the Commissioner takes the view that the gathering in of the crop ceases when the crop is physically collected together for the first time on a farm prior to its processing on or off the farm. If a crop is processed on the farm immediately after harvesting, the gathering in of the crop ceases when it is taken to the site of the processing plant.

233. Where the processing takes place off the farm, the transport of the crop from the farm to the processing plant is not ordinarily an activity in gathering in of the crop. If the crop is loaded directly from a harvester into a road vehicle that will take it away immediately for processing, the Commissioner considers that the gathering in of the crop ceases once it has been fully loaded onto the road vehicle for transport off the farm. The transport is an activity that occurs after the crop has been gathered in. This is particularly the case where the crop is taken from a central collection area on the farm to a processing plant off the farm.

234. However, in some circumstances, a crop that cannot be stored may be taken by agricultural machinery,^[105] that is used as an integral part of the harvesting process, directly from the field where it is grown to a collection area off the farm (for example, to a collection area or pad at a processing plant or mill or next to a railway siding). The Commissioner accepts that, in these circumstances, the crop is not gathered in until it is taken to the central collection area at the processing plant or mill or to another central collection area off the farm (for example to a railway siding for subsequent transport by rail). Any subsequent transport of the crop from that central collection area is not an activity in gathering in but occurs after the crop is gathered in.

AAT and judicial decisions on gathering in of crops

235. The point at which a crop is said to be 'gathered in' and what the act of 'gathering in' includes has been the subject of AAT and judicial decisions. This has been particularly the case if the crop harvested:

(a)

undergoes some treatment or process soon after or in conjunction with the harvesting process in order to obtain the produce for which the crop is grown (for example when parsley is dried); or

(b)

leaves the agricultural property without prior storage on the property (for example sugar cane).

236. In ANR^[106] Sheppard and Burchett JJ affirmed the decision of the AAT that fuel used in the carriage of grain by rail from regional silos to grain ports was not eligible for diesel fuel rebate under the diesel fuel rebate scheme. They said:

In order to succeed, the applicant has to show that, as a matter of law, the carriage of the grain in the circumstances postulated was an operation connected with the gathering in of a crop. In our opinion the carriage is remote from this operation. The operation is connected rather with the distribution of the gathered-in product than with the actual operation of getting it in.^[107]

237. In Vicmint,^[108] Deputy President Dr. Gerber ruled that the distillation of peppermint oil from peppermint plant material (leaves and stalks) did not fall within the ordinary meaning of 'gathering in of crops'. This was despite the fact that, as a matter of commercial necessity, the distillation process had to occur within a short time of mowing and chopping and occurred on the applicant's farm. In his decision, Dr. Gerber said:

It seems generically that 'gathering in' consists of: the process of plucking plants from the ground, or fruit or other produce from the plant, some initial processing in the immediate vicinity of the place where the plant was, or is, in the ground; and collecting such roughly processed items together in the same place, either on or off the property on which it was growing. In the instant case 'gathering in' is the mowing and windrowing of the peppermint leaves and stalks, the chopping and immediate loading of the leaves and stalks into the mobile tubs, and transporting the leaves and stalks to the site of the steam distillation equipment.^[109]

238. In Day,^[110] Associate Professor Barton also found that the distillation of essential oils from cultivated trees did not fall within the ordinary meaning of the 'gathering in of crops'. In his decision, Associate Professor Barton said:

...the phrase 'gathering in of crops' as it occurred in sub-para (b) of the definition of 'agriculture' ... means the act of severing and collecting plant material from cultivated plants where they stand and does not include any milling, extractive or other process, such as the distillation process, that is applied to the plant material that has been collected. ... The use of 'gathering in of crops' in conjunction with 'cultivation' of crops excludes, in the view of the Tribunal, any argument that the legislature intended to include a process such as the distillation process, in that core activity.^[111]

239. Deputy President Dr. Gerber in Vicmint identified the 'gathering in' as a process of plucking plants or fruit, with some initial processing while Member, Associate Professor Barton in Day, found that the expression meant simply severing and collecting plant material without further processing. The Commissioner takes the view that there is no fundamental conflict between the two findings as neither of the decisions included the distillation process in the definition of 'gathering in'.

240. The approach adopted by the AAT in Day is consistent with the approach taken in Vicmint in that both decisions recognised the fact that the 'gathering in' of crops ceased when the crop was first physically collected together on a farm. The Commissioner takes the view that the reference to 'initial processing' in the decision of Deputy President Dr. Gerber in Vicmint refers to the activities that are an integral part of the harvesting of a crop. Those initial processes include removal of soil or other material which might be collected during harvesting and cleaning or threshing that might occur in a harvester at the time that the crop is severed from the ground. These activities take place in the act of severing and collecting plant material from cultivated plants and, as acknowledged by Member Barton in Day, does not extend to include any milling, extractive or other processes after the plant material has been collected together in one place.

241. In Re LM & TMR Quinlivan and the Quinlivan Family Trust and the Chief Executive Officer of Customs^[112] (Quinlivan), the AAT affirmed the decision of the Chief Executive Officer of Customs that fuel used in the operation of a grain dryer some distance away from a farm to artificially dry grain was not eligible for diesel fuel rebate. The AAT took the view that the artificial drying of the crop occurred after it had been gathered in. However, the AAT did not specify the point at which the particular crop was 'gathered in', although it commented that the drying of the crop using windrows was a natural method of drying and was carried out before the crop was gathered in.^[113]

242. While the AAT did not identify the actual point at which the gathering in of the grain crop had ceased, it can be concluded that it must have been 'gathered in' before the drying of the grain off the farm. The Commissioner takes the view that the 'gathering in' in Quinlivan was most likely completed when the crop was first transferred from the harvester to a field bin or a truck for transport to the dryer.

243. In Case 21/98; AAT No. 13,430^[114] (Case 13,430), the taxpayer was involved in the transportation industry and sought a refund of sales tax on the purchase of particular vehicles and parts on the basis that the vehicles were used to transport harvested sugar cane from farms to sugar mills. The relevant sales tax legislation contained an exemption for machinery, implements and apparatus used in an agricultural activity. Agriculture for the purposes of that legislation included operations connected with the cultivation of the soil, the gathering in of crops and the rearing of live-stock.

244. Senior Member KL Beddoe ruled that the exemption did not apply, as the transporting of the sugar cane was after it had been gathered in. In his view, the 'gathering in' of sugar cane ceased when it was delivered to 23.6 tonne canetainers, which were placed at delivery pads located on or adjacent to the farmer's property. In reaching his conclusion, he said:

There is thus a clear contractual distinction between the delivery of the crop to a central collection area of the pads as once delivered to the pads, the transport agreement then takes effect. It is at this point that the balance tips as the crop ceases to be gathered in and is accepted by the purchaser Co-op... being an entity who's operations are concerned with milling and production of sugar being distinct from the growing and harvesting of a crop. It is immediately prior to the Transport Agreement taking effect that the crop has been gathered into one mass as discussed in Vicmint.^[115]

245. In Proserpine Co-operative Sugar Milling Association v. Commissioner of Taxation^[116] (Proserpine), the Federal Court was required to consider whether a cane inspector's vehicle attracted a sales tax exemption. The principal issue was whether the vehicle was regarded as 'mainly carrying out activities in agricultural industry'. The main use of the vehicle was to transport cane inspectors to farm properties to ensure the smooth transport of cane to the mill, the management of cane bin delivery and collection by cane locomotives. The term 'agriculture' for the purposes of sales tax legislation included operations connected with cultivation of soil, the gathering in of crops and the rearing of livestock. In considering whether the transfer of sugar cane to the mill had the relevant connection to agriculture, Keifel J found that:

From a practical viewpoint those operations connected with the harvest, the 'gathering in of crops' as distinct from its following manufacture, do not extend to the transport of the cane and the organisation of that transportation to the mill. Those activities are, as the Tribunal found, properly seen as connected with the mill's processing.^[117]

246. The Commissioner considers that the views expressed in ANR, Vicmint, Quinlivan, Day and, although decided in a different legislative context, Case 13,430 and Proserpine, are relevant to the interpretation of the expression 'gathering in of crops' in paragraph 22(1)(b) of the Energy Grants Act.^[118]

Some common crops and when they are gathered in

247. The following table lists some common crops and when they are 'gathered in':

248. The Commissioner takes the view that once a crop is 'gathered in', the transportation of the crop by any vehicle from the farm or a central collection point is not a qualifying use as 'gathering in of crops'.^[119]

Rearing of live-stock

249. The definition of 'agriculture' in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture means:

(c)

the rearing of live-stock

250. The term 'rearing' is not defined in the Energy Grants Act and takes its ordinary meaning. The relevant definition of 'rear' in The Australian Oxford Dictionary^[120] is 'breed and care for (animals)'.

The meaning of 'live-stock'

251. The term 'live-stock' is defined in section 4 as having a meaning 'affected by subsection 23(2)'.

252. Subsection 23(2) defines live-stock in the following terms:

The expression live-stock includes any animal reared for the production of food, fibres, skins, fur or feathers, or for its use in the farming of land.

253. The word includes, used in the definition of live-stock in subsection 23(2), has been considered in numerous cases.^[121] In some instances, the word is used as an extension of the thing defined or described and at other times to provide clarification. In the definition of agriculture in the Energy Grants Act, the expression is used in a variety of constructions, and each activity in which it is used must be examined separately to see the sense in which it is used. It is often used to simply make clear what the particular activity or definition intends to cover. In the Commissioner's view, in the context of subsection 23(2), the term 'includes' is used to both expand and clarify the meaning of 'live-stock'.

254. The ordinary meaning of the term live-stock, is 'animals, esp. on a farm, regarded as an asset'.^[122]

255. The Commissioner considers that subsection 23(2) affects the ordinary meaning of live-stock in two ways. Firstly, it expands the term to include any animal.

256. Secondly, subsection 23(2) clarifies the definition by requiring that the animal be reared for the production of food, fibres, skins, fur or feathers, or for its use in the farming of the land.

257. The decision in Hemens (Valuation Officer) v. Whitsbury Farm and Stud Ltd and other appeals^[123] (Hemens) supports the Commissioner's view. In Hemens, a definition of 'live-stock' similar to the definition of 'live-stock' in the Energy Grants Act was considered. Balcombe LJ stated that the definition of live-stock, in the context of the provision being discussed, did not include racehorses.^[124] He further stated:

In Belmont Farm v. Minister of Housing and Local Government (1962) 13 P & CR 417 a Divisional Court of the Queen's Bench Division held that the breeding and keeping of horses, not intended for use in the farming of land, did not amount to 'the breeding and keeping of 'livestock' and so was not a use of the land for the purposes of agriculture within the definition of 'agriculture' contained in subsection 119(1) of the Town and Country Planning Act 1947. We are not, of course, bound to follow this decision, and I accept that it is a decision on a different definition of 'livestock' in a different Act. However, I find the reasoning of Lord Parker CJ in that case relevant to the question we have to answer. There 'livestock' was defined as 'including any creature kept for the production of food, wool, skins or fur, or for the purpose of its use in the farming of land'. Lord Parker CJ said (at 421-422):

Granting that the word 'including' has been used in an extensive sense, it seems to me nonsense for the draftsman to use those words 'any creature kept for the production of food, wool, skins or fur, or for the purpose of its use in the farming of land', if the word 'livestock' was intended to cover the keeping of any creature whether for its use in farming land or not. It seems to me that these words show a clear intention that 'livestock,' however it is interpreted, does not extend to the breeding and keeping of horses unless it is for the purpose of their use in the farming of land.

258. The Commissioner considers that the comments made by Balcombe LJ in Hemens apply equally to the definition of 'live-stock' in subsection 23(2).

259. In the context of section 23, the term 'live-stock' means any animal kept for the production of food, wool, skins or fur, or for its use in the farming of land. The term live-stock, therefore, includes animals such as sheepdogs, stock horses, and other working animals that are used as a resource in farming.

260. In the Commissioner's view, the term 'live-stock' also includes animals bred on agricultural stud farms, for example, merino sheep stud farms and cattle stud farms. This is because such animals are reared for the ultimate production (through their progeny) of food, fibres, skins, fur or feathers.

261. Animals that are not reared for the production of food, fibres, skins, fur or feathers, or for their use in the farming of land are not within the meaning of live-stock for the purposes of the energy grants scheme. This means that the rearing of racehorses or showjumping horses, or animals bred as pets are not live-stock as defined in subsection 23(2).

Rearing of live-stock

262. Rearing of live-stock includes all activities required to breed, raise and care for the animals for the specified purposes in accordance with accepted commercial animal husbandry and management practices. The feeding of animals and the basic milling of stock feed by a farmer for their own use and any off-road transport of the live-stock for agistment during the rearing process are activities in rearing of live-stock.

263. Rearing of live-stock ends when the purpose for which the animals are reared is complete. Practically, this is either when an animal dies or leaves the agricultural property following a sale or other disposal.

264. The breeding of and caring for animals other than for the production of food, fibres, skins, fur or feathers, or for their use other than in the farming of land is not rearing of live-stock under paragraph 22(1)(c) as such animals are not live-stock.

265. The transportation and unloading of feed from a delivery truck into a storage structure on a farm^[125] and the loading, and transportation to an abattoir, a slaughtering point or to a port for export of live-stock are not activities in the rearing of live-stock.^[126] Nor does rearing of live-stock include the transport of live-stock to a sale yard for auction, sale or other disposal.

