Issue
Is the production of mushroom substrate, by a commercial mushroom grower, wholly for their own use, 'horticulture' as defined in section 33 of the Energy Grants (Credits) Scheme Act 2003?
Decision
Yes. The production of mushroom substrate, by a commercial mushroom grower, wholly for their own use, is 'horticulture' as defined in section 33 of the EGCSA.
Facts
The client is a commercial mushroom grower who produces mushroom substrate and then uses the substrate as a growth medium for mushrooms in their business. The client uses all the mushroom substrate they produce in their own mushroom growing business. None of the substrate is made available for sale.
Reasons for Decision
Section 33 of the EGCSA defines 'horticulture' as including: (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
As horticulture is defined inclusively in the legislation, an activity can be considered 'horticulture' if it falls within any of the activities specified in the definition of horticulture or the common meaning of the term.
The cultivation, propagation or production of fruit, trees, seeds etc. involve a number of activities undertaken over a period of time to arrive at the end product. It is evident from the Federal Court case Australian Native Landscapes Pty Ltd v. Collector of Customs 24 AAR 353; (1997) 44 ALD 531; ( Australian Native Landscapes' Case ) that certain activities undertaken separately are not horticulture, but when they are undertaken as part of an overall process to cultivate, propagate or produce fruit, trees, seed etc by the person who ultimately grows the final product, they are horticulture.
In Australian Native Landscapes' Case, the Federal Court considered whether the commercial manufacture of potting mix was 'horticulture' under 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 . The Customs Act contained a definition of 'horticulture' in subsection 164(7). That definition was the same as the definition contained in section 33 of the EGCSA and the findings from that decision remain relevant.
The Federal Court held that the manufacture of potting mix for commercial sale was not 'horticulture' and confirmed the distinction made by the Administrative Appeals Tribunal (AAT) between commercial production of potting mix for sale (which is not horticulture) and the production of potting mix by a grower for his or her own purposes (which is horticulture).
Later, in Elf Farm Supplies Pty Ltd v. Chief Executive Officer of Customs [1998] AATA 929, the AAT applied the distinction made in Australian Native Landscapes' Case , to determine that the commercial production of mushroom substrate that is sold to a mushroom farmer was not 'horticulture'.
In this case the mushroom substrate is produced by a commercial mushroom grower for use by him in growing mushrooms. It is not sold to a mushroom grower. Therefore, the production of the substrate is an activity that is part of the process of cultivating the mushrooms.
Accordingly, the production of mushroom substrate by a commercial mushroom grower that he or she uses for the purpose of cultivating mushrooms is 'horticulture'.