Issue
Is a business of catching fish for sale to pet shops and aquariums undertaken for purposes connected with recreation sport or tourism and therefore excluded from the definition of 'fishing operations' in subsection 34(1) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
No. A business of catching fish for sale to pet shops and aquariums is not undertaken for purposes connected with recreation sport or tourism and therefore is not excluded from the definition of 'fishing operations' in subsection 34(1) of the EGCSA.
Facts
The client carries on a business of catching fish for sale to pet shops and aquariums.
Reasons for Decision
Under the Energy Grants (Credits) Scheme, a person is entitled to an energy grant if they purchase diesel fuel for use by them in primary production.
The definition of primary production in section 21 of the EGCSA includes 'fishing operations'.
The term 'fishing operations' is defined in subsection 34(1) of the EGCSA as: (a) the taking, catching or capturing of fish; or ... but does not include any activity referred to in any of the preceding paragraphs that is conducted, in whole or in part: (h) otherwise than for the purposes of a business; or (i) for business purposes connected with recreation, sport or tourism.
The catching of fish falls under (a) of the definition of 'fishing operations'. However, the client's activities will be excluded from the definition of 'fishing operations' if they are conducted in whole or in part, for purposes other than a business, or for 'business purposes connected with recreation, sport or tourism'.
The client is catching fish. The catching of fish is ordinarily associated with the business purpose of selling the fish for profit. In this case, the client's services are provided to pet stores and aquariums for profit. This also constitutes business purposes. Therefore, the first of the above exclusionary tests is satisfied, and the client's activities will constitute fishing operations provided they are not carried on for business purposes connected with recreation, sport or tourism.
As pet stores and aquariums are often operated for the sale of animals to people seeking pets for recreational purposes, it must be determined whether the client's business purpose is 'connected with recreation, sport or tourism' for the purposes of the definition of 'fishing operations'.
Prior to 1995 the meaning of the phrase 'in connection with' was much discussed by the Courts, generally in the context of determining if an activity was undertaken 'in connection with' agriculture or mining, as then defined, for the purposes of the diesel fuel rebate scheme.
In several key cases the Federal Court accepted that the phrase 'in connection with' was wide and imprecise in meaning, and capable of describing a wide range of relationships. Most notably, in Collector of Customs v. Pressure Tankers Pty Ltd and Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280, the Court considered whether the unloading of stockfeed from trucks to silos was an operation connected with the rearing of livestock. In that case the Court gave direction on how the phrase should be considered. They said 'The question is whether they are connected to the extent contemplated by the Act'.
It is evident that the legislators were contemplating the distinction between commercial fishing operations and fishing for sport, recreational or tourism purposes in directing the rebate towards primary production activities. As such it is clear that fuel used for fishing charters and by recreational or sports fishermen will be excluded.
The activity of catching fish carried out for the business purposes of selling the species for profit is farther removed than the above examples in its connection with recreation and as such is not connected with recreation, sport or tourism to the extent contemplated by the EGCSA.
Therefore, the catching of fish is a business activity that is undertaken for the purpose of selling them for profit. The ultimate purchaser of the fish is not relevant as the fishing activity itself is a business activity. Although pet stores and aquariums may be considered recreational businesses, the 'fishing operations' are not undertaken as part of such a business.
Accordingly, the client is considered to be undertaking 'fishing operations' for business purposes not connected with recreation, sport or tourism.