266. Any further care for the live-stock (for example during transport, or in lairage yards or on wharves prior to export) is also not rearing of live-stock.^[127]

Viticulture

267. The definition of 'agriculture' in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture means:

(d)

viticulture

268. For the purposes of paragraph 22(1)(d), viticulture is the growing of grapes through the cultivation of grape vines and includes:

•

the planting, tending and maintaining of vines;

•

the erection of trellises in a vineyard;

•

the harvesting of grapes; and

•

clearing land on an agricultural property where a viticultural business is being carried on provided the land clearing occurs immediately prior to the activities, of erecting trellises and planting vines.^[128]

269. Once grapes have been harvested, you are entitled to a fuel tax credit for taxable fuel that you acquire for use in agricultural activities undertaken until the grapes are collected into one mass at a central collection area on the farm. If, in the vineyard, grapes are loaded immediately onto a truck for transport away from the agricultural property, the loading of the truck at the agricultural property is an activity in viticulture.

270. For the purposes of paragraph 22(1)(d), viticulture does not include:

•

activities that take place after the grapes are collected into one mass at a central collection area on the farm; or

•

the transport of grapes away from the agricultural property for processing of any kind.^[129]

271. Activities such as the drying of grapes to produce dried fruit^[130] or the crushing of grapes, either to produce grape juice or wine, are not 'viticulture' as they occur after the grapes have been harvested and gathered in. These activities are undertaken in the production of wine, juice or dried fruit.

272. From 1 July 2006 to 30 June 2008 (inclusive), you are not entitled to a fuel tax credit under section 22 in respect of taxable fuel you acquire for use in these activities undertaken in the production of wine, juice or dried fruit. However, from 1 July 2008 to 30 June 2012 (inclusive) you are entitled to a half credit for taxable fuel you acquire for use in these activities and from 1 July 2012 you are entitled to a full fuel tax credit.

Horticulture

273. The definition of 'agriculture' in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture means:

(d)

horticulture

274. Section 33 defines horticulture in the following terms:

The expression horticulture includes:

(a)

the cultivation or gathering in of fruit, vegetables, herbs, edible fungi, nuts, flowers, trees, shrubs or plants; or

(b)

the propagation of trees, shrubs or plants; or

(c)

the production of seeds, bulbs, corms, tubers or rhizomes.

275. The Australian Oxford Dictionary^[131] defines the term 'horticulture' as being 'the art of garden cultivation'. The Macquarie Dictionary^[132] defines the term 'horticulture' as:

1. commercial cultivation of fruit, vegetables, and flowers, including berries, grapes, vines and nuts. 2. the science or art of growing fruit, vegetables, flowers or ornamental plants. 3. the cultivation of a garden.

276. The definition of horticulture in section 33 takes the ordinary meaning of the term and expands that ordinary meaning by including activities in 'gathering in' of horticultural produce. An activity can be considered 'horticulture' if it falls within the ordinary meaning of horticulture or it falls within the expanded definition in section 33, and is carried out for the purpose of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

277. The cultivation of horticultural produce means to bestow labour on the land in raising the produce as part of a business and includes the activities of:

•

sowing of seeds or planting;

•

fertilising;

•

spraying against pests and diseases;

•

weeding;

•

watering the crop; and

•

thinning and pruning.

278. Horticulture also includes the production of potting mix by a horticulturalist for use in their business of horticulture.^[133]

279. The 'cultivation ... of fruit, vegetables, herbs, edible fungi, nuts, flowers, trees, shrubs or plants' means to bestow labour on the land in raising this produce; to till or improve by husbandry. It includes turning the soil and adding fertiliser in order to grow the particular produce.

280. The gathering in of horticultural produce means to pick or harvest from the place of growth and physically collect together in one place for the first time. Gathering in of horticultural produce includes the process of plucking plants from the ground, or fruit or other produce from the plant, some initial processing in the vicinity of the place where the plant was, or is, in the ground and physically bringing together the crop.

281. For the purposes of paragraph 22(1)(d), gathering in of horticultural produce does not include:

•

any further processing necessary for the recovery of the produce after it has been gathered in;

•

further processing undertaken on the produce for the extraction of another product or in refining the produce; or

•

transport of the produce after it has been gathered in.

282. When a horticultural produce is gathered in and not immediately transported or processed, but is stored on the property, the Commissioner considers that the 'gathering in' ceases when the crop is brought together for the first time. Any subsequent storage is covered by paragraph 27(f), which deals with the storage of produce of a core agricultural activity on a farm.

283. Horticulture does not extend to the commercial manufacture of goods produced for sale to others for use in horticulture. For example, an entity that manufactures potting mix or mushroom substrate for commercial sale does not undertake the business of horticulture.^[134] The manufacturers are not making potting mix/substrate as part of their own production of plants/mushrooms.^[135] However, a commercial horticulturalist who acquires taxable fuel for use in making potting mix or substrate for their own use in the production of plants or mushrooms is entitled to a fuel tax credit under the qualifying activity of agriculture.

284. A horticultural activity that does not constitute a business undertaken to obtain produce for sale is not 'agriculture'.

285. In Re City of Nunawading and Comptroller-General of Customs^[136] (City of Nunawading), the AAT held that the development and care of reserves, parks, bushland and gardens did not constitute horticulture for the purposes of the Customs Act. The AAT stated that to come within the meaning of horticulture in subsection 164(7) of the Customs Act, an activity must relate in some way to an aspect of primary production conducted as a commercial or business enterprise. The AAT allowed a rebate only to the extent to which the City used diesel fuel in propagating plants for sale.

286. The Commissioner considers that the decision of the AAT in City of Nunawading applies equally to the meaning of horticulture in Subdivision 3C of Part 2 of the Energy Grants Act. The principle applied in City of Nunawading is broadly reflected in the Energy Grants Act by excluding, from the meaning of agriculture, activities that are not carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.^[137]

Pasturage

287. The definition of 'agriculture' in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture means:

(d)

pasturage

288. The term 'pasturage' is not defined in the Energy Grants Act and therefore takes its ordinary meaning of:

1 . land for pasture. 2 . the process of pasturing cattle etc.^[138]

289. The term 'pasturage' in paragraph 22(1)(d) means the growing of grass or herbage for live-stock to graze upon, or the act of releasing live-stock for feeding upon land on which this grass has been grown. It includes agistment.

290. Pasturage encompasses all activities involved in the growing of this grass or herbage, including watering, feeding the grass with nutrients, and the undertaking of weed control.^[139]

Agistment activities

291. The Commissioner considers that pasturage includes agistment activities.

292. The term 'agist' is defined in The Australian Oxford Dictionary^[140] as 'take in and feed (livestock) for payment'. While the terms 'agist' and 'agistment' are not used in paragraph 22(1)(d), they are similar in meaning to the term 'pasturage', which is expressly included in the meaning of the term 'agriculture'.

293. Agistment activities are 'agriculture' for the purposes of the energy grants scheme, provided they are carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.^[141] This requirement is satisfied if:

•

the agistment activities are undertaken as one element of an agricultural business; or

•

the entity conducts agistment activities on a scale that amounts to a business.

Apiculture

294. The definition of 'agriculture' in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture means:

(d)

apiculture

295. The term 'apiculture' in paragraph 22(1)(d) means the breeding and care of bees for the production of honey and/or beeswax.^[142] It includes activities such as the transportation of hives (excluding transport on public roads), and the extraction of honey from the honeycomb by methods such as heat extraction or use of a centrifuge.

296. To qualify as agriculture, it is not necessary that apicultural activities be carried out on an agricultural property. Apiculture may be undertaken on crown land, state forests, and other public land or on farms owned or operated by others.

297. Apicultural activities carried out on crown land, state forests, and other public land does not have the effect of converting these properties or land into an agricultural property.^[143]

298. Apiculture does not include the manufacture of honey and/or beeswax nor does it include activities such as the blending or bottling of honey.

Activities included as 'agriculture'

299. Paragraphs 22(1)(e) to 22(1)(i) set out the activities that are included within the definition of agriculture. Sections 23 to 27 set out the meanings of each of these activities.

300. To qualify as agriculture for the purposes of the energy grants scheme, some activities included in the definition of agriculture must be 'solely' for a particular purpose.^[144] For example, paragraph 24(b) refers to 'searching for ground water solely for use in an agricultural activity...'.

301. In addition, some activities must be undertaken by an entity that carries on a core agricultural activity.^[145] A number of the activities included within the definition of agriculture also require an activity to be undertaken 'on an agricultural property where a core agricultural activity is carried on' or 'at a place adjacent to that property'.

302. Paragraphs 7 to 9 of this Ruling explain the meaning of 'core agricultural activity'. The expression 'an agricultural property where a core agricultural activity is carried on' is discussed at paragraphs 13 to 21 and the expression 'at a place adjacent to that property' is explained at paragraphs 22 to 26 of this Ruling.

Solely

303. The word 'solely', in the context of the paragraphs in which it is used, takes on its ordinary meaning of 'only' or 'exclusively'. For an activity to be solely for a particular purpose, it must be only and exclusively for that purpose and for no other purpose. Where a specified activity is required to be solely for a particular purpose for it to be agriculture, an activity that is for a dual purpose will not qualify as agriculture.

304. In Randwick Municipal Council v. Rutledge^[146] (Randwick Council), Windeyer J in relation to the use of the words 'exclusively' or 'solely' stated:

The words 'exclusively' and 'solely' are familiar in fiscal and rating law. Where an exemption from rating depends upon the use of land exclusively for a particular stated purpose, then the use must be for that purpose only. ... such words confine the use of the property to the purpose stipulated and prevent any use of it for any purpose, however minor in importance, which is collateral or independent, as distinguished from incidental to the stipulated use.^[147]

305. A strict and narrow interpretation of the provisions of the definition of agriculture in the Energy Grants Act that contain the 'solely' requirement would mean that you may not be entitled to a fuel tax credit for taxable fuel acquired for use in a core agricultural activity.

306. For example, paragraph 24(d) provides that an agricultural soil/water activity includes the pumping of water solely for use in an agricultural activity. If a farmer pumps water on their farm only or exclusively for use in the irrigation of their crop, the pumping of the water is within the meaning of 'agriculture'. The farmer is entitled to a fuel tax credit for taxable fuel acquired for use in the pumping of water.

307. If, however, the bulk of the water is for use in irrigation, and a small quantity is for use in raising showjumping horses, then, on a strict and narrow reading of paragraph 24(d), the activity is not an agricultural soil/water activity as the pumping of the water is not solely for use in an agricultural activity. From 1 July 2006 to 30 June 2008 (inclusive), no entitlement to a fuel tax credit will arise, and from 1 July 2008 to 30 June 2012 (inclusive) an entitlement to a half credit will arise, even though the bulk of the water is for use in the relevant agricultural activity.

308. The above approach does not accord with the legislative intent of the Energy Grants Act to maintain entitlement to off-road credits established under the diesel fuel rebate scheme for those that engage in mainstream agriculture.

309. The Commissioner considers that where an entity that carries on an enterprise of agriculture acquires taxable fuel for use in a number of activities, an apportionment can be made as to its intended use in the different activities.^[148] If a portion of the taxable fuel is acquired for use in a qualifying activity that has the 'solely' requirement, an entitlement to an off-road credit arises for the portion of the taxable fuel that is acquired for use in the activity that qualifies as 'agriculture'.

310. The Commissioner's views accord with the legislative intent of the Energy Grants Act in relation to the introduction of the 'solely' requirement in a number of specified eligible activities in the definition of agriculture in the diesel fuel rebate scheme. The Commissioner's views are also supported by some AAT and judicial decisions.^[149]

Legislative intent

311. Prior to the 1995 amendments to the Customs Act and the Excise Act, the eligibility criteria for the agriculture category of the diesel fuel rebate scheme contained two broad eligibility criteria known as the 'sweeper clauses'.^[150] The so called 'sweeper clauses' provided that operations 'connected with' agriculture were eligible activities.

312. The 1995 amendments sought to narrow the eligibility criteria by replacing the broad and ambiguous 'sweeper clauses' with an objective list of eligible activities.

313. In introducing the amendments, the then Minister for Industry Science and Technology said:

In the existing legislation, both the definition of 'agriculture' and the definition of 'mining operations' employ what are known as 'sweeper clauses', which have the effect of making other operations connected with agriculture or mining eligible for the payment of rebate. The interpretation of these 'sweeper clauses' has been a source of contention over the years, and has generated most of the litigation in the lifetime of the scheme. ...

The intention of these amendments is to put beyond doubt that the Scheme is not meant to provide rebate eligibility for activities which are not sufficiently connected with mining or agriculture; for instance, the provision of a service or utility to a farmer or miner, such as electricity through a grid, ...

Because claims of these kinds have sought to broaden the scheme well beyond what it should be, the Government is proposing that these amendments be made retrospective to 1 August 1986 to protect the revenue.^[151]

314. The Customs and Excise Legislation Amendment Bill 1995 was subject to further amendments in the Senate prior to being enacted. Those further amendments introduced the 'solely' requirement into a number of specified activities. In explaining the further amendments, the Supplementary Explanatory Memorandum states:

The stated intention of the Bill is not to affect the eligibility of rebate of persons engaged in mainstream farming and mining. ... The schedule of amendments to the Bill is a direct response to these representations and proposes to expand the list of eligible activities under both the definitions of 'agriculture' and 'mining operations'. It is considered that the expanded list will maintain the integrity of the Scheme in assisting persons engaged in mainstream... mining operations while excluding from eligibility activities that can only be regarded as being remotely connected with agriculture or mining.^[152]

315. The introduction of the 'solely' requirement in a number of activities in the diesel fuel rebate scheme was not, therefore, to deny rebate to those that engaged in mainstream farming (or mining) activities but was intended to deny rebate to those that provide services, or goods to farmers (or miners) as part of a supply of services or goods to the public at large. As the energy grants scheme adopts essentially the same definition of 'agriculture' and maintains the entitlements equivalent to those available under the diesel fuel rebate scheme, this applies equally to the entitlement provisions of the energy grants scheme.

