Issue
Can a person who uses diesel fuel at particular premises to generate electricity for use in the course of carrying on a hospitality business and for accommodation to staff claim diesel fuel rebate under the retail/hospitality category in paragraph 78A(1)(ad) of the Excise Act 1901 and corresponding paragraph 164(1)(ad) of the Customs Act 1901 for the portion of diesel fuel used to generate electricity for staff accommodation?
Decision
Yes. A person who uses diesel fuel at particular premises to generate electricity for use in the course of carrying on a hospitality business and for accommodation to staff can claim diesel fuel rebate under the retail/hospitality category in paragraph 78A(1)(ad) of the Excise Act and corresponding paragraph 164(1)(ad) of the Customs Act for the portion of diesel fuel used to generate electricity for staff accommodation.
Facts
The client carries on a retail/hospitality business. The client purchases diesel fuel for use in generating electricity for use within the boundaries of the retail/hospitality business, including staff accommodation.
The retail/hospitality business (including the staff residences) does not have ready access to a commercial supply of electricity.
Reasons for Decision
Schedule 1 of the Diesel Fuel Rebate Scheme Amendment Act 2002 inserted paragraph 78A(1)(ad) into the Excise Act and made corresponding amendments to the Customs Act.
This paragraph extends the off-road diesel fuel rebate scheme to provide for a payment of rebate to a person who purchases diesel fuel for use by them at particular premises to generate electricity for use in the course of carrying on, at those premises, an enterprise that: • has, as its principal purpose, the retail sale of goods or services or the provision of hospitality, and • does not have, at those premises, ready access to a commercial supply of electricity.
The extension of the diesel fuel rebate scheme only applies in respect of diesel fuel purchased on or after 1 July 2002.
It is accepted that the client: (a) purchases diesel fuel for use in generating electricity, and (b) does not have, at the retail/hospitality business (including the staff residences), ready access to a commercial supply of electricity.
It is also accepted that the principal purpose of the enterprise is the retail sale of goods and services and the provision of hospitality.
Example 1.1 of the Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002, states that: South Seas Pty Ltd operates a tourist resort in a remote part of Western Australia that does not have a ready access to a commercial supply of electricity. It uses diesel fuel to generate power for its own use in van sites, motel accommodation, a retail store and residential accommodation... South Seas Pty Ltd is eligible for a rebate for diesel fuel used to generate electricity for its own business including the residential accommodation, as the principal purpose of its enterprise is the provision of hospitality services...
This indicates that the carrying on of an enterprise which has, as its principal purpose the provision of hospitality, can include the provision of residential accommodation for the staff, provided that accommodation can still be regarded as 'at' the premises where the diesel fuel is used and the enterprise is carried on.
In this instance, as the staff accommodation is within the bounds of the hospitality/retail business, it is 'at' the premises where the diesel fuel is used and the enterprise is carried on.