Issue
Is a parent company selling fuel for the purposes of paragraph 49(b) and paragraph 55(b) of the Energy Grants (Credits) Scheme 2003 (EGCSA) when it purchases fuel and provides it, for a charge, to its wholly owned subsidiary company?
Decision
Yes. A parent company is selling fuel for the purposes of paragraph 49(b) and paragraph 55(b) of the EGCSA when it purchases fuel and provides it, for a charge, to its wholly owned subsidiary company.
Facts
A parent company purchases fuel and provides it, for a charge, to its wholly owned subsidiary company.
The wholly owned subsidiary company is a separate legal entity with its own Australian Business Number (ABN).
Reasons for Decision
Subsection 56(1) of the EGCSA states that you are entitled to an energy grant if you are entitled to an on-road or an off-road credit. In order to be entitled to an on-road or off-road credit, the entity must satisfy a number of tests, in particular the entity must have purchased the fuel.
However, paragraph 49(b) and paragraph 55(b) of the EGCSA provide that an entity which purchases fuel and subsequently sells or otherwise disposes of the fuel is not entitled to and is taken to never have been entitled to an on-road or off-road credit.
The Administrative Appeals Tribunal considered the issues of 'use' and to a lesser extent 'sale or disposal' in Re Riviera Nautic Pty Limited v. Federal Commissioner of Taxation [2002] AATA 657. Riviera Nautic was decided in relation to the Diesel Fuel Rebate Scheme which was the precursor to the Energy Grants (Credits) Scheme and was administered under the Excise Act 1901 and the Customs Act 1901 . In that case, the AAT considered that in determining whether something had been sold, one should consider whether property in it is intended to pass. Further, the Macquarie Dictionary (Rev 3rd edn) Macquarie, Sydney 2001 defines 'sell' as: 1. to give up or make over for consideration; dispose of to a purchaser for a price.
The parent company supplies the fuel to a wholly owned subsidiary for a charge. The subsidiary is a distinct legal entity from the parent company, and has its own ABN. Therefore, the parent company has disposed of the fuel, for consideration, to the subsidiary company. Property has clearly passed to the subsidiary company.
Therefore, when the parent company provides fuel to its subsidiary for a charge, it is selling the fuel for the purposes of paragraph 49(b) and paragraph 55(b) of the EGCSA.