Issue
Is a property on which non-agricultural activities are carried out and a small number of livestock are agisted an 'agricultural property' for the purposes of sections 23 to 27 of the Energy Grants (Credits) Scheme Act 2003(EGCSA)?
Decision
No. A property on which non-agricultural activities are carried out and a small number of livestock are agisted is not an 'agricultural property' for the purposes of sections 23 to 27 of the EGCSA.
Facts
An entity operates a non-agricultural enterprise on a property and also agists a small number of livestock on the property.
Reasons for Decision
Under the Energy Grants (Credits) Scheme, an entity is, subject to certain conditions, entitled to an off-road credit in the form of an energy grant if they purchase off-road diesel fuel for use by them in an eligible activity, including 'agriculture'.
The definition of 'agriculture' in section 22 of the EGCSA states: (1) .... Agriculture means: (a) the cultivation of the soil; or (b) the cultivation or gathering in of crops (c) the rearing of livestock (d) viticulture, horticulture, pasturage or apiculture; and includes: (e) a livestock activity; or (f) an agricultural soil/water activity; or (g) an agricultural construction activity; or (h) an agricultural waste activity; or (i) a sundry agricultural activity.
The activities falling within paragraphs 22(1)(a) to 22(1)(d) are defined as 'core agricultural activities' under section 31 of the EGCSA when they are carried out for the purposes of, or purposes that will directly benefit, a business undertaken to obtain produce for sale.
The activities falling within paragraphs 22(1)(e) to 22(1)(i) of the definition of 'agriculture' are further defined in sections 23 to 27 of the EGCSA. Within each of these sections, certain activities are required to be carried out on an agricultural property in order to be eligible for an off-road credit.
The meaning of 'agricultural property' was considered at length by the Administrative Appeals Tribunal in Raymond Cedric and Brian Richard Wallace v. CEO of Customs [1998] AATA 13015 (the Wallace Case ). In that case, Deputy President Forgie SA looked to the common meaning of 'agricultural' as meaning 'of or pertaining to agriculture'. Forgie then looked at the common meaning of 'agriculture', and compared it with the definition of agriculture in the Customs Act, which excludes forestry and fishing. Forgie observed that, if the common meaning of agriculture was adopted, an agricultural property could include a property on which 'forestry' was carried on, despite the fact 'forestry' was specifically excluded from the legislative definition of 'agriculture'.
Forgie concluded that the term 'agricultural property' in the Customs Act should be interpreted in light of the definition of 'agriculture' within the same Act.
The definition of agriculture in the Customs Act and the EGCSA excludes any activity (other than hunting or trapping that is carried on for the purposes of a business) unless the activity is carried out for the purposes of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.
This exclusion was identified by Forgie and considered relevant in determining whether a property is an agricultural property.
We consider that the Wallace Case creates the principal that, within the phrase 'agricultural property', the adjective 'agricultural' should be interpreted with regard to the legislative definition of 'agriculture'. Consequently, where the legislative definition of 'agriculture' in the EGCSA is narrower than the common meaning of the term, the meaning of 'agriculture' in the phrase 'agricultural property' should reflect the legislative definition.
Forgie did not consider whether the meaning of the term 'agricultural property' should reflect any aspects of the statutory definition of 'agriculture' that are broader than the ordinary meaning. However, Forgie's willingness to give weight to the statutory exclusions from the definition of 'agriculture' indicates that weight should also be given to any statutory broadening of the term. Most specifically, the legislative definition of 'agriculture' includes the core agricultural activities viticulture, horticulture, pasturage and apiculture.
Therefore, a property will be considered an agricultural property for the purposes of the EGCSA, if it is a property on which the cultivation of the soil, the cultivation or gathering in of crops, the rearing of live-stock, viticulture or pasturage or apiculture (or a combination of two or more of these activities) are carried out for the purpose of, or for purposes that will directly benefit, a business undertaken to obtain produce for sale.
The determination of whether a property is an agricultural property is a matter of fact and degree. It is not expected that every hectare of a farm will be used for a core agricultural activity at any one time. Some paddocks may remain fallow or uncleared, some may be devoted to dams and structures (for example, sheds and stockyards) and some land may be occupied by the owner's residence. The property and activities must be considered as a whole (see the Wallace Case at paragraph 40).
Accordingly, a property will not be an agricultural property, if the only agricultural activities conducted on the property are minor relative to the main use of the land. For example, a property that is essentially used for some other purpose (such as a National Park) does not become an agricultural property merely because an apiarist has placed some hives on the property.
Therefore, in this instance, even if the agisting of a small number of livestock was said to constitute the core agricultural activity of 'rearing of livestock' or 'pasturage', the agistment activities are a minor use of the land in this instance and are not sufficient to characterise the property as an 'agricultural property'.