Issue
Is a person who uses diesel fuel at particular premises to generate electricity for use in the course of carrying on a business comprising a caravan park, tea rooms and a museum eligible for diesel fuel rebate under the 'hospitality/retail' category in paragraph 78A(1)(ad) of the Excise Act 1901 and corresponding paragraph 164(1)(ad) of the Customs Act 1901 ?
Decision
Yes. A person who uses diesel fuel at particular premises to generate electricity for use in the course of carrying on a business comprising a caravan park, tea rooms and a museum is eligible for diesel fuel rebate under the 'hospitality/retail' category in paragraph 78A(1)(ad) of the Excise Act and corresponding paragraph 164(1)(ad) of the Customs Act.
Facts
The client carries on an enterprise in the form of a caravan park, tea rooms and an adjacent museum. The client purchases diesel fuel for use in generating electricity for the buildings.
The caravan park, tea rooms and museum do not have ready access to a commercial supply of electricity.
The museum is a relatively small building. In the museum, memorabilia and historic photographs are displayed. Visitors are charged a fee for entrance to the museum.
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.
This extension of the diesel fuel rebate scheme applies in respect of diesel fuel purchased on or after 1 July 2002.
It is accepted that: (a) the caravan park, tearooms and museum are part of the same enterprise, and (b) the client does not have, at the caravan park, tearooms and adjacent museum, ready access to a commercial supply of electricity
The test that applies in this instance is whether the enterprise has as its principal purpose the retail sale of goods or services or the provision of hospitality.
Example 1.3 of the Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002 says: South Seas Pty Ltd operates a tourist resort in a remote part of Western Australia that does not have 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 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 example clearly indicates that caravan parks would generally be expected to have as their primary purpose the retail sale of goods or services or the provision of hospitality.
Further, in carrying on the enterprise the client sells food, drink and souvenirs in the tearooms and provides displays for tourists at the museum. In the museum, memorabilia and historic photographs are displayed. A small charge is made for entry to the museum. The income generated from the museum is a minor part of the business. The tearooms and museum are used exclusively for these purposes.
Accordingly the principle purpose of the enterprise carried on at the caravan park, tearooms and museum is the retail sale of goods and services and the provision of hospitality and the client is eligible for diesel fuel rebate under paragraph 78A(1)(ad) of the Excise Act and corresponding paragraph 164(1)(ad) of the Customs Act.