Issue
Is diesel fuel used in vessels by an entity to demonstrate the performance and features of those vessels to prospective purchasers 'use in marine transport' as defined in section 36 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
Yes. The diesel fuel used in vessels by an entity to demonstrate the performance and features of those vessels to prospective purchasers is 'use in marine transport' as defined in section 36 of the EGCSA.
Facts
An entity sells pleasure craft vessels.
As part of that enterprise, the entity takes vessels for test runs, with potential purchasers on board, to demonstrate the performance and features of the vessels.
Reasons for Decision
Subsection 53(1) of the EGCSA states that an entity is entitled to an off-road credit if they purchase or import into Australia off-road diesel fuel for a use by them that qualifies.
Subsection 53(3) of the EGCSA provides that use in marine transport, in the course of carrying on an enterprise, is a use that qualifies. The phrase 'use in marine transport' is defined in section 36 of the EGCSA to mean a number of activities, including 'use in a vessel in marine transport' as defined in subsection 36(2) of the EGCS.
A key step in determining what constitutes 'use in a vessel in marine transport' is to determine the meaning of the term 'marine transport'.
In Re Port of Brisbane Corporation v. Deputy Commissioner of Taxation [2004] AATA 222; (2004) 55 ATR 1029 ( Port of Brisbane ), the Administrative Appeals Tribunal (AAT) considered the meaning of 'marine transport' for the purposes of the Diesel Fuel Rebate Scheme, which was the precursor to the Energy Grants (Credits) Scheme.
In Port of Brisbane , the AAT reasoned at paragraph 31 that: ... the phrase "use in ... marine transport" should be accorded its ordinary and natural meaning. ...
And further at paragraph 32 that: .... In the Tribunal's opinion, the key to the meaning of "marine transport" lies in the meaning of the word "transport". The Concise Macquarie Dictionary (3rd edition 1988) lists as the sixth meaning of transport: "6. a means of transporting, as a ship, truck or plane used for transporting soldiers or military stores, or convicts." The first meaning of transport in the Oxford English Dictionary is: "1. the action of carrying or conveying a thing or person from one place to another, conveyance." The use of the word "transport" in the phrase "marine transport" suggests a conveyance - something which does the conveying - a vehicle or vessel or aircraft which moves through its particular medium (land, water, air) carrying a thing or person. The medium in this case is, of course, water. Thus ... "marine transport" should in this instance be interpreted as meaning the act of conveying a thing...
In this case, when the entity takes a vessel for a test run to demonstrate the performance and features of the vessel to potential purchasers, the potential purchasers are passengers onboard the vessel. Accordingly, while the entity is demonstrating the vessel to the potential purchasers, the entity is transporting passengers.
Therefore, the use of diesel fuel by an entity in demonstrating vessels to potential purchasers is 'use in marine transport' as defined in section 36 of the EGCSA.