Issue
Is the thinning and felling of trees under power lines carried out on behalf of a commercial power authority within the definition of 'primary production' under subsection 164(7) of the Customs Act 1901 for the purposes of the diesel fuel rebate scheme?
Decision
No. The thinning and felling of trees under power lines carried out on behalf of a commercial power authority is not within the definition of 'primary production' under subsection 164(7) of the Customs Act for the purposes of the diesel fuel rebate scheme.
Facts
The client is contracted by a commercial power authority to carry out the trimming and cutting of trees which are under a commercial power authority's power lines. This contract includes stump grinding, chipping and removal of tree debris and site clean up.
Reasons for Decision
Subsections 78A (1) of the Excise Act 1901 and 164(1) of the Customs Act provide that, subject to certain conditions, a rebate is payable to a person who purchases diesel fuel for use off-road 'in primary production'.
The expression 'primary production' is defined in section 164(7) of the Customs Act as follows: Primary production means: (a) agriculture; (b) fishing operations; or (c) forestry.
In the context of the phrase 'in primary production', the preposition 'in' means 'in the course of' or 'in the process or act of'. Therefore, if an activity can be said to have taken place 'in the course of' primary production, whether that primary production is agriculture, fishing operations or forestry, it can be concluded that it takes place 'in' primary production.
A person who purchases off-road diesel fuel for use in an eligible primary production activity is entitled to an off-road rebate. This remains the case where an eligible forestry activity is carried out by a person in performance of a contract with a person or entity engaged in forestry as a primary production activity.
In this case, the relevant contract requires the contractor to 'carry out tree clearing, including stump grinding' in a specified distribution area of an electricity distribution corporation. The contract is expressed to be for the purpose of 'Maintenance of tree Clearances'. The work to be performed under the contract includes 'Trimming and cutting of trees clear of the overhead service line including the disposal of all debris'.
The commercial power authority is engaged in the distribution and sale of electricity. The authority is not engaged in a primary industry.
This view is supported by the explanatory memorandum to the Diesel Fuel Taxes Legislation Amendment Bill (No 1) 1982, which established the off-road scheme. It says that the legislation was designed to 'introduce . . . a new system providing rebates of duty paid on diesel fuel used for off-road purposes by persons engaged in the agriculture, mining and fishing industries'. The measures were intended to encourage the primary industries to which they applied.
In performing the contract on behalf of an electricity corporation, a contractor is performing an activity in the course of the distribution and sale of electricity, and is not engaged in primary production. Accordingly, the thinning and felling of trees under power lines when carried out on behalf of a commercial power authority is not within the definition of 'primary production' under subsection 164(7) of the Customs Act for the purposes of the diesel fuel rebate scheme.