Issue
Is drilling wells for ground water on an agricultural property an 'agricultural soil/water activity' as defined in section 24 of the Energy Grants Credits Scheme Act 2003 (EGCSA)?
Decision
Yes. Drilling wells for ground water on an agricultural property is an 'agricultural soil/water activity' as defined in section 24 of the EGCSA.
Facts
The entity operates a business drilling wells for ground water.
The entity is contracted by an agricultural property owner to drill wells for water. The drilling for water takes place on an agricultural property where a core agricultural activity is carried on, and the ground water is only for use in an agricultural activity.
Drilling activities involve test drilling. If the test drilling at one site is not successful the drill rig moves to another site to undertake further test drilling. A bore is established when suitable water is found.
Reasons for Decision
Under the Energy Grants Credits Scheme an entity is, subject to certain conditions, entitled to an energy grant if they purchase diesel fuel for use by them in one of the defined activities, including 'agriculture'.
'Agriculture' is defined in section 22 of the EGCSA and includes an 'agricultural soil/water activity'.
The definition of an 'agricultural soil/water activity' in section 24 of the EGCSA includes: (b) searching for ground water solely for use in an agricultural activity, or the construction or maintenance of facilities for the extraction of such water, solely for that use, if the searching, construction or maintenance: (i) is carried out on an agricultural property where a core agricultural activity is carried on, or at a place adjacent to that property; and (ii) is carried out by the person who carries on the first-mentioned agricultural activity or by a person contracted by that person to carry out the searching, construction or maintenance...
The entity's drilling activities are carried out on an agricultural property where a core agricultural activity is carried on, and are carried out by a person who is contracted to the person carrying out the agricultural activity the water is for use in.
Therefore, the entity's activities will be an agricultural soil/water activity if they constitute: (i) the searching for ground water solely for use in an agricultural activity, and/or (ii) the construction or maintenance of facilities for the extraction of such water.
The Macquarie Dictionary 2001 rev. 3rd edn, The Macquarie Library Pty Ltd, NSW defines 'search' as 'to go or look through carefully in seeking to find something', and 'the act of searching; careful examination or investigation.' The test drilling and movement of the drilling rig to different places on the agricultural property to drill for ground water until it is found, amount to 'searching' for ground water, as it is through such examination and investigation that the ground water being searched for is found.
Accordingly, drilling wells for water on an agricultural property is an 'agricultural soil/water activity' as defined in section 24 of the EGCSA.