AAT and judicial decisions

316. Further, the Commissioner's view on the interpretation of the provisions that have the 'solely' requirement takes into account the views expressed in AAT and Court decisions.

317. Re Central Norseman Gold Corporation Limited and Collector of Customs^[153] (Central Norseman), although decided in the context of the 'sweeper clauses', is instructive as to how the AAT or the Courts may interpret the provisions that have the 'solely' requirement. In its decision, the AAT stated:

These provisions are intended to apply to commercial operations and are therefore to be read in a practical, commonsense manner. They therefore permit the apportionment of a bulk purchase of fuel whenever it can be shown that there is an appropriate basis upon which the apportionment should be made. Although the matter was not argued before the Tribunal, we would accept that a case for apportionment may in a proper case be made out in relation to the purchase of fuel for the operation of a powerhouse which produces electricity for use partly in the course of a mining operation as defined and partly not in the course of such an operation.

That is not to say, however, that the rebate is to be determined simply by apportioning the use to which electricity from a multi-purpose powerhouse is actually used or is intended to be used. The applicant is not entitled to a rebate unless it demonstrates that it purchased diesel fuel for use in a mining operation as defined. If it is established that it has done so, the applicant will not lose its entitlement to rebate simply because some of the electricity produced is in fact used for a purpose which, looked at on its own, does not form part of a mining operation as defined.^[154]

318. In Randwick Council, Windeyer J, in relation to land, accepted that questions may arise when part of the land is used for the relevant purpose and another part for a different purpose. He referred to the decision of the High Court in Sisters of Mercy Property Association v. Newtown and Chilwell^[155] (Sisters of Mercy).

319. In Sisters of Mercy, the High Court examined subsection 249(5) of the Local Government Act 1928-1941 (Victoria) which stated:

Land in the occupation of or under the management and control of any religious body and upon which is situated any hall or other building used in connection with any church exclusively for any purposes connected with or in support of the objects of such religious body shall not be rateable property.

320. In that case, on the relevant land there was a convent for nuns of the order, a convent chapel, a college and a small building used exclusively for the preparation of altar bread and for mending church vestments for the religious purposes of the convent chapel.

321. The court adopted an apportionment approach and held that the land actually occupied by the 'altar-bread building' with its curtilage (if any) was exempt from rates, but that this did not bring about the exemption of any other part of the land.^[156]

322. The above decisions indicate that, in appropriate circumstances, an apportionment can be made to determine the extent to which an activity or thing is 'solely' or 'exclusively' for a particular purpose.^[157] The Commissioner considers that, in relation to those activities in the definition of 'agriculture' in section 22 that have the 'solely' requirement, it is open and appropriate for the Commissioner to take the apportionment approach in determining whether or not an activity is solely for the relevant purpose. The provisions are capable of this interpretation, which gives a reasonable result that accords with the legislative intent.^[158]

323. The apportionment must be made on a fair and reasonable basis. In determining whether an activity is 'solely' for a particular purpose, reference can be made to appropriate records that substantiate the quantity of fuel that you propose to use or actually use in a qualifying use. For example, in relation to the supply or pumping of water solely for use in agriculture, the appropriate records include:

•

the quantity (in litres or tonnes) of water supplied to an agricultural property and any other property;

•

if meters are installed, meter readings of the quantity of water supplied to the agricultural property and other properties; and

•

the total number of hours and fuel consumption rate for the equipment used to pump water to an agricultural property.

324. If an activity fails to meet the provisions of one of the paragraphs where the 'solely' requirement is present, its eligibility as agriculture under paragraphs 22(1)(a) to 22(1)(d) can be considered.^[159]

The meaning of agricultural activities in sections 23 to 27

Live-stock activity

325. The definition of 'agriculture' in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture includes:

(e)

a live-stock activity

326. The term 'live-stock' is defined in section 4 as having a meaning affected by subsection 23(2). The meaning of 'live-stock' is discussed in paragraphs 251 to 261 of this Ruling.

327. The expression 'live-stock activity' is defined in subsection 23(1). Activities that constitute live-stock activities can broadly be described as:

•

shearing and milking;

•

transporting of live-stock;

•

return journeys after transporting live-stock; and

•

mustering of live-stock.

Shearing and milking

328. Paragraph 23(1)(a) provides:

The expression live-stock activity means:

(a)

the shearing or cutting of hair or fleece of live-stock, or the milking of live-stock, carried out on an agricultural property

329. The activities of shearing, cutting of hair or fleece, or milking of live-stock qualify as live-stock activities under paragraph 23(1)(a), if they are carried out on an agricultural property.^[160] It does not matter who carries out the activities mentioned.

330. The 'shearing or cutting of hair or fleece of live-stock'^[161] is considered to extend beyond the shearing of sheep. It includes the removal of hair or fleece from other animals, for example, goats, alpacas and llamas.

331. The phrase 'the milking of live-stock' extends to all activities involved in the obtaining of milk from any animal that may be considered live-stock.

Transporting of live-stock

332. Paragraph 23(1)(b) provides:

The expression live-stock activity means:

(b)

the transporting of live-stock to an agricultural property:

(i)

for the purpose of rearing; or

(ii)

for the purpose of agistment

333. For the transport of live-stock to be a live-stock activity, the off-road transportation^[162] of live-stock must be to an agricultural property^[163] and it must be for the purpose of either rearing or agistment of the live-stock.^[164]

334. If the live-stock is moved from one vehicle to another whilst being transported for an eligible purpose, the transport undertaken by each vehicle qualifies as a live-stock activity.

335. The off-road transport of live-stock to a place other than an agricultural property (for example to a sale yard), or to an agricultural property for a reason other than that of rearing or agistment is not a live-stock activity under paragraph 23(1)(b).

336. Only the actual transport of live-stock for an eligible purpose qualifies as a live-stock activity. Travel prior to the transport of live-stock for the requisite purpose or the movement of a vehicle from a depot to a place at which live-stock are loaded is not a live-stock activity under paragraph 23(1)(b).

Return journeys after transporting live-stock

337. Paragraph 23(1)(c) provides:

The expression live-stock activity means:

(c)

the return journey from a place referred to in paragraph (b) of the vehicles or equipment used in transporting the live-stock, if that journey is for the purpose of later carrying out the transportation referred to in paragraph (b) or for the backloading of raw materials or consumables for use in a core agricultural activity

338. Under paragraph 23(1)(c), a return journey of vehicles or equipment, used in transporting live-stock, from an agricultural property, to which live-stock has been transported for the purpose of rearing or agistment, is a live-stock activity provided:

•

the return journey is for the backloading of raw materials or consumables, for example, fertiliser or stockfeed, for use in a core agricultural activity; or

•

the return journey is undertaken in order to repeat the transporting of live-stock for rearing or agistment to an agricultural property.

339. For the purposes of paragraph 23(1)(c), a return journey is a journey from an agricultural property at which live-stock for rearing or agistment have been unloaded back to the place from which the live-stock were first transported.

340. A return journey qualifies as a live-stock activity only if the forward journey qualifies as a live-stock activity under paragraph 23(1)(b). The return journey does not have to be undertaken immediately, but must be sufficiently associated with the initial journey to be regarded as a 'return journey', rather than as independent transport.

341. There is no requirement that the return journey be undertaken without a break. It must, however, be possible to view the broken journey as a return journey. This will be determined on a case by case basis having regard to the facts and circumstances of each case.

342. If a vehicle transports live-stock from more than one place, there is no requirement that it return to all of those places. If it returns to only one of those places, that journey qualifies as a return journey.

343. If the return journey is for the purposes of backloading raw materials, there is no requirement that it take place without a break. The return journey may, for example, include short detours to load the raw materials or consumables in question. These detours, however, must be of such a nature that the entire trip can be identifiable as a return journey. The materials backloaded must be for use in a core agricultural activity.

Mustering of live-stock

344. Paragraph 23(1)(d) provides:

The expression live-stock activity means:

(d)

the mustering of live-stock undertaken:

(i)

by a person who carries on a core agricultural activity; or

(ii)

by a person contracted by that person to carry out the mustering;

on the agricultural property where the core agricultural activity is carried on

345. The mustering of live-stock is a live-stock activity under paragraph 23(1)(d) if it is undertaken on a farm^[165] by a farmer^[166] or an entity contracted by that farmer, or a subcontractor.^[167] If mustering of live-stock is undertaken on public or common land, it is not an eligible live-stock activity.

346. The 'mustering of live-stock' means the physical act of rounding up live-stock for purposes such as shearing, branding, dipping, moving them from one paddock to another, any other activity necessary for the care and management of the live-stock, or for their transport away from the agricultural property.

347. Mustering of live-stock involves the use of four wheel drive vehicles, motor cycles, aircraft or animals for the purposes of rounding up live-stock.

Agricultural soil/water activity

348. The definition of 'agriculture' in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture includes:

(f)

an agricultural soil/water activity

349. Agricultural soil/water activity is defined in section 24. Activities that constitute agricultural soil/water activities can broadly be described as:

•

soil or water conservation on an agricultural property;

•

searching for ground water;

•

soil or water conservation within an approved catchment area;

•

pumping of water; and

•

supply of water.

Soil or water conservation on an agricultural property

350. Paragraph 24(a) provides:

The expression agricultural soil / water activity means:

(a)

any activity undertaken for the purpose of soil or water conservation:

(i)

by a person who carries on a core agricultural activity; or

(ii)

by a person contracted by that person to carry out the first-mentioned activity;

on the agricultural property where the core agricultural activity is carried on

351. For the purposes of paragraph 24(a), a soil or water conservation activity is any activity undertaken to preserve the soil or water and the quality thereof upon a property.

352. A soil or water conservation activity is an agricultural soil or water conservation activity under paragraph 24(a) if the activity is carried out on a farm by a farmer, an entity contracted by the farmer, or by a subcontractor.

353. There is no single factor that is conclusive in identifying whether an activity is undertaken for the purposes of soil or water conservation. Each case must be decided having regard to the relevant facts and circumstances.

354. The Commissioner considers that soil or water conservation activities on an agricultural property include:

•

repairs to the banks of a creek which have suffered erosion;

•

planting grasses to prevent erosion;

•

ripping steep areas across slopes to help slow down the erosion action of wind and rain after a fire; and

•

planting water plants to improve the quality of water in a creek on a farm.

Searching for groundwater

355. Paragraph 24(b) provides:

The expression agricultural soil / water activity means:

(b)

searching for ground water solely for use in an agricultural activity, or the construction or maintenance of facilities for the extraction of such water, solely for that use, if the searching, construction or maintenance:

(i)

is carried out on an agricultural property where a core agricultural activity is carried on, or at a place adjacent to that property; and

(ii)

is carried out by the person who carries on the first-mentioned agricultural activity or by a person contracted by that person to carry out the searching, construction or maintenance.

356. Searching for ground water is an agricultural water activity under paragraph 24(b) if:

•

the water is solely, that is, only or exclusively for use in an agricultural activity;

•

the search is carried out on a farm^[168] or at a place adjacent to the farm; and

•

the search is carried out by the farmer, a contractor to that farmer or by a subcontractor.

357. The construction or maintenance of facilities for the extraction of water is an agricultural water activity under paragraph 24(b) if:

•

the facility is for the extraction of ground water only;

•

the water is solely, that is, only or exclusively for use in an agricultural activity;

•

the construction or maintenance is carried out on a farm or at a place adjacent^[169] to the farm; and

•

the construction or maintenance is carried out by the farmer,^[170] a contractor to that farmer or a subcontractor.

358. Searching for ground water does not include the relocation of equipment between different farms or between places that are not adjacent to those farms. The construction or maintenance of facilities for the extraction of water does not include:

•

an activity that occurs prior to construction of facilities for the extraction of the water; or

•

an activity that is not directly concerned with the actual construction or maintenance of those facilities.

359. As explained at paragraphs 303 to 324 of this Ruling, the expression 'solely' in paragraph 24(b) takes its ordinary meaning of 'only' or 'exclusively'. Therefore, the water, the subject of the search, or the construction or maintenance of the facilities for the extraction of the ground water, must be only or exclusively for use in an agricultural activity.

360. Paragraph 24(b) is limited in its application to searching for ground water. This is different from paragraphs 24(d) and 24(e), which are not limited in their application to the pumping or supply of ground water but which refer to the pumping or supply of any water solely for use in the relevant agricultural activity.

361. Ground water is water that lies beneath the surface of the ground, usually in aquifers. Searching for ground water includes the repositioning or relocation within a farm of equipment used in searching for ground water.

362. Searching for ground water is an agricultural water activity, even if the search results in no ground water being found.

Soil or water conservation in an approved catchment area

363. Paragraph 24(c) provides:

The expression agricultural soil / water activity means:

(c)

any activity undertaken for the purposes of soil or water conservation:

(i)

by a person who carries on a core agricultural activity within an approved catchment area; or

(ii)

by a person contracted by that person to carry out the first-mentioned activity;

within the approved catchment area

364. The phrase ' approved catchment area' is defined in section 30 to mean an area:

(a)

in respect of which a soil or water conservation plan has been adopted by the persons who carry on core agricultural activities within that area; or

(b)

in respect of which a soil or water conservation agreement has been made between the persons who carry on core agricultural activities within that area.

365. For an activity to be an agricultural soil/water activity under paragraph 24(c), it must be for the purposes of soil or water conservation in an approved catchment area.

366. In the context of paragraph 24(c), a soil or water conservation activity is any activity undertaken to preserve the soil or water and the quality thereof within an approved catchment area.

367. Activities covered by paragraph 24(c) can be carried out on any part of the approved catchment area. A qualifying use under this paragraph is not limited to activities within the area on which a core agricultural activity is carried on.

