Issue
Does an entity that conducts a retail/hospitality business have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA) if a commercial power supply is available for connection but is insufficient for the entity's needs?
Decision
No. An entity that conducts a retail/hospitality business does not have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the EGCSA if a commercial power supply is available for connection but is insufficient for the entity's needs.
Facts
An entity purchases diesel fuel and uses it to generate electricity for use in carrying on an enterprise that has, as its principal purpose, the retail sale of goods or services or the provision of hospitality. The electricity generated is used at the premises where the retail/hospitality business is carried on.
The site where the enterprise is carried on is a temporary site. There is nothing preventing the entity from accessing a commercial supply of electricity at the site, but the entity chooses not to, as the commercial power supply would be inadequate to meet their needs.
Reasons for Decision
Subsection 53(1) of the EGCSA states that an entity is entitled, subject to various prescribed restrictions, to an off-road credit if they purchase diesel fuel for a use by them that qualifies.
Paragraph 53(4)(a) of the EGCSA provides that the following is a use that qualifies: use at particular premises to generate electricity for use in the course of carrying on, at those premises, an enterprise that: (i) has, as its principal purpose, the retail sale of goods or services (other than electricity) or the provision of hospitality; and (ii) does not have, at those premises, ready access to a commercial supply of electricity;
The phrase 'ready access' in subparagraph 53(4)(a)(ii) of the EGCSA is not defined in the legislation, but the Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002 (the Explanatory Memorandum), says that a business would be regarded as having ready access if: A commercial supply of electricity was present or convenient to the business and immediately available for connection. (emphasis added)
The Diesel Fuel Rebate Scheme was the precursor to the Energy Grants (Credits) Scheme, and was administered under the Customs Act 1901 and the Excise Act 1901.
The Excise Act and the Customs Act both contained similar provisions to that contained in paragraph 53(4)(a) of the EGCSA. Consequently, the Explanatory Memorandum remains relevant.
In this instance, a commercial supply of electricity is not present, in terms of the business already being connected to it. It must therefore be determined whether a commercial supply of electricity is 'convenient' to the business. If so, it must then be determined whether the electricity supply is 'immediately available' for connection.
The term 'convenient' in this context suggests that connection to the electricity supply should not be burdensome to the business in terms of cost and effort. It also suggests that connection to the power supply should suit the business.
From this entity's point of view, the commercial power supply that is immediately available for connection is inadequate for the needs of the business. Therefore, it does not suit and is not 'convenient' to the business.
As the commercial power supply is neither present nor convenient to the business, the business does not have 'ready access' to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the EGCSA, notwithstanding that there is nothing preventing the entity from accessing a commercial supply of electricity at its premises.