ATO ID 2008/85: PSO: non accredited laboratory and appropriate facilities, resources and expertise
Date of decision: 2 June 2008
Business line: Indirect Tax

Issue
What does the Commissioner consider necessary to demonstrate that a laboratory has the appropriate facilities, resources and expertise to conduct the tests necessary for the purposes of the definition of 'independent laboratory' in subregulation 3(1) of he Product Stewardship (Oil) Regulations 2000 (PSO Regulations)?

Decision
The Commissioner considers a laboratory that has the following elements demonstrates that it has the appropriate facilities, resources and expertise to conduct tests necessary for the purposes of the definition of 'independent laboratory' in subregulation 3(1) of the PSO Regulations:

Facts
A recycler of used oil engages two laboratories to test a sample of oil that the recycler has processed. The laboratories tested the sample against the criteria in Schedule 1 to the PSO Regulations. Laboratory A conducts the test to determine the mutagenicity index of the oil using the Modified Ames Test. The test is conducted by specialists that are qualified, appropriately trained and experienced in microbiological analysis. Laboratory B conducts tests to determine if the sample meets the criterion in items 2 to 7 in Schedule 1 to the PSO Regulations. This laboratory is experienced in testing petroleum liquid fuels and lubricant analysis.

Reasons for decision
Summary: Subregulation 4(3) of the PSO Regulations provides that for a benefit under item 1 in the table of subregulation 4(1) of the PSO Regulations, the re-refined base oil must be tested by an independent laboratory against the criteria in Schedule 1 to the PSO Regulations (Schedule 1). Included in the definition of an 'independent laboratory' in subregulation 3(1) of the PSO Regulations is the requirement that the laboratory has the 'appropriate facilities, resources and expertise to conduct the tests necessary for the purposes of Schedule 1'. A criterion in Schedule 1 stipulates that the oil must be non-carcinogenic, demonstrated by having a prescribed mutagenicity index using the Modified Ames Test. The Modified Ames Test relies on analysing bacterial growth. Therefore the Commissioner considers that a person conducting the Modified Ames Test must be qualified, appropriately trained and experienced in microbiological analysis to accurately analyse and record the test results. Schedule 1 also stipulates that the oil must be tested to establish the levels of: The person that conducts these tests must be qualified, trained and experienced in conducting tests that provide results to the levels specified in Schedule 1. Therefore the Commissioner considers that the laboratory must be experienced in testing petroleum liquid fuels and lubricant analysis. However there are other elements of a laboratory that contribute to the production of accurate and reliable test data. These elements include, but are not limited to: Therefore, a laboratory will demonstrate that it has the appropriate facilities, resources and expertise to conduct the tests necessary for the purposes of Schedule 1 where all the above mentioned elements are evident. Further, in relation to testing the mutagenicity index of the oil, the sample is analysed by a qualified, appropriately trained and experienced specialist using the Modified Ames Test. In relation to testing the other criterion in Schedule 1, the laboratory is experienced in testing petroleum liquid fuels and lubricant analysis.

Legislative references: Product Stewardship (Oil) Regulations 2000 subregulation 3(1) subregulation 4(1) item 1 of the Table in subregulation 4(1) subregulation 4(3) Schedule 1
Related ATO interpretative decisions: ATO ID 2008/84
Subject references: Product stewardship oil scheme PSO base oil PSO recycling PSO re-refining