Issue
Is the use of diesel fuel to power a refrigerated trailer's generator, whilst the trailer is being transported as part of a train, 'use in rail transport' as defined in section 38 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
Yes. The use of diesel fuel to power a refrigerated trailer's generator, whilst the trailer is being transported as part of a train, is 'use in rail transport' as defined in section 38 of the EGCSA.
Facts
An entity purchases diesel fuel which is used by a refrigerated trailer.
The refrigerated trailer can be lifted onto a train bogie allowing it to travel as a rail wagon.
Whilst engaged in rail transport, the refrigerated trailer draws diesel fuel from its own independent fuel tank to power its generator in order to maintain the quality of the goods being transported.
The refrigerated trailer's generator must be kept running at all times to ensure that the temperature of the trailer and its contents remains constant.
Reasons for Decision
Subsection 53(1) of the EGCSA provides that an entity is, subject to certain conditions, entitled to an off-road credit if they purchase diesel fuel for a use by them that qualifies.
Section 53(3) of the EGCSA provides that use in rail transport (otherwise than for the purpose of propelling a road vehicle on a public road) in the course of carrying on an enterprise, is a use that qualifies.
Section 38 of the EGCSA sets out the meaning of the expression 'use in rail transport'. The most pertinent provision that needs to be considered is contained in subsection 38(5) of the EGCSA, which states that: Use in equipment in or on a rail vehicle for air-conditioning, heating, lighting or for any purpose incidental to using the rail vehicle: (a) in rail transport; or (b) for any of the purposes mentioned in paragraphs (3)(a) to (f); or (c) as mentioned in subsection (4) is use in rail transport.
In order for the refrigerated trailer's use of diesel fuel to be considered 'use in rail transport', the diesel fuel must be used in equipment in or on the rail vehicle, for any purpose incidental to using the rail vehicle in rail transport. Each test will be considered in turn.
In Serco Australia Pty Ltd v. Commissioner of Taxation [2003] AATA 737, it was held that rail vehicles are vehicles which are controlled by the direct influence of the rails on the wheels and the bogies or wheelsets located under the vehicles. In this case the refrigerated trailer is lifted onto a train bogie allowing it to travel as a rail wagon.
The term 'rail vehicle' is defined in section 39 of the EGCSA as a train, tram or any other vehicle operating on rails
In this instance, the refrigerated trailer is part of a train which in turn is a rail vehicle.
Whilst engaged in rail transport, the refrigerated trailer uses its own diesel fuel from a separate fuel tank to power its generator in order to maintain the quality of the goods being transported. Therefore the generator is 'equipment in or on a rail vehicle'.
The phrase 'incidental to' is not defined in the EGCSA in relation to rail transport. The ordinary meaning of the term 'incidental' must therefore be considered.
The phrase 'incidental to' is defined in The Macquarie Dictionary , 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW as: ...liable to happen in connection with; naturally appertaining to.
In this case, the refrigerated trailer forms part of the train which is a rail vehicle. To enable the perishable goods to arrive at their destination in good condition, the refrigerated trailer uses diesel fuel in its generator. Therefore the use of diesel fuel in the generator is incidental to using the rail vehicle in rail transport.
Accordingly, the use of diesel fuel to power a refrigerated trailer's generator, whilst being transported as part of a train, is 'use in rail transport' as defined in section 38 of the EGCSA.