368. An approved catchment area is an area for which a soil or water conservation plan or agreement exists. The soil or water conservation plan must have been adopted by farmers who carry on core agricultural activities within the area covered by the plan. Alternatively, the soil or water conservation agreement must have been made between farmers who carry on core agricultural activities within the area covered by the agreement. Paragraph 24(c) does not exclude other entities from being parties to the agreement.

Pumping of water

369. Paragraph 24(d) provides:

The expression agricultural soil / water activity means:

(d)

the pumping of water solely for use in an agricultural activity if the pumping:

(i)

is carried out on an agricultural property where a core agricultural activity^[171] is carried on, or at a place adjacent to that property; and

(ii)

is carried out by the person who carries on the first-mentioned agricultural activity or by a person contracted by that person to carry out the pumping, other than a person so contracted that is a Commonwealth authority or a State or Territory authority

370. Under paragraph 24(d), the pumping of any water qualifies as an agricultural water activity if:

•

the water is solely, that is, only or exclusively for use in an agricultural activity;

•

the pumping is carried out on a farm or at a place adjacent to the farm; and

•

the pumping is carried out by the farmer, a contractor to that farmer or by a subcontractor, other than a Commonwealth, State or Territory authority.

371. To qualify as an agricultural water activity under paragraph 24(d), the water being pumped must be solely, that is, exclusively or only, for use in an agricultural activity.^[172]

372. The pumping of water is not restricted to ground water. Paragraph 24(d) applies to the pumping of any water solely, that is, only or exclusively for use in the relevant agricultural activity.

373. The pumping of water by a State or Territory authority (usually carried out by a water authority) does not qualify as an agricultural water activity under paragraph 24(d).

374. A State or Territory authority is defined in section 4 as:

(a)

an instrumentality of a State or Territory; or

(b)

an authority or body established for the purpose of a State or Territory by or under a law of the State or Territory.

375. The construction or maintenance of facilities for the pumping, or the maintenance of infrastructure, including the laying of supply pipes, does not qualify as an agricultural water activity under paragraph 24(d).

Supply of water

376. Paragraph 24(e) provides:

The expression agricultural soil / water activity means:

(e)

the supply of water solely for use in an agricultural activity if:

(i)

the supply is to an agricultural property where a core agricultural activity is carried on; and

(ii)

the water comes from that property or a place adjacent to that property; and

(iii)

the supply is carried out by the person who carries on the first-mentioned agricultural activity or by a person contracted by that person to carry out the supply, other than a person so contracted that is a Commonwealth authority or a State or Territory authority.

377. Under paragraph 24(e), the supply of any water qualifies as an agricultural water activity if:

•

the water is solely, that is, only or exclusively for use in an agricultural activity;

•

the supply is to a farm;

•

the water comes from that farm or from a place adjacent to that farm; and

•

the supply is carried out by the farmer, a contractor to that farmer or by a subcontractor, other than a Commonwealth, State or Territory authority.

378. To qualify as an agricultural water activity under paragraph 24(e), the water being supplied must be solely, that is, exclusively or only, for use in an agricultural activity.^[173]

379. The supply of water is not restricted to ground water. Paragraph 24(e) applies to the supply of any water solely, that is, only or exclusively for use in the relevant agricultural activity.

380. The supply of water can include all off-road modes of supplying water, such as transportation by tanker.

381. The supply of water by a State or Territory authority (usually a water authority) does not qualify as an agricultural water activity.

382. The construction or maintenance of facilities for the supply, or the maintenance of infrastructure, including the laying of supply pipes, does not qualify as an agricultural water activity under this paragraph.

Agricultural construction activity

383. The definition of 'agriculture' in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture includes:

(g)

an agricultural construction activity

384. Agricultural construction activity is defined in section 25. Activities that constitute agricultural construction activities can broadly be described as:

•

construction or maintenance of fences;

•

construction or maintenance of firebreaks;

•

construction or maintenance of sheds, pens, silos or silage pits;

•

construction or maintenance of dams, water tanks and certain other water related systems; and

•

carrying out of earthworks for use in a core agricultural activity.

Construction or maintenance of fences

385. Paragraph 25(a) provides:

The expression agricultural construction activity means:

(a)

the construction or maintenance of fences undertaken:

(i)

by a person who carries on a core agricultural activity; or

(ii)

by a person contracted by that person to carry out the construction or maintenance;

on the agricultural property where the core agricultural activity is carried on

386. The construction or maintenance of fences is an agricultural construction activity under paragraph 25(a) if:

•

the construction or maintenance takes place on a farm; and

•

it is undertaken by the farmer, a contractor of that farmer or a subcontractor.

387. The construction or maintenance of fences includes the sinking of fence posts, the running of wire between posts and the replacement and repair of parts of a fence.

388. The transportation of fencing materials to an agricultural property for use in the construction of a fence is not an eligible activity under paragraph 25(a).

Construction or maintenance of firebreaks

389. Paragraph 25(b) provides:

The expression agricultural construction activity means:

(b)

the construction or maintenance of firebreaks undertaken:

(i)

by a person who carries on a core agricultural activity; or

(ii)

by a person contracted by that person to carry out the construction or maintenance;

on the agricultural property where the core agricultural activity is carried on or at a place adjacent to that place

390. The construction or maintenance of firebreaks is an agricultural construction activity under paragraph 25(b) if:

•

the construction or maintenance takes place on a farm or at a place adjacent to that farm; and

•

it is undertaken by the farmer, a contractor of that farmer or a subcontractor.

391. The Commissioner considers that a firebreak is a clearing or open space created or maintained in order to provide an obstacle to fire and to reduce or prevent damage or destruction of property by fire. The firebreak may be constructed within the property boundary, or around the property.

392. The construction or maintenance of a firebreak involves the clearing of trees, scrub, or other vegetation within the firebreak area by bulldozing, ploughing, grading or burning.

393. The construction or maintenance of a firebreak by a local council or shire authority under a statutory power or local government by-law is not eligible as an agricultural construction activity under paragraph 25(b). In this case, the council or authority does not carry out the construction or maintenance as a contractor to a farmer.

Construction or maintenance of sheds, pens, silos or silage pits (sundry farm structures)

394. Paragraph 25(c) provides:

The expression agricultural construction activity means:

(c)

the construction or maintenance of sheds, pens, silos or silage pits for use in an agricultural activity if the construction or maintenance:

(i)

is carried out on an agricultural property where a core agricultural activity is carried on; and

(ii)

is carried out by the person who carries on the first-mentioned agricultural activity or by a person contracted by that person to carry out the construction or maintenance

395. The construction or maintenance of these sundry farm structures is an agricultural construction activity under paragraph 25(c) if:

•

the construction or maintenance takes place on a farm;

•

the sundry farm structures are for use in an agricultural activity; and

•

the construction or maintenance is carried out by the farmer, a contractor of that farmer or a subcontractor.

396. Activities that occur prior to construction of these sundry farm structures, for example, the transport of materials or plant and equipment to a farm for the purposes of carrying out the construction or maintenance, are not agricultural construction activities under paragraph 25(c).

397. The construction or maintenance of buildings such as administration offices and domestic premises are also not agricultural construction activities under paragraph 25(c). However, the construction or maintenance of an administration building for use in a core agricultural activity may be eligible for an off-road credit under the provisions of paragraph 22(1)(a) to 22(1)(d).^[174]

Construction or maintenance of dams, water tanks, water troughs, water channels, irrigation systems or drainage systems (relevant water structures)

398. Paragraph 25(d) provides:

The expression agricultural construction activity means:

(d)

the construction or maintenance of dams, water tanks, water troughs, water channels, irrigation systems or drainage systems including, without limiting the generality of the foregoing, water pipes and water piping for use in a core agricultural activity if the construction or maintenance:

(i)

is carried out on the agricultural property where the core agricultural activity is carried on; and

(ii)

is carried out by the person who carries on the core agricultural activity or by a person contracted by that person to carry out the construction or maintenance

399. The construction or maintenance of relevant water structures is an agricultural construction activity under paragraph 25(d) if:

•

the construction or maintenance takes place on a farm;

•

the relevant water structures are for use in a core agricultural activity; and

•

the construction or maintenance is carried out by the farmer, a contractor of that farmer or a subcontractor.

400. The Commissioner considers that an irrigation system includes all parts of that system, and can comprise a series of channels, associated pumping stations, pipes, water piping, sprinklers and spray systems. Similarly, the Commissioner considers a drainage system to include all parts of a system used to drain water from land. This includes artificial channels.

401. Activities that occur prior to the construction or maintenance, for example, the transport of materials or equipment to the agricultural property for use in the construction of the relevant water structures or systems, are not agricultural construction activities under paragraph 25(d).

Carrying out of earthworks for use in a core agricultural activity

402. Paragraph 25(e) provides:

The expression agricultural construction activity means:

(e)

the carrying out of earthworks for use in a core agricultural activity if the earthworks:

(i)

are carried out on the agricultural property where the core agricultural activity is carried on; and

(ii)

are carried out by the person who carries on the core agricultural activity or by a person contracted by that person to carry out the earthworks.

403. The term earthworks is defined in section 32 to mean:

(a)

the forming or maintenance of levee banks or windbreaks; or

(b)

contour banking; or

(c)

land levelling or land grading.

404. The carrying out of earthworks is an agricultural construction activity under paragraph 25(e) if:

•

the earthworks are for use in a core agricultural activity;

•

the earthworks are carried out on the farm where that agricultural activity is carried on; and

•

they are carried out by the farmer, a contractor of that farmer or a subcontractor.

405. In the context of paragraph 25(e):

•

levee banks are man-made embankments put in place to prevent the overflow of a river or other water source, or small ridges surrounding fields to be irrigated;

•

the term 'windbreak' is commonly used to describe a specifically grown line of trees or a structure used to shelter crops or live-stock from the wind. In the context of the definition of 'earthworks' in section 32 the term has a more limited meaning. The Commissioner takes the view that it means an earth wall or an earth wall-like or levee-like structure which provides shelter for crops or live-stock;

•

contour banking is the practice of creating a system of banks across sloping ground to minimise soil erosion of topsoil by rain; and

•

land levelling or grading is the laying, spreading or compacting of earth, gravel or sand.

406. The activity of carrying out earthworks does not include activities undertaken to construct a road or to seal a road that is constructed through grading and levelling. An activity of this kind is considered road works, rather than earthworks.

Agricultural waste activity

407. The definition of agriculture in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture includes:

(h)

an agricultural waste activity

Removal or disposal of waste

408. Agricultural waste activity is defined in section 26 to mean:

(a)

the removal of waste products of an agricultural activity from the agricultural property where the activity is carried on; or

(b)

the disposal of waste products of an agricultural activity on the agricultural property where the activity is carried on.

409. A waste product can be described as something that is an excess material, or is unproductive and superfluous.^[175] The concept of waste embraces all unwanted and economically unusable or rejected by-products at any given place and time, and any other matter which may be discharged, accidentally or otherwise, to the environment.

410. The Administrative Appeals Tribunal in Esso Australia Ltd v. Chief Executive Officer of Customs^[176] (Esso Australia) found that, for the purposes of the diesel fuel rebate scheme 'waste' should not be confined to naturally occurring materials such as tailings or gangue. The Tribunal said that such a reading would adopt too narrow an approach to the interpretation of the legislation. The AAT found that domestic and industrial waste removed from offshore oil production platforms qualifies as 'a waste product of a mining operation'. The AAT said:

In the Tribunal's view the evidence clearly establishes that this waste is produced as a consequence of a mining operation and is, therefore, a waste product of a mining operation. It follows, and the Tribunal so finds, that the removal of this waste clearly falls within the ambit of s.164(7)(s) and is included in the definition of 'mining operation'. The waste products referred to in s.164(7)(s) are not to be read as being confined to naturally occurring materials such as tailings or gangue.^[177]

411. In Re BHP Billiton Petroleum Pty Ltd and Chief Executive Officer of Customs^[178] (BHP Billiton), the Tribunal affirmed the respondent's decision as to what constituted waste. The list of goods identified by the respondent included:

•

used and recovered used equipment for scrapping as unrepairable, for example, steel casing, steel tubing, drill bits, well heads and associated equipment;

•

general waste from the galley, for example, packaging, empty tins, off cuts in steel and other consumables, old gloves, scrapped wooden pallets, household type refuse from quarters; and

•

hazardous refuse (for example paint, acids, used battery cases).

412. While these cases deal with waste in the context of mining operations, they expand the meaning of 'waste products' to domestic and industrial waste in addition to tailings and gangue. Domestic waste is not a product of the actual extraction of the mineral but is still covered by the definition of a mining operation. Similarly, waste products of an agricultural activity may not be restricted to those products that are derived directly from a core agricultural activity.

413. In BHP Billiton,^[179] the AAT refined the definition of 'waste given in Esso Australia.^[180] The AAT said:

It does not seem to us that definitions of 'waste' are helpful. The phrase presently under consideration is 'waste products of a mining operation'. To the extent that dictionary definitions assist it is our opinion that the Macquarie Dictionary definition of 'waste product' is of the greatest assistance. In the present case the words 'as manufacture' in that definition can be replaced with 'as mining operations'.^[181]

414. In light of the comments made in Esso Australia and BHP Billiton, the Commissioner considers an appropriate definition of waste for the purposes of the definition of 'agriculture' to be 'material produced in a process, as agriculture, and discarded as useless when the process is completed'.

415. Examples of waste products of an agricultural activity include animal manures, wheat stubble, grape or plant prunings, and animals that have died of natural causes on the agricultural property and which are not used as pet food. However, they do not include excess irrigation water drained from an irrigated farm.^[182] In determining whether something is a waste product of an agricultural activity, the facts and circumstances of each case must be considered.

