Issue
Is the use of diesel fuel in propelling a vessel while it conducts surveillance operations 'use in marine transport' as defined in section 36 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
No. The use of diesel fuel in propelling a vessel while it conducts surveillance operations is not 'use in marine transport' as defined in section 36 of the EGCSA.
Facts
An entity has been contracted to provide security patrols on water at a port.
The entity uses a vessel in the course of its surveillance work.
The crew of the vessel are engaged in the surveillance work.
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. Subsection 36(3) of the definition provides that: ... Use: (a) in a vessel, or in equipment in or on a vessel; and (b) while the vessel is in or on the sea or fresh water; and (c) for any of the purposes mentioned in subsection (4) is use in marine transport.
Subsection 36(4) of the EGCSA lists a number of specific purposes. However, surveillance is not one of the listed purposes.
The definition of 'use in marine transport' in section 36 of the EGCSA also contains a more general test: ... (2) Use in a vessel in marine transport is use in marine transport. ...
Therefore it must be determined whether the use of a vessel to conduct surveillance activities constitutes 'use in a vessel in marine transport'.
The term 'marine transport' is not defined in the EGCSA. Its meaning was recently considered by the Administrative Appeals Tribunal (Tribunal) in Re Allseas Marine Contractors SA and Federal Commissioner of Taxation [2005] AATA 7 (Allseas).
In Allseas, the Tribunal considered (among other things) whether the use of a vessel in surveying a pipeline on the ocean floor was use in marine transport for the purposes of the former Diesel Fuel Rebate Scheme. Given the presence of the term 'use in marine transport' in the EGCSA, the findings of the Tribunal provide insight into the meaning of the term in the current legislation.
The Tribunal confirmed the view of Moore J. in Port of Brisbane Corporation v. Deputy Commissioner of Taxation [2004] FCA 1232; (2004) 57 ATR 545 (who in turn confirmed the view of the Tribunal in Re Port of Brisbane Corporation and Deputy Commissioner of Taxation [2004] AATA 222; (2004) 55 ATR 1029) that the term 'marine transport' equates to 'the act of conveying a thing or a person from one place to another through or over water using some kind of vessel or vehicle'.
With regard to the survey vessel, the Tribunal held that the vessel was not engaged in marine transport while it was carrying out its surveying activities. This was despite the fact that the Tribunal stated (in paragraph 33): Of course, crew and equipment were on board the vessel while the surveying was performed.
The Tribunal went on to say: But the vessel was not then carrying them as part of an activity of marine transport or ancillary to marine transport. The immediate purpose in carrying them was to perform the survey work, which I find is not marine transport.
The views of the Tribunal are equally applicable to the use of a surveillance craft. While the vessel is undertaking its surveillance work, it is not engaged in marine transport. Any persons or equipment that are carried on board the vessel while the surveillance is being undertaken are there in order to facilitate the surveillance.
Accordingly the use of diesel fuel in propelling a vessel while it conducts surveillance operations is not 'use in marine transport' as defined in section 36 of the EGCSA.