Issue
Is the pumping of water from a water source located on an entity's farm to the garden surrounding the entity's homestead, a 'sundry agricultural activity' as defined in paragraph 27(j) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
Yes. The pumping of water from a water source located on the entity's farm to the garden surrounding the entity's homestead is a 'sundry agricultural activity' as defined in paragraph 27(j) of the EGCSA.
Facts
An entity undertakes a core agricultural activity.
The entity carries out this core agricultural activity on their farm, and uses diesel fuel to power a pump, located close to the homestead, which conveys water from a water source on the entity's farm to a tank. The pump is used to water the garden surrounding the homestead. The homestead is located on the farm.
Reasons for Decision
Section 53 of the EGCSA provides that, subject to the conditions and restrictions specified in the Regulations, an entity is entitled to an off-road credit if they purchase or import into Australia off-road diesel fuel for a use by them that qualifies, including 'agriculture'.
'Agriculture' is defined in section 22 of the EGCSA to include, subject to certain limitations, a 'sundry agricultural activity', which is defined in turn in section 27 of the EGCSA.
The most pertinent activity in section 27 of the EGCSA is set out in paragraph 27(j), which states that the expression 'sundry agricultural activity' includes: 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 (ii) 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.
'Residential premises' is defined in the EGCSA as including 'premises used as a house'. A homestead falls within this definition.
The Federal Court considered the meaning of the word 'at' in this context, a number of times under the Diesel Fuel Rebate Scheme which was administered under the Excise Act 1901 and the Customs Act 1901 and was the precursor to the Energy Grants (Credits) Scheme. The Excise Act and the Customs Act contained a similar entitlement provision that allowed payment of a diesel fuel rebate for diesel fuel used 'at residential premises' for meeting the 'other domestic requirements' of residents of the premises.
In Re: Collector of Customs, Tasmania v. Flinders Island Community Association (1985) 7 FCR 205 ( Flinders Island case ), the Federal Court found that in order to meet the requirement that the fuel is used 'at' residential premises, there must be a close connection between the use (that is, where the pump is) and the residential premises (the homestead) and that the generation takes place in physical proximity to the premises.
In Collector of Customs v. Rottnest Authority (1994) 48 FCR 177, the Court accepted the view put forward in the Flinders Island case but further determined that the generating plant should 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'.
As the pump that is used to pump water from the river to a tank from which the garden is watered, is located close to the homestead, there is a close connection between the pump and the homestead. The pumping takes place in sufficient physical proximity to the homestead to allow it to be reasonably identified with the premises. Therefore the fuel is used 'at' the residential premises.
The pumping of water for use in watering a garden surrounding a place of residence on an agricultural property, is considered to be meeting one of the 'other domestic requirements' of the residents of those premises.
Furthermore, the use of diesel fuel to power the pump is 'use by a person who carries on a core agricultural activity', and the residential premises are situated on the agricultural property where that core agricultural activity is carried on.
Accordingly, the pumping of water from a water source located on an entity's farm to the garden surrounding the entity's homestead is a 'sundry agricultural activity' as defined in paragraph 27(j) of the EGCSA.