416. The fact that someone other than the farmer may at some later time reuse a product discarded as waste by the farmer does not necessarily preclude it from being waste. For example, vine prunings discarded by the farmer and removed as waste from the agricultural property, but subsequently used to make a mulch or compost for sale, would still be regarded as the waste product of an agricultural activity.

417. For the purposes of paragraphs 26(a) and 26(b), the waste products removed or disposed of must be the waste products of an agricultural activity.

418. Under section 26, an agricultural waste activity is the removal from or disposal on an agricultural property of the waste products of an agricultural activity.

419. Removal in the context of paragraph 26(a) means the taking away, or the movement of the waste product from the agricultural property. Accordingly, the movement of waste from one part of the agricultural property to another part of the same property does not qualify as an agricultural waste activity under paragraph 26(a).

420. Disposal of waste products of an agricultural activity on the agricultural property means the elimination, destruction or, in any other manner, getting rid of a waste product within the confines of the agricultural property where the particular activity is carried on. This includes disposal by burying or incineration.

421. Under paragraph 26(b), the disposal of waste products of an agricultural activity must occur on the agricultural property where the agricultural activity that produced the waste is carried on.

Sundry agricultural activity

422. The definition of agriculture in subsection 22(1) states in part:

Subject to subsection (2), the expression agriculture includes:

(i)

a sundry agricultural activity.

423. Sundry agricultural activity is defined in section 27. Activities that constitute sundry agricultural activities can be broadly described as:

•

frost abatement;

•

hay baling;

•

planting and tending of trees;

•

firefighting activities;

•

service, maintenance or repair of vehicles or equipment;

•

storage of produce of a core agricultural activity;

•

packing or prevention of deterioration of the produce of a core agricultural activity;

•

weed, pest or disease control;

•

hunting or trapping for the purposes of a business; and

•

use of fuel at residential premises for specified purposes.

Frost abatement

424. Paragraph 27(a) provides:

The expression sundry agricultural activity means:

(a)

frost abatement carried out on an agricultural property

425. Frost abatement is the mitigation or alleviation of the potential for damage to crops by frost. Frost abatement activities include the use of overhead sprinkler systems, orchard heaters, wind machines and frost alarms.

426. For a frost abatement activity to be a sundry agricultural activity under paragraph 27(a), the activity must be carried out on an agricultural property.

Hay baling

427. Paragraph 27(b) provides:

The expression sundry agricultural activity means:

(b)

hay baling on the agricultural property where the hay was cultivated

428. Hay baling involves the packing of hay or straw into bales or bundles in paddocks for storage or transportation and any subsequent pressing and re-baling of that hay.

429. For a hay baling activity to be a sundry agricultural activity, the activity must be carried out on the same agricultural property on which the hay was grown. It is not necessary that the hay is baled by the farmer. Provided the hay is baled on the agricultural property where it was grown, it does not matter who actually performs the baling.

Planting or tending of trees

430. Paragraph 27(c) provides:

The expression sundry agricultural activity means:

(c)

the planting or tending of trees on an agricultural property otherwise than for the purpose of felling

431. Planting of trees is the act of putting or setting seeds or young trees into the ground. Tending of trees means the undertaking of activities to ensure the survival of the trees or to enhance their growth, quality and vigour, for example, fertilising after planting, spraying trees against pests and diseases, eliminating weeds, fire protection measures and watering.

432. The planting and tending of trees is a sundry agricultural activity under paragraph 27(c) if the planting or tending of trees is carried out on an agricultural property and the trees are not planted or tended for the purpose of felling.

433. The planting or tending of trees on an agricultural property for use in the prevention of soil erosion, as windbreaks or for providing shade for live-stock is a sundry agricultural activity under paragraph 27(c).

Firefighting activities

434. Paragraph 27(d) provides:

The expression sundry agricultural activity means:

(d)

the carrying out of firefighting activities:

(i)

by a person who carries on a core agricultural activity; or

(ii)

by a person contracted by that person to carry out the first mentioned activity;

on the agricultural property where the core agricultural activity is carried on or at a place adjacent to that place.

435. A firefighting activity is a sundry agricultural activity under paragraph 27(d) if:

•

the activity is carried out on a farm or at a place adjacent to that farm; and

•

the activity is carried out by a farmer, or by a contractor of that farmer or a subcontractor.

436. A firefighting activity is an activity undertaken to suppress a fire, or to prevent its spreading in order to preserve life and property.

437. Firefighting activities carried out on a farm or at a place adjacent to that farm by a volunteer fire brigade or country fire service do not qualify as a sundry agricultural activity under paragraph 27(d).^[183]

Service, maintenance or repair of vehicles or equipment

438. Paragraph 27(e) provides:

The expression sundry agricultural activity means:

(e)

the service, maintenance or repair of vehicles or equipment for use in an agricultural activity if the service, maintenance or repair:

(i)

is carried out on an agricultural property where a core agricultural activity is carried on; and

(ii)

is carried out by the person who carries on the first-mentioned agricultural activity or by a person contracted by that person to carry out the service, maintenance or repair

439. The service, maintenance or repair of vehicles or equipment is a sundry agricultural activity under paragraph 27(e) if the service, maintenance or repair:

•

is of vehicles or equipment for use in an agricultural activity;

•

is carried out on a farm; and

•

is carried out by the entity that carries on the agricultural activity in which the vehicle or equipment is used, or by a contractor of that entity or a subcontractor.

440. The transport of vehicles or equipment away from the farm for service, maintenance or repair elsewhere is not an eligible activity under paragraph 27(e).

Storage of produce

441. Paragraph 27(f) provides:

The expression sundry agricultural activity means:

(f)

the storage of produce of a core agricultural activity on an agricultural property where a core agricultural activity is carried on

442. Storage of produce is a sundry agricultural activity under paragraph 27(f) if the storage is:

•

of produce of a core agricultural activity; and

•

on a farm.

443. For the storage of produce to qualify as a sundry agricultural activity under paragraph 27(f), it is not necessary that the produce be from plants or animals grown or reared on the same farm on which it is stored.

Packing or prevention of deterioration of produce

444. Paragraph 27(g) provides:

The expression sundry agricultural activity means:

(g)

the packing, or the prevention of deterioration, of the produce of a core agricultural activity if:

(i)

the packing, or the prevention of deterioration, of the produce is carried out on an agricultural property where a core agricultural activity is carried on; and

(ii)

there is no physical change to the produce; and

(iii)

the packing, or the prevention of deterioration, of the produce does not constitute a processing of the produce

445. The packing or prevention of deterioration of produce is a sundry agricultural activity under paragraph 27(g) if the packing or prevention of deterioration is:

•

of produce of a core agricultural activity;

•

carried out on a farm;

•

does not result in any physical change to the produce; and

•

does not constitute a processing of the produce.

446. For the packing or prevention of deterioration of produce to qualify as a sundry agricultural activity, it is not necessary that the produce be from plants or animals grown or reared on the same farm on which it is stored. The activity carried out on another farm qualifies as a sundry agricultural activity under paragraph 27(g), provided the other requirements of the paragraph are met.

447. The term 'physical change' is not defined in the Energy Grants Act and takes on its ordinary meaning. The term 'physical change' means a change in the physical nature or appearance of a substance which occurs with no change in chemical composition, as when water freezes as ice.^[184]

448. In the Collector of Customs (Tas) v. Davis,^[185] the Federal Court considered whether the drying of parsley on the farm on which it was grown was eligible for diesel fuel rebate under the diesel fuel rebate scheme. Beaumont J quoted from an earlier decision of the AAT, which stated:

The fact that the parsley undergoes no physical change other than the removal of moisture further demonstrates a close relationship between the product before and after the process.^[186]

449. Beaumont J held that:

The activity in question is, first, necessary for the preservation of the crop: and secondly, both temporally and physically proximate to the primary activity of harvesting the crop.^[187]

450. Hence, the Federal Court found that the drying of parsley on the farm where it was grown was considered to be necessary for the preservation of the crop and did not constitute a physical change (other than the removal of moisture) in the produce.

451. In Vicmint,^[188] the AAT considered whether the distillation of peppermint oil by a farmer constituted a physical change. The AAT accepted that the 'crop' was the peppermint oil and that the oil, following distillation, was chemically and physically the same as it was before distillation. However, during the distillation process, there was a change in the oil from a liquid (within the leaf and stalk) to vapour, and then back to a liquid. This constituted two physical changes.

452. The AAT ruled that the extraction of peppermint oil from peppermint herbage by a process of distillation constituted a physical change, notwithstanding that the end product was a natural oil with the same physical characteristics as the oil that enters that process within or on the leaf and stalk or in separate form.

453. The Commissioner considers that the expression 'physical change', in the context of subparagraph 27(g)(ii), refers to a significant alteration in the physical appearance or physical composition of the produce, so that the produce is not recognisable as such. The Commissioner does not consider the dehydration (that is removal of water) of produce constitutes a physical change for the purposes of subparagraph 27(g)(ii).

454. In determining whether a physical change has occurred in a product the facts and circumstances of each case must be considered. It is important to consider the nature of the produce and the similarities between the agricultural produce and the product before and after the process.

455. The term 'processing' in subparagraph 27(g)(iii) is not defined in the Energy Grants Act and takes its ordinary meaning, which refers to the doing of 'a systematic series of actions directed to some end'.^[189]

456. The Commissioner considers that the term 'processing' in paragraph 27(g) has a narrow meaning and refers to the doing of something to the produce that changes its nature, form or condition into another product. A wider meaning of the term 'processing', in the context of paragraph 27(g) would mean that the simple drying of a crop by a farmer could constitute processing.

457. In Vicmint,^[190] the AAT also considered whether the distillation of peppermint oil constituted a processing of the crop. The AAT referred to Federal Commissioner of Taxation v. Hammersley Iron Pty Ltd^[191] in which Gobbo J examined various dictionaries and identified a general trend toward 'processing' constituting a change in nature, form or condition. The AAT held that the separation of the oil from the leaves and stalks constituted a processing of the oil.

458. The Commissioner takes the view that a crop is processed only if it undergoes a fundamental change in its nature, form or condition. Examples include the milling of grain, the extraction of juice from sugar cane or fruit and the canning of produce. The Commissioner considers that in each of these examples, there is a physical change to the produce as a result of the processing, which occurs after the produce is harvested or gathered in. The cutting of fruit and removal of its stone or kernel to aid dehydration does not constitute processing for the purposes of subparagraph 27(g)(iii).

459. The packing or prevention of deterioration of produce would include dehydration such as the drying of grains, tobacco leaves, herbs (for example parsley) and fruits (for example apricots) as well as humidity control and refrigeration of produce whilst awaiting transport.

Weed, pest or disease control

460. Paragraph 27(h) provides:

The expression sundry agricultural activity means:

(h)

weed, pest or disease control undertaken:

(i)

by a person who carries on a core agricultural activity; or

(ii)

by a person contracted by that person to carry out the weed, pest or disease control;

on the agricultural property where the core agricultural activity is carried on

461. Weed, pest or disease control is a sundry agricultural activity under paragraph 27(h) if it is carried out on a farm by a farmer, or by a contractor of that farmer, or a subcontractor.

462. A weed, pest or disease eradication program undertaken by a Commonwealth, State or Territory authority or by a local council is not a sundry agricultural activity under paragraph 27(h) unless the authority or council is specifically contracted by a farmer to carry out the activity.

463. A weed is 'a wild plant growing where it is not wanted'.^[192] Weed control involves activities undertaken to inhibit and eradicate weed growth, such as spraying, scarifying, ploughing or scraping of agricultural land.

464. A pest is 'a destructive animal, esp. an insect which attacks crops, live-stock, etc'.^[193] Pest control involves activities undertaken to inhibit or eradicate pests, including the spraying of crops or pasture and trapping or shooting vermin.

465. A disease is:

1. an unhealthy condition of the body (or a part of it) or the mind; illness, sickness. 2. a corresponding physical condition of plants.^[194]

Disease control involves activities to inhibit disease in live-stock or crops, for example, the spraying of crops or spreading of disease inhibiting agents on crops, such as fungicides, or the drenching of live-stock.

466. Where a pest control activity involves the hunting or trapping of foxes, rabbits and other vermin, the entitlement to a fuel tax credit for taxable fuel acquired for use in the activity depends on the status of the entity that acquires the taxable fuel. A farmer carrying out such an activity on their own farm, or an entity contracted by that farmer to carry out the activity on a farm carries on a sundry agricultural activity under paragraph 27(h).

467. An entity that carries on a business of hunting or trapping is entitled to a fuel tax credit for taxable fuel that they acquire for use in these activities as they constitute sundry agricultural activities in their own right under paragraph 27(i) of the Act.

Hunting or trapping

468. Paragraph 27(i) provides:

The expression sundry agricultural activity means:

(i)

hunting or trapping that is carried on for the purposes of a business, including the storage of any carcasses or skins obtained from the hunting or trapping

469. Hunting or trapping, including the storage of carcasses or skins obtained from these activities (hunting or trapping), are sundry agricultural activities under paragraph 27(i) if they are carried on for the purposes of a business.

470. Hunting or trapping, are not agricultural activities as defined in subsection 28(1), nor are the activities excluded from being in agriculture by paragraph 22(2)(b). Hunting or trapping is a specific activity that is included in the definition of agriculture for the purposes of the energy grants scheme (and therefore the fuel tax credit system) but which is not an agricultural activity.

471. The ordinary meaning of the term 'hunting' is 'the practice of pursuing and killing wild animals, esp. for sport'.^[195] An example of hunting is kangaroo shooting for the purposes of obtaining meat and/or skins. The ordinary meaning of the term 'trapping' is 'to catch (an animal) in a trap'.^[196] Trapping refers to the setting and use of mechanical or other contrivances for the purposes of catching or killing game and other animals.

