Issue
Does an entity that conducts a retail/hospitality enterprise 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 it is connected to a commercial supply of electricity, but the electricity supply at the place where they carry on their retail/hospitality enterprise is insufficient to meet their needs at certain times?
Decision
Yes. An entity that conducts a retail/hospitality enterprise has 'ready access' to a commercial supply of electricity for the purpose of subparagraph 53(4)(a)(ii) of the EGCSA, if it is connected to a commercial supply of electricity, but the electricity supply at the place where they carry on their retail/hospitality enterprise is insufficient to meet their needs at certain times.
Facts
An entity operates an enterprise that has, as its principal purpose, the retail sale of goods or services (other than electricity).
The premises where the enterprise is carried on are connected to a commercial supply of electricity.
At certain times, the commercial supply of electricity is not sufficient to meet the needs of the enterprise. At these times, the entity purchases and uses diesel fuel to operate generators at the site to generate electricity for use in carrying on their enterprise.
Reasons for Decision
Subsection 53(1) of the EGCSA states that you are entitled to an off-road credit if you purchase diesel fuel for a use by you 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 entity operates an enterprise that has, as its principal purpose, the retail sale of goods or services (other than electricity). Therefore, the requirements of subparagraph 53(4)(a)(i) of the EGCSA have been met and the use of the fuel will be a use that qualifies under paragraph 53(4)(a) provided the entity does not have, at its premises, 'ready access' to a commercial supply of electricity.
The phrase 'ready access' is not defined in the EGCSA, but the Explanatory Memorandum to the Diesel Fuel Rebate Scheme Amendment Bill 2002 (the Explanatory Memorandum), in discussing entitlement to off-road credits for diesel fuel used in retail/hospitality enterprises states that: The amendment does not extend to businesses with ready access to a commercial supply of electricity who generate their own power or who operate an emergency backup generator. A business would be regarded as having ready access if a commercial supply was present or convenient to the business and immediately available for connection.
The Diesel Fuel Rebate Scheme was the precursor to the Energy Grants (Credits) Scheme (EGCS) 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.
Therefore, if a commercial supply of electricity is not present, in terms of the enterprise already being connected to it, it needs to 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.
In this instance, a commercial supply of electricity is present, in terms of the enterprise already being connected to it and it is therefore unnecessary to consider convenience and availability. Accordingly, the entity does have ready access to a commercial supply of electricity.
That is, an entity has ready access to a commercial supply of electricity for the purposes of subparagraph 53(4)(a)(ii) of the EGCSA if it is connected to such a power supply, even if at certain times the supply of electricity available at the place where they carry on their enterprise is insufficient to meet the needs of the enterprise.