Excise - Payments - Diesel Fuel Rebate Scheme - eligibility of fuel used in vessels hired to the public for fishing or recreational purposes

Is diesel fuel, purchased by a tourism enterprise for use in vessels which are hired out to the public for fishing or recreational purposes, eligible for the diesel fuel rebate under subsection 164(1) of the Customs Act 1901 (Customs Act) and subsection 78A(1) of the Excise Act 1901 (Excise Act)?

The tourism enterprise is entitled to the diesel fuel rebate under subsection 164(1) of the Customs Act and subsection 78A(1) of the Excise Act under the 'marine transport' category for the fuel used to power the vessels it hires to customers , provided the cost of the fuel is included in the overall hire charge and the hirers are not separately charged for the fuel.

The applicant for rebate carries on an enterprise as a tourism business. The basis of the enterprise is that it hires out vessels for fishing or recreational activities.

The hire rate paid by hirers of the vessels is inclusive of all fuel used irrespective of the quantity. The hirers have exclusive use of the vessels and fuel during the hire period.

Subsection 164(1) of the Customs Act relevantly provides that the diesel fuel rebate is payable to a person who purchases fuel for use by him for marine transport in the course of carrying on an enterprise.

Subsection 164(2) of the Customs Act relevantly provides that a person is not entitled to the rebate if the person sells or otherwise disposes of the fuel.

In Re Riviera Nautica Pty Limited and Commissioner of Taxation the Administrative Appeals Tribunal found that: (a) the word 'use' has a wide meaning and should be given its ordinary or general meaning. The tribunal was satisfied that the applicant purchases diesel fuel for its own use (b) the meaning of the words marine transport, covers the hire of vessels so that clients of a tourism enterprise can transport themselves around by vessel (c) the use by the tourism enterprise of diesel fuel to power vessels which it hires to customers is a use of the fuel 'in marine transport', in the course of carrying on an enterprise; and (d) as any fuel remaining in the vessel at the end of the fuel is returned to the tourism enterprise, the fuel is not disposed of or sold by the tourism enterprise to the hirers. Therefore subsection 164(2) of the Customs Act does not disentitle the applicant in these circumstances.