472. Under paragraph 27(i) the storage of any carcasses or skins obtained from hunting or trapping are also sundry agricultural activities. This often involves the use of mobile or fixed refrigeration equipment and the use of vehicles off-road to tow refrigeration equipment, mobile cages or other plant or equipment while hunting or trapping is taking place. Storage of carcasses or skins ends when they are removed from storage for sale or processing.

473. There is no locational requirement for the purposes of paragraph 27(i). Hunting and trapping can therefore occur at any place at which an entity has an entitlement to engage in these activities. However, the hunting and trapping must be carried out by an entity for the purposes of a business.

Use of taxable fuel 'at' residential premises

474. Paragraph 27(j) provides:

The expression sundry agricultural activity means:

(j)

the use of off-road diesel fuel at residential premises in:

(i)

providing food and drink for; or

(ii)

providing lighting, heating, air-conditioning, hot water or similar amenities for; or

(iii)

meeting other domestic requirements of;

residents of the premises if:

(iv)

the use is by a person who carries on a core agricultural activity; and

(v)

the residential premises are situated on the agricultural property where that activity is carried on.

475. The expression 'residential premises' is defined in section 4 to mean:

(a)

premises used as a house; or

(b)

other premises at which at least one person resides;

but does not include:

(c)

premises used in the business of a hotel, motel or boarding house or a similar business; or

(d)

premises used as a hospital or nursing home or as any other institution providing medical or nursing care; or

(e)

premises used as a home for aged persons; or

(f)

premises used as a boarding school.

476. The use of taxable fuel is a sundry agricultural activity under paragraph 27(j) if:

•

the use of the taxable fuel is at residential premises;

•

the use of the taxable fuel is in:

(i)

providing food and drink for; or

(ii)

providing lighting, heating, air-conditioning, hot water or similar amenities for; or

(iii)

meeting other domestic requirements of; residents of the premises;

•

the use of the taxable fuel is by a farmer;^[197] and

•

the residential premises are situated on a farm.^[198]

477. The activity covered by paragraph 27(j) is not an agricultural activity as defined in subsection 28(1) but a specific activity that is included as a sundry agricultural activity within the meaning of agriculture.

478. There is no restriction on the way in which taxable fuel may be used in meeting the domestic requirements of residents of the premises. For example, the taxable fuel may be used as a burner fuel to provide heating.

479. However, from 1 July 2006, if you acquire taxable fuel for use by you in generating electricity or for use as heating oil in the course of carrying on your enterprise, you are entitled to a fuel tax credit under section 41-5 of the FT Act.^[199] For example, if you acquire taxable fuel for use in generating electricity 'at' residential premises on your agricultural property in which you accommodate farm workers such as shearers and drovers.

480. To be entitled to a fuel tax credit under the qualifying use of agriculture, taxable fuel acquired for use at residential premises must meet a dual locational test.

481. The first part of this test is to determine whether the taxable fuel is acquired for use 'at' residential premises. When considering this issue, the Courts have taken the view that the diesel fuel must be purchased for use at a place that may be reasonably identified with the premises.^[200] The plant or generator in which the diesel fuel is to be used should thus be appurtenant to the premises and coherent with them, and it should be able to be said that it 'belongs' to the premises.

482. In Collector of Customs, Tasmania v. Flinders Island Community Association^[201] the Association operated a generator, which supplied electricity to nearby houses located on a housing estate. In relation to the meaning of 'at' residential premises under the diesel fuel rebate scheme, the Court found that the word 'at' required:

...a close connection between the use and the residential premises but not use within the residential premises. What is a sufficiently close connection must depend on the circumstances of the particular case... In this regard it appears that the Parliament intended to give a rebate in respect of use of diesel fuel for what might be called home generation of electricity for domestic purposes...

It is consistent with that policy, and the use of the word 'at', that the generation takes place in physical proximity to the supplied houses and that the resultant electricity be used only at premises falling within the definition of 'residential premises'.^[202]

483. In Collector of Customs v. Rottnest Island Authority^[203] the Authority was responsible for generating all electricity for use on the island. Electricity was generated for use in a number of residential premises, in a shopping complex, other shops, a garden golf complex, street lighting and other commercial venues.

484. In relation to the locational test, the Court considered that:

...the section requires that, because the existence of some appropriate heating or generating plant is clearly contemplated, the location of such a plant be in sufficient proximity to the premises as to enable it reasonably to be identified with the premises. It must be appurtenant to the premises and coherent with them. It must be able to be said of the plant using the fuel that it belongs to the premises even though it be not a part of them.^[204]

485. Although the above decisions were in respect of a separate category of eligible activities (diesel fuel purchased for use 'at residential premises') for the purposes of the diesel fuel rebate scheme, the Commissioner considers that that the principles established in them are relevant in determining whether the use of taxable fuel is 'at residential premises' under paragraph 27(j) of the definition of sundry agricultural activity.^[205]

486. The second part of the locational test is to determine whether the premises themselves are on a farm.^[206]

487. Taxable fuel acquired for use in the relevant activity must be acquired by a farmer. However, there is no requirement that the farmer be the resident of the premises. The use of taxable fuel at residential premises on a farm in providing for food, drinks, lighting, heating, air-conditioning, hot water or to meet the other domestic needs of itinerant workers, for example, shearers or drovers, working on the farm qualifies as sundry agricultural activities under paragraph 27(j).

Activities excluded from the definition of agriculture

488. Paragraphs 22(2)(a) and 22(2)(b) set out the activities or operations that are excluded in the definition of 'agriculture' in the Energy Grants Act.

Forestry or fishing operations

489. Paragraph 22(2)(a) provides:

The expression agriculture does not include:

(a)

fishing operations or forestry

490. Activities in fishing operations or forestry do not qualify for an off-road credit under the agriculture category. However, separate entitlement categories exist for fishing operations^[207] and forestry^[208] as these are within the definition of primary production in section 21.

Activities not undertaken as part of a business to obtain produce for sale

491. Paragraph 22(2)(b) provides:

The expression agriculture does not include:

(b)

an activity referred to in subsection (1) (other than hunting or trapping that is carried out for the purposes of a business, including the storage of any carcasses or skins obtained from the hunting or trapping) unless the activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

492. An activity is not excluded under paragraph 22(2)(b) if the activity is for purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale. The exception to this is hunting or trapping, including the storage of any carcasses or skins obtained from the hunting or trapping, that is carried out for the purposes of a business.

493. An activity will directly benefit a business undertaken to obtain produce for sale if there is a close and immediate benefit (that is, a positive effect) to the business arising from the activity in question. This will be the case, for example, for contract harvesters. Whilst their own business is not for the purposes of obtaining produce for sale for themselves, the activities of contract harvesters in harvesting a crop for a farmer who carries on a business of obtaining produce for sale will directly benefit the business of the farmer.

494. The use of the word 'business' in paragraph 22(2)(b) denotes a commercial concern carried on with the aim of making a profit. Paragraph 199 of this Ruling sets out the indicia of when a person carries on a business.

495. The exclusion from eligibility under the agriculture category of activities that are not carried on as part of a 'farming' business is to ensure that persons engaged in so-called 'amenity agriculture', for example, hobby farms or agricultural colleges or persons growing flowers for public presentation^[209] are not entitled to off-road credits.

496. Activities such as growing flowers and plants for pleasure or presentation, or developing and maintaining parks, gardens, recreation reserves or similar areas, whilst exhibiting some of the characteristics of agriculture are excluded from the definition of agriculture by paragraph 22(2)(b). These activities are not undertaken for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.^[210]

Status of non-profit bodies

497. The fact that an entity that is carrying on agricultural activities may be a non-profit body will not, in itself, prohibit the entity from satisfying the requirement that its activities are carried on for the purpose of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.

498. Therefore, provided the agricultural activities are conducted by a non-profit body in the course of carrying on its enterprise and:

•

are carried on in a commercial manner;

•

would meet the standard business tests if the body were not non-profit; and

•

the body is registered or required to be registered for GST,^[211]

it is entitled to a fuel tax credit if it acquires taxable fuel for use in an activity that qualifies as agriculture.

499. However, where an agricultural activity conducted by a non-profit body would not meet the normal business tests - for example where the present and prospective cash flows from the sale of produce are nominal in relation to expenditure - the non-profit body is not entitled to a fuel tax credit if it acquires taxable fuel for use in the activity. The activity is excluded from the definition of agriculture by paragraph 22(2)(b).

500. From 1 July 2008 to 30 June 2012 (inclusive) a non-profit body that is carrying on an enterprise involving agricultural activities other than for purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale will be entitled to a half credit.

The exclusion from the qualifying use of 'in primary production' of taxable fuel acquired for use in propelling a road vehicle on a public road

501. The subsection 53(2) primary production exclusion excludes from the qualifying use 'in primary production' (and, therefore, 'in agriculture'), taxable fuel acquired for use in propelling a road vehicle on a public road.

502. Although not a qualifying use in primary production, you are entitled to a fuel tax credit under section 41-5 of the FT Act for taxable fuel you acquire for use in a vehicle^[212] with a GVM greater than 4.5 tonnes, travelling on a public road.^[213]

503. For the purposes of the subsection 53(2) primary production exclusion it is necessary to determine what a road vehicle is and what a public road is.

Meaning of 'road vehicle'

504. A 'road vehicle' is a vehicle of a kind ordinarily used on roads for the transport of persons or goods.^[214]

505. The meaning of the phrase 'of a kind ordinarily used' was considered in Clean Investments Pty Ltd v. Commissioner of Taxation (Clean Investments).^[215] The full Federal Court reviewed the authorities^[216] in relation to the question whether coin-operated washing machines were goods of a kind ordinarily used for household purposes. The full Federal Court concluded:

The statutory question is not whether those goods of the taxpayer will in fact be used for household purposes but whether they are goods 'of a kind ordinarily used for household purposes' ...

...it is preferable to pose the statutory question as a single composite question.

In some cases it may be misleading to address separately the question of identification of the 'genus' to which the particular goods in question belong ...

Goods and purposes can be equally correctly described in different ways, in particular, broadly or narrowly, yet the description selected may dictate the answer to the statutory question. For example, an architect's stool, an office chair and a kitchen stool or chair may be described as 'stools' or 'chairs' and their purpose as being 'to provide seating'. Yet it would be wrong to conclude that the architect's stool or the office chair is of a kind ordinarily used for household purposes for no other reason that, like the kitchen chair, it is ordinarily used for the purpose of seating ...

If, in the present case, one were to define the genus of which the relevant machines are members as 'machines designed to wash fabrics', apparently even industrial washing machines would qualify as goods ordinarily used for household purposes...

I accept that 'ordinarily' means 'commonly' or 'regularly', not 'principally', 'exclusively' or 'predominantly' ...^[217]

506. The Macquarie Dictionary^[218] defines a 'vehicle' as ' 1 . any receptacle, or means of transport, in which something is carried or conveyed, or travels. 2 . a carriage or conveyance moving on wheels or runners'.

507. It defines a 'road' as:

1. a way, usually open to the public for the passage of vehicles, persons and animals. 2. any street so called. 3. The track on which vehicles etc pass, as opposed to the pavement.

508. The term 'road vehicle' refers to the class of vehicle, not to the actual use to which a particular vehicle may be put. A vehicle is a road vehicle if it is of a class of vehicles that are designed for use on roads for the transport of persons or goods even if it is never used or registered for use on roads.

509. By way of contrast, a vehicle in a class that can clearly be seen to have been designed for use off-road, with only limited design features enabling its use on public roads, is not a road vehicle. This is so even though, with significant restrictions in relation to matters such as speed and load, the vehicle may be used on public roads in particular and limited circumstances, or may be required to be registered for use on public roads for those circumstances. Examples of this type of vehicle are grain harvesters, mechanical grape harvesters and fertiliser spreaders.

Meaning of 'a vehicle of a kind ordinarily used on roads for the transport of persons or goods'

510. The definition requires the vehicle to be of a class of road vehicle commonly or routinely used on roads in the transport of persons or goods. The decision to be made is not whether a particular road vehicle is actually used for this purpose but whether it belongs to a class of road vehicles that is commonly used for this purpose.^[219] Some typical examples where the purpose and customary use is to transport persons or goods include cars, buses, utility trucks, pantechnicons and articulated vehicles such as semi-trailers and road trains.

511. In ICI Australia Operations Pty Ltd v. Deputy Commissioner of Taxation (Vic)^[220] (ICI Operations), the full Supreme Court of Victoria dealt with the question of whether a mobile manufacturing unit (MMU) was a road vehicle for the purposes of item 14 of the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935. Excluded from the exemption were 'road vehicles of the kinds ordinarily used for the transport or delivery of goods, or parts of those road vehicles'.

512. In dealing with the exclusion from the exemption Gray J stated:

The expression 'road vehicles of the kinds ordinarily used etc.' is to my mind perfectly apt to define a category which might be described as conventional road vehicles whose purpose and customary use is to transport persons or goods, for example cars, buses and goods carrying vehicles of various types.

The exception presupposes that there is more than one kind of road vehicle which is 'ordinarily used etc.' The expression 'of the kinds' indicates classes of vehicles the functions of which make it necessary to classify them in terms of transportation of persons or goods.

