Issue
For the purposes of paragraphs 35(c) and 35(e) of the definition of forestry, which deal with the 'transporting . . .of timber' in the Energy Grants (Credits) Scheme Act 2003 (EGCSA), is the idling of a timber transport truck, when loading or unloading, included in the eligible activity?
Decision
Yes. Diesel fuel used in a truck which is idling whilst waiting for forest timber to be loaded or unloaded, is eligible under paragraphs 35(c) or 35(e) in the forestry category of EGCSA, provided that the truck is engaged in a journey which is eligible under those paragraphs.
Facts
An entity operates a truck to transport felled timber.
Felled timber is loaded on the truck in a forest or plantation.
The truck delivers the felled timber to a sawmill or a chipmill in the forest or plantation and the felled timber is unloaded from the truck.
The truck also delivers felled timber in a forest or plantation to a sawmill or a chipmill outside the forest or plantation and the felled timber is unloaded from the truck.
Whilst the felled timber is loaded or unloaded from the truck, the truck is stationary and idles as it waits for the loading or unloading of felled timber to be completed.
Reasons for Decision
The expression 'transporting ... of timber' in paragraph 35(c) of the EGCSA refers to the conveying or carrying, in a forest or plantation, of felled timber from one place in the forest or plantation where it was felled to another place in that forest or plantation, usually to a mill located in that forest or plantation. To qualify as an eligible activity, the transport must be undertaken within the forest or plantation in which the timber is felled.
Under paragraph 35(e) of the EGCSA, a person is entitled to an off-road credit if they purchase diesel fuel for use in the transporting of timber from the forest or plantation, in which it was felled, to a sawmill or chipmill situated outside the forest or plantation. The purpose of the journey so undertaken must be to transport timber for its milling at a sawmill, or chipmill, located outside the forest in which the timber was felled.
Diesel fuel used in idling while a truck is stationary will be eligible if the diesel can be said to be used in 'transporting . . of timber'.
The Energy Grants (Credits) Scheme is a beneficial scheme that confers benefits on persons that undertake certain activities. As for the previous off-road scheme, the entitlement provisions of the Energy Grants (Credits) Scheme are intended to be read in a practical, commonsense manner.
Where there is doubt as to the meaning and application of the qualifying provisions, the ATO considers that they are to be liberally construed unless the text or context requires a narrow construction.
Consequently, the term 'transporting . . of timber' should be construed liberally and given a practical construction. The transporting of timber as envisaged in paragraphs 35(c) and (e) of the EGCSA, necessarily involves periods when the transport truck is stationary and idling. Usually this occurs at the time of loading or unloading forest timber. The practical view is that idling in those circumstances is an integral part of the 'transporting . . . of timber' and is therefore eligible for the off-road grant.