Issue
Does the chipping of vegetative waste on an agricultural property, prior to its removal from the agricultural property, constitute 'the removal of waste products' within the meaning of paragraph 26(a) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
No. The chipping of vegetative waste on an agricultural property, prior to its removal from the agricultural property, does not constitute 'the removal of waste products' within the meaning of paragraph 26(a) of the EGCSA.
Facts
An entity carries on a business of producing commercial products from waste vegetation. Its activities involve the recovery, chipping and bioconversion of the vegetation and the formulation of the processed material into growing media and allied products for the horticulture industry and other industries.
The entity obtains its raw material, such as pruned vine leaves and stems, trees or weeds, from a variety of sources including agricultural properties. The entity chips the waste vegetation either at the properties from which it is sourced, or at its own premises.
When chipping waste on agricultural properties, the entity uses a portable chipping plant. The waste is then transported to the entity's premises.
Reasons for Decision
Under sections 53 of the EGCSA, an entity is entitled to an off-road credit if it purchases off-road diesel fuel for certain qualifying uses, including primary production. Primary production is defined in section 21 of the EGCSA as meaning a number of activities including 'agriculture'.
'Agriculture' is defined in section 22 of the EGCSA to mean a number of activities including an 'agricultural waste activity'. The term 'agricultural waste activity' is in turn defined in section 26 of the EGCSA as follows: The expression agricultural waste activity means: (a) the removal of waste products of an agricultural activity from the agricultural property where the activity is carried on; or (b) the disposal of waste products of an agricultural activity on the agricultural property where the activity is carried on.
To qualify as an agricultural waste activity under paragraph 26(a) of the EGCSA, the activity must constitute the removal of waste products of an agricultural activity from the agricultural property.
In this instance, the entity's chipping activities are more properly regarded as a step in the manufacture of various products. This is evidenced by the fact that all waste is chipped, even if it arrives at the entity's premises prior to being chipped. Therefore, the chipping is not regarded as being an integral part of the removal of waste products from agricultural properties. Accordingly the requirements of paragraph 26(a) of the EGCSA are not satisfied.