It is next necessary to identify 'the kinds' of road vehicles which fall within the genus 'ordinarily used etc.'. In this category are cars, buses, utility trucks, tray-bodied trucks, dumptrucks, road trains and the like. The test for inclusion in this category is that one can stipulate that the primary purpose of the vehicle and its customary use is to transport goods or persons in the course of commercial activity. In applying this test, the concept of 'ordinarily used for' equals 'whose primary but not necessarily exclusive purpose and customary use is'. I say that because in my view the expression 'ordinarily used' in the present context cannot be divorced from the concept of the primary purpose for which the vehicle is intended to be used and is in fact customarily used.^[221]

513. The Commissioner considers that the comments made by the Full Federal Court in Clean Investments and Gray J in ICI Operations^[222] are relevant in determining the meaning of a road vehicle in the subsection 53(2) primary production exclusion.

514. Vehicles that are not characterised as of a kind that are ordinarily used for the transport of persons, or the transport or delivery of goods or other property, are those where:

(a)

the transport or delivery use is incidental, subordinate or secondary to the use of the road vehicle, as a class of goods, for another purpose; and

(b)

their primary use, as a class of goods, is for that other purpose.^[223]

515. The Commissioner is of the view that tractors, tractor/trailer combinations, fertiliser spreaders, harvesters and sprayers are not road vehicles for the purposes of the subsection 53(2) primary production exclusion. These vehicles are not primarily for the purpose of, nor are they customarily used for, the transport of goods or persons.

516. However, tractors, tractor/trailer combinations, fertiliser spreaders, harvesters and sprayers with a GVM of 4.5 tonnes or less are vehicles for the purposes of section 41-20 of the FT Act. Under section 41-20 of the FT Act, you are not entitled to a fuel tax credit for taxable fuel acquired for use in a vehicle with a GVM of 4.5 tonnes or less travelling on a public road.^[224]

517. If travel on a public road by vehicles such as tractors, tractor/trailer combinations, fertiliser spreaders, harvesters and sprayers with a GVM of more than 4.5 tonnes is incidental to the vehicle's main use as farm machinery, the amount of the fuel tax credit is not reduced by the amount of the road user charge.^[225]

518. The following table illustrates your entitlement to fuel tax credits for road vehicles and for dedicated farm vehicles that are not of a kind ordinarily used on roads for the transport of goods or persons.

Meaning of 'public road'

519. The operation of the subsection 53(2) primary production exclusion means that the transportation of agricultural produce by a road vehicle on roads that are not public roads qualifies as an eligible use under subsection 22(1). For the purposes of the subsection 53(2) primary production exclusion, it is, therefore, important to define 'public road'.

Roads that are public roads

520. A 'road' is defined in common law as a way from one place to another which enables passage between the two. It is well established that, under the common law, a 'road' becomes a 'public road' when the owner of the land has unequivocally indicated an intention to dedicate the road for public use, and the public has accepted the proffered dedication.^[229]

521. However, in Australia the vast majority of public roads are constructed by government. In Brodie and Anor v. Singleton Shire Council,^[230] Kirby J observed:

.... from the start, the building of public highways and roads in Australia was a responsibility of government, and eventually of statutory bodies (and not parishes and men thereof as in England...)^[231]

522. There are statutory authorities in each state and territory which are responsible for the construction, management and maintenance of the public road transport infrastructure within their own jurisdictions. Roads which are constructed, managed or maintained by these authorities are public roads. These roads fall into three main categories, being:

•

national highways;

•

state and territory highways and main roads; and

•

local roads and streets.

National highways

523. The roads making up the national highways network are constructed and maintained by the states and territories out of funding provided by the Federal Government. These major highways are easily identifiable. They are public roads for the purposes of the subsection 53(2) primary production exclusion.

State and territory highways and main roads

524. Each state or territory has a statutory authority^[232] which is responsible for the construction of highways and main roads within the state or territory. State and territory highways and main roads are the major connecting roads between towns.

525. It is usually the case that the governing statute provides for the formal declaration, proclamation or dedication of the highways and main roads for which the particular state or territory statutory authority is responsible.^[233]

526. The Commissioner considers that, in each state or territory, the roads which are constructed and maintained by the state or territory authority which has the primary responsibility for highways and main roads are public roads for the purposes of the subsection 53(2) primary production exclusion.

Local roads

527. Within each state and the Northern Territory there are numerous local government authorities with statutory responsibility for the construction and maintenance of local roads within their own areas.

528. Local roads are the smaller connecting roads and suburban streets within the boundaries of a local government area.

529. The powers of local government authorities in each state and the Northern Territory are enumerated in a statute which creates local government in that state or territory. The legislative powers and responsibilities in each statute apply to each individual local government area within the same state or territory. However, the statutes are not identical and this gives rise to variations according to the state or territory in which a particular local government area is located.

530. Although local government statutes do not always provide for dedication or declaration of roads as public roads, such statutes normally vest the ownership of local roads in a local government authority.^[234] In Australia, the vesting by statute in local government authorities of fee simple in land over which there are public streets leaves the streets dedicated to the public.^[235] As noted by Murray CJ in Attorney-General; Ex rel Australian Mutual Provident Society v. Corporation of the City of Adelaide:^[236]

... although the fee simple of all public streets within a municipality is vested in the Corporation of that Municipality, I think it is clear that the Corporation has not an unencumbered estate in the land, and an unrestricted right to use it in any manner it pleases. The surface is a street dedicated to the public, and it is as a street that the Corporation acquires its title to the land ... It holds, therefore, subject to the rights of the public to use the street for passing and re-passing, except in so far as those rights may be taken away or limited by statute.^[237]

531. The Commissioner considers that, in each local government area, those roads and streets which are vested in, constructed or maintained by a local government authority for general public usage are public roads for the purposes of the subsection 53(2) primary production exclusion.

Public roads under the common law

532. If a road is not under the control and management of a state or territory authority which is responsible for the provision of road infrastructure to the public, then whether the road is a 'public road' under the common law is a question of fact.

533. In order to establish that a road has been dedicated as a public road at common law, there must be established an 'unequivocal indication of the intention of the owner of the land to dedicate it to the public as a road'.^[238]

534. To establish whether a land owner has dedicated a road as a public road under the common law, some of the matters to be considered are:

•

whether there has been a declaration of an intention to dedicate;

•

delineation on maps or plans of roads set apart for public use;

•

use by the public;

•

whether vehicles must be registered to use the road and state or territory traffic laws are applicable while the vehicles use the road; or

•

the expenditure of money by public bodies in forming or maintaining the land as a road.

535. When considered with all the relevant evidence, the above matters may amount to an unequivocal indication of the intention of the owner of the land to dedicate it to the public as a road. Where that dedication is accepted by the members of the public as such, the road is a public road.

536. However, the courts have indicated that caution is necessary in determining whether a dedication of a road has been made. In President of the Shire of Narracan v. Leviston^[239] Barton J said:

... by placing too liberal a construction in favour of the public and against the landowner upon acts of passage which are tolerated by him, there is a danger lest, in the sparsely settled districts of a country like this, where roads are few and unmade, and mutual concessions on the part of the land owners and the public are necessary, land owners should be put upon the defensive, and be forced to set obstructions in the way of every act which, in a long course of time, might be construed as the assertion of a right of public highway.^[240]

537. The comments of Barton J were referred to with approval by Lockhart J in Attorney-General for the Northern Territory of Australia v. Minister for Aboriginal Affairs and Others.^[241]

Roads that are not public roads

Roads managed by statutory authorities not having responsibility for highways, main roads and local roads

538. Where a road is constructed or maintained by a statutory authority principally and primarily for the purposes of carrying out the statutory objects of the authority, and any public use of the road is subordinate to those statutory objects, then the road is not a public road.

539. Where such a statutory scheme confers a limited right of public access, which is subordinate to the main objects of the statute, then members of the public have a lesser entitlement to that access than the entitlement they have to use public highways, main roads, local roads and suburban streets. The Commissioner considers that where the public does not have a plenary right of access and use, a road cannot be characterised as a public road.

540. Similar principles apply where a statute confers upon an authority the responsibility for control and management of land on which a forest or plantation exists. The authority may make and maintain roads to have access within the forest or plantation for their forestry management purposes. Whilst members of the public may use these roads, their use is subordinate to the use of the authority, which may deny, without any notice, access to the road by members of the public. These roads are not public roads.

Roads over privately owned land

541. An owner of private property may permit members of the public to pass over the property. A person may lawfully enter private land where the person has an express or implied invitation, licence, permission, lawful authority or consent of the person in possession of the land.^[242] A person who initially enters land with lawful authority becomes a trespasser if the consent of the owner is revoked.^[243]

542. The use of a road over private land by members of the public does not create a public road, notwithstanding that the owner of the land does not hinder the use of the road by the public. Private land cannot become a public road without an effective act of dedication by the owner.^[244]

Appendix 2 - Background

Fuel tax credit system

543. The fuel tax credit system commenced on 1 July 2006. The table below depicts how the fuel tax credit available for different fuel uses will be phased in over between 1 July 2006 and 1 July 2012.

544. From 1 July 2006, fuel tax credits are claimable by businesses via the BAS. Special transitional arrangements allow certain eligible entities to make a claim for an early payment of fuel tax credits without having to wait for the lodgment of a BAS.^[246]

545. Separate claiming arrangements apply to non-business claimants for the generation of electricity for domestic use.

546. Even though the FT Act is a taxing Act,^[247] many provisions of the fuel tax credit system and the transitional provisions are beneficial in that they confer benefits on entities that acquire taxable fuel for use in carrying on an enterprise. Having regard to this policy intent, a purposive interpretive approach will be taken in the interpretation of these provisions.

Energy grants claimed under the Fuel Tax Act

547. Entitlement to an energy grant for off-road diesel fuel is limited to fuel purchased or imported between 1 July 2003 and 30 June 2006 inclusive.^[248] Entities entitled to an energy grant will have 12 months after that date to claim an energy grant under the Product Grants and Benefits Administration Act 2000 (PGBA Act) if they were entitled to an off-road credit under the Energy Grants Act. This means that the claim must be made before the earlier of 1 July 2007 and the end of three years after the start of the claim period.^[249]

548. Alternatively, a claim for such grants (where off-road diesel fuel is purchased or imported between 1 July 2003 and 30 June 2006) can be made under the FT Act by way of a 'decreasing fuel tax adjustment'.^[250]

549. You are not entitled to an energy grant for an off-road credit for diesel fuel, if you have already given the Commissioner a return for a tax period or a fuel tax return period which takes into account a decreasing fuel tax adjustment that relates to the fuel.^[251]

550. The transitional provisions allow you to claim a 'decreasing fuel tax adjustment' on your BAS if the adjustment is attributable to the tax period or fuel tax return period that you choose that ends before 1 July 2009.^[252] The amount of the adjustment is equal to the amount of off-road credit for the energy grant that you were entitled to under the Energy Grants Act.

551. A 'decreasing fuel tax adjustment' decreases an entity's 'net fuel amount'.^[253] That is, a 'decreasing fuel tax adjustment' increases the amount of fuel tax credit an entity is otherwise entitled to.^[254]

Energy Grants Scheme

552. For the Commissioner's views in relation to the operation of the energy grants credits scheme in general and the off-road credit entitlements for the qualifying use of 'agriculture' in particular, see PGBR 2005/3 Energy grants: off-road credits for agriculture.

553. Appendix 3 of this Ruling provides a comparison of the energy grants scheme and the fuel tax credit system.

Appendix 2 - Comparison table

554. The following table is a comparison of the energy grants scheme and the fuel tax credit system. The comparison is only in relation to taxable fuel acquired for use in carrying on an enterprise other than in a vehicle, with a GVM of more than 4.5 tonnes, travelling on a public road.

Appendix 4 - Detailed contents list

555. The following is a detailed contents list for this Ruling:

Not previously issued as a draft

References

ATO references:
NO 2006/11199

Related Rulings/Determinations:

PGBR 2004/1
PGBR 2005/1
PGBR 2005/2
PGBR 2005/3
TR 97/11
TR 97/11ER
TR 2006/10
GSTR 2006/3
GSTR 2006/4
FTD 2006/2
FTD 2006/3
MT 2006/1
FTR 2006/3
FTR 2006/4

Subject References:
acquire
acquire, or manufacture in, or import into, Australia
apportionment
apportionment of fuel
business
business purposes
carrying on your enterprise
agricultural activities
agricultural construction activity
agricultural property
agricultural soil/water activity
agricultural waste activity
apiculture
apportionment of fuel
carrying out of earthworks for use in a core agricultural activity
claims
core agricultural activity
cultivation of the soil
cultivation or gathering in of crops
diesel fuel
eligible use
energy grant
energy grants (credits) scheme
gathering in
grants
horticulture
in
live-stock activity
off-road credits scheme
off-road diesel fuel
off-road scheme
on-road credits scheme
pasturage
person who carries on a core agricultural activity
place adjacent to an agricultural property
public road
rearing of live-stock
road vehicle
solely
status of contractors and subcontractors
sundry agricultural activity
viticulture

Legislative References:
ANTS(GST)A 1999 9-20
ANTS(GST)A 1999 Div 23
ANTS(GST)A 1999 184-1
ANTS(GST)A 1999 195-1
EGCSA 2003 4
EGCSA 2003 Pt 2 Div 3 Subdiv C
EGCSA 2003 21
EGCSA 2003 22
EGCSA 2003 22(1)
EGCSA 2003 22(1)(a)
EGCSA 2003 22(1)(b)
EGCSA 2003 22(1)(c)
EGCSA 2003 22(1)(d)
EGCSA 2003 22(1)(e)
EGCSA 2003 22(1)(f)
EGCSA 2003 22(1)(g)
EGCSA 2003 22(1)(h)
EGCSA 2003 22(1)(i)
EGCSA 2003 22(2)
EGCSA 2003 22(2)(a)
EGCSA 2003 22(2)(b)
EGCSA 2003 23
EGCSA 2003 23(1)
EGCSA 2003 23(1)(a)
EGCSA 2003 23(1)(b)
EGCSA 2003 23(1)(c)
EGCSA 2003 23(1)(d)
EGCSA 2003 23(2)
EGCSA 2003 24
EGCSA 2003 24(a)
EGCSA 2003 24(b)
EGCSA 2003 24(c)
EGCSA 2003 24(d)
EGCSA 2003 24(e)
EGCSA 2003 25
EGCSA 2003 25(a)
EGCSA 2003 25(b)
EGCSA 2003 25(c)
EGCSA 2003 25(d)
EGCSA 2003 25(e)
EGCSA 2003 26
EGCSA 2003 26(a)
EGCSA 2003 26(b)
EGCSA 2003 27
EGCSA 2003 27(a)
EGCSA 2003 27(b)
EGCSA 2003 27(c)
EGCSA 2003 27(d)
EGCSA 2003 27(e)
EGCSA 2003 27(f)
EGCSA 2003 27(g)
EGCSA 2003 27(g)(ii)
EGCSA 2003 27(g)(iii)
EGCSA 2003 27(h)
EGCSA 2003 27(i)
EGCSA 2003 27(j)
EGCSA 2003 28(1)
EGCSA 2003 28(2)
EGCSA 2003 28(2)(a)
EGCSA 2003 28(2)(b)
EGCSA 2003 28(2)(c)
EGCSA 2003 28(2)(d)
EGCSA 2003 30
EGCSA 2003 31
EGCSA 2003 32
EGCSA 2003 33
EGCSA 2003 34
EGCSA 2003 35
EGCSA 2003 51(2)
EGCSA 2003 52
EGCSA 2003 53
EGCSA 2003 53(1)
EGCSA 2003 53(2)
EGCSA 2003 53(3)
EGCSA 2003 53(6)
EGCSA 2003 53(7)
EGCSA 2003 55
EGCSA 2003 55A
EGCS Regulations 2003
FTA 2006 41-5
FTA 2006 41-5(1)
FTA 2006 41-5(2)
FTA 2006 41-15
FTA 2006 41-20
FTA 2006 41-25
FTA 2006 Subdiv 41-B
FTA 2006 42-5
FTA 2006 Div 43
FTA 2006 43-10
FTA 2006 43-10(4)
FTA 2006 Div 44
FTA 2006 44-5(3)
FTA 2006 Subdiv 45-A (repealed as of 1 July 2009)
FTA 2006 45-5 (repealed as of 1 July 2009)
FTA 2006 45-5(2) (as at 30 June 2009)
FTA 2006 Div 60
FTA 2006 60-5
FTA 2006 60-5(1)
FTA 2006 61-15
FTA 2006 61-20
FTA 2006 Div 65
FTA 2006 65-5(1)
FTA 2006 65-5(2)
FTA 2006 65-5(3)
FTA 2006 65-5(4)
FTA 2006-65 5(5) (as at 30 June 2009)
FTA 2006 95-5
FTA 2006 110-5
FT (Consequential and Transitional Provisions) Act 2006 Sch 3
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 9
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 9(3)
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 10
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 10(5)(b)
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 11
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 11(5)(b)
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 11(6)
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 11(7)
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 12
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 12A
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 12A(1)(c)(i)
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 12A(1)(e)(i)
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 12A(1)(e)(ii)
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 12A(1)(f)
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 12A(2)
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 12A(3)(a)
FT (Consequential and Transitional Provisions) Act 2006 Sch 3 12A(3)(b)
PGBA Act 2000 9
PGBA Act 2000 15(2)(db)
PGBA Act 2000 15(2A)
Customs Act 1901 164
Customs Act 1901 164(7)
Customs Act 1901 164(7)(c)
Customs Act 1901 164(7)(ca)
Customs Act 1901 164(7)(s)
Customs Tariff Act 1995 9
Excise Act 1901 78A
Excise Tariff Act 1921
ITAA 1936 51(1)
Real Property Act 1886
Sales Tax (Exemptions and Classifications) Act 1935 Sch 1 14
TAA 1953
TAA 1953 Sch 1 105-55
Tax Laws Amendment (2009 Measures No. 2) Act 2009 Sch 7 16(4)
Tax Laws Amendment (2009 Measures No. 2) Act 2009 Sch 7 16(5)
Town and Country Planning Act 1947 119(1)
Local Government Act 1928-1941 (Vic) 249(5)
Local Government Act 1999 (SA) 208(1)
Main Roads Act 1930 (WA) 13
Roads Act 1993 (NSW) 13
Roads and Jetties Act 1935 (Tas) 7
Transport Act 1983 (Vic) Sch 2
Transport Infrastructure Act 1994 (Qld) 23

Case References:
Attorney-General; Ex rel Australian Mutual Provident Society v. Corporation of the City of Adelaide
[1931] SASR 217

Attorney-General for the Northern Territory v. Minister for Aboriginal Affairs (NSW G 235 of 1988)
unreported decision, 3 August 1988
Attorney-General for the Northern Territory of Australia v. Minister for Aboriginal Affairs and Others
(1989) 23 FCR 536
Australian National Railways Commission v. Collector of Customs SA
(1985) 8 FCR 264
(1985) 69 ALR 367
Australian Native Landscapes Pty Ltd v. Collector of Customs
[1997] 81 FCA (21 February 1997)
(1997) 24 AAR 353
(1997) 44 ALD 531
Barker v. R
(1983) 153 CLR 338
(1983) 47 ALR 1
(1983) 57 ALJR 426
Belmont Farm v. Minister of Housing and Local Government
(1962) 13 P & CR 417
Brodie and Anor v. Singleton Shire Council
(2001) 206 CLR 512
(2001) 180 ALR 145
Case 21/98
(1998) ATC 263
(1998) 40 ATR 1166
AAT No. 13,430 [1998] AATA 874
Chief Executive Officer of Customs v. WMC Resources Ltd (as agent for East Spar Alliance)
(1998) 158 ALR 241
(1998) 87 FCR 482
Clean Investments Pty Ltd v. Commissioner of Taxation
[2001] FCA 80 14 February 2001
(2001) 105 FCR 248
(2001) 184 ALR 314
(2001) 46 ATR 248
2001 ATC 4068
Cohns Industries Pty Ltd v. Deputy Federal Commissioner of Taxation (Cth)
(1979) 37 FLR 508
(1979) 24 ALR 658
(1979) 79 ATC 4243
(1979) 9 ATR 759
Collector of Customs v. Pozzolanic Enterprises Pty Limited
(1993) 43 FCR 280
(1993) 115 ALR 1
Collector of Customs v. Reg Russell and Sons Pty Ltd
No. WAG 95 of 1994 FED No. 421/95
Collector of Customs v. Rottnest Island Authority
(1994) 119 ALR 406
(1994) 48 FCR 177
Collector of Customs (Tas) v. Davis
(1989) 23 FCR 378
(1989) 10 AAR 439
Collector of Customs, Tasmania v. Flinders Island Community Association
(1985) 7 FCR 205
60 ALR 717
Commissioner of Taxation v. Chubb Australia Ltd
(1995) 128 ALR 489
(1995) 56 FCR 557
(1995) 95 ATC 4186
(1995) 30 ATR 285
Commissioner of Taxation v. Sherwood Overseas Pty Ltd
(1985) 85 ATC 4267
(1985) 75 FLR 474
16 ATR 473
85 ATC 4267
Cowell v. Rosehill Racecourse Co Ltd
(1937) 56 CLR 605
(1937) 11 ALJR 32 - HCA - 22/04/1937
[1937] ALR 273
Cuisenaire v. Reed
(1962) 5 FLR 180
[1963] VR 719
Deputy Commissioner of Taxation v. Stewart
(1984) 154 CLR 385
(1984) 52 ALR 253
15 ATR 387
(1984) 84 ATC 4146
Deputy Commissioner of Taxation (NSW) v. Newbound & Co Pty Ltd
(1952) 26 ALJR 386
(1952) 10 ATD 59
Diethelm Manufacturing Pty Ltd v. Commissioner of Taxation
(1993) 44 FCR 450
(1993) 116 ALR 420
(1993) 93 ATC 4703
(1993) 26 ATR 465
Esso Australia Ltd v. Chief Executive Officer of Customs
[1998] AATA 366
Federal Commissioner of Taxation v. BHP Minerals Ltd
(1983) 51 ALR 166
14 ATR 389
83 ATC 4407
Federal Commissioner of Taxation v. Hamersley Iron Pty Ltd
(1980) 33 ALR 251
(1980) 80 ATC 4509
(1980) 11 ATR 302
Federal Commissioner of Taxation v. Payne
(2001) HCA 3
46 ATR 228
2001 ATC 4027
(2001) 202 CLR 93
(2001) 177 ALR 270
(2001) 75 ALJR 442
Hemens (Valuation Officer) v. Whitsbury Farm and Stud Ltd and other appeals
[1987] 1 All ER 430
Hygienic Lily Ltd v. Deputy Commissioner of Taxation
(1987) 71 ALR 441
(1987) 13 FCR 396
18 ATR 619
(1987) 87 ATC 4327
ICI Australia Operations Pty Ltd v. Deputy Commissioner of Taxation (Vic)
(1987) 87 ATC 5110
(1987) 19 ATR 647
In the Estate of Nicholas
[1955] VLR 291
[1955] ALR 817
Kentucky Fried Chicken Pty Ltd v. Federal Commissioner of Taxation
(1986) 86 ATC 4701
(1986) 17 ATR 1039
Kiosses v. Corporation of the City of Henley and Grange
(1971) 6 SASR 186
(1971) 33 LGRA 286
Lincoln Hunt Australia Pty Ltd v. Willesee
(1986) 4 NSWLR 457 - NSWSC - 13/02/1986
Lippett v. Robertson
[1953] SASR 13
Marsal Pty Ltd & Ors v. Comptroller of Stamps (Vic)
(1982) 82 ATC 4536
OR Cormack Pty Ltd v. Federal Commissioner of Taxation
(1992) 23 ATR 151
(1992) 92 ATC 4121
Permanent Trustee Company of New South Wales Ltd v. Campbelltown Municipal Council
(1960) 105 CLR 401
[1961] ALR 164
(1960) 6 LGRA 340
President of the Shire of Narracan v. Leviston
(1906) 3 CLR 846
(1906) 12 ALR 294
Proserpine Co-operative Sugar Milling Association v. Commissioner of Taxation
(1996) 96 ATC 5016
(1996) 34 ATR 129
Randwick Municipal Council v. Rutledge
(1959) 102 CLR 54
Re BHP Billiton Petroleum Pty Ltd and Chief Executive Officer of Customs
[2002] AATA 705
50 ATR 1156
(2002) 69 ALD 453
Re BHP Petroleum and Collector of Customs
(1987) 11 ALD 413
6 AAR 245
Re Central Norseman Gold Corporation Limited and Collector of Customs, Western Australia
AAT No. W84/118
(1985) 8 ALN N288
Re City of Nunawading and Comptroller-General of Customs
No. V93/540 AAT No. 9758
(1994) 36 ALD 628
Re Day and Deputy Commissioner of Taxation
[2004] AATA 1305 (7 December 2004)
58 ATR 1189
Re Elf Farm Supplies Pty Ltd and Chief Executive Officer of Customs
[1998] AATA 929
(1998) 28 AAR 485
Re French Island Barge Pty Ltd and Collector of Customs
No. V92/255 AAT No. 8625
Re Impast Pty Ltd and Collector of Customs
No. W91/290 AAT No. 8355
Re LM & TMR Quinlivan and the Quinlivan Family Trust and the Chief Executive Officer of Customs
[1997] AATA 11810
(1997) 25 AAR 142
Re McDermott Industries and Chief Executive Officer of Customs
(1997) 47 ALD 134
Re Proprietary Articles Trade Association of South Australia Inc.
[1949] SASR 88
Re Raymond Cedric and Brian Richard Wallace v. CEO of Customs
AAT No. 13,015 [1998] AATA 633 (25 June 1998)
(1998) 27 AAR 430
Re Reg Russell and Sons Pty Ltd and Collector of Customs
Nos. W93/218 and W94/16 AAT No. 9635
Re Riviera Nautic Pty Ltd and Federal Commissioner of Taxation
[2002] AATA 657
50 ATR 1106
68 ALD 581
Re Rylane Pty Ltd and Collector of Customs
No. W94/26 AAT No. 9692
[1994] AATA 9692
Re Vicmint Partners Pty Ltd and Chief Executive Officer of Customs
(1997) 48 ALD 475
Re Wandoo Alliance Pty Ltd v. Chief Executive Officer of Customs
[2001] AATA 801
(2001) 34 AAR 98
Re Water Administration Ministerial Corporation and Chief Executive Officer of Customs (13 August 1997)
N96/1212 AAT No. 12,111
Ronpibon Tin NL v. FC of T
(1949) 78 CLR 47
Sisters of Mercy Property Association v. Newtown and Chilwell
(1944) 69 CLR 369
Vickery v. Municipality of Strathfield
(1911) 11 SR (NSW) 354
(1911) 28 WN (NSW) 107 - NSWSC - 31/08/1911
YZ Finance Co. Pty Ltd v. Cummings
(1963-1964) 109 CLR 395

Other References:
The Australian Oxford Dictionary, 1999, Oxford University Press, Melbourne
Customs and Excise Legislation Amendment Bill 1995
Explanatory Memorandum to the Customs and Excise Legislation Amendment Bill 1995
The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW
New Shorter Oxford English Dictionary (1993)
Second Reading Speech, Customs and Excise Legislation Amendment Bill 1995
Supplementary Explanatory Memorandum to the Customs and Excise Legislation Amendment Bill 1995
Revised Explanatory Memorandum to the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006
Oxford Dictionary of English (2003)