TAXATION RULING NO. ST 2176

ST 2176

SALES TAX: REPAIRS TO AIDS TO MANUFACTURE

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FOI status:

May be releasedFOI number: I 1199562

PREAMBLE

A manufacturer acquired a computer system for use primarily and principally in planning for routine and emergency maintenance of manufacturing plant. The computer system also scheduled the labour, materials and plant necessary to carry out the maintenance. Advice was sought from this office whether the computer system qualified for exemption under item 113E, First Schedule.

FACTS

2. The computer system is used primarily and principally to plan for the routine and emergency maintenance of the manufacturing complex. The system was installed to improve the efficiency and productivity of the maintenance function.

3. The data base of the system includes details of fixed frequency maintenance functions eg. planned scheduled turnarounds, shutdowns etc. The system also has the capacity to perform predictive and diagnostic monitoring functions and this feature enables maintenance programs to be scheduled in advance.

4. When maintenance of an item of plant is required the system produces an activities listing, a manpower histogram and job cards for each maintenance activity in the work forecast period. The job cards outline precisely what maintenance is required.

5. The system also prepares a listing of required maintenance spares and materials for the maintenance operations listed in the work forecast period.

RULING

6. Item 113E provides exemption for certain machinery, implements, apparatus and materials for use by a person exclusively or primarily and principally in the repair or maintenance of machinery that qualifies for conditional exemption as aids to manufacture.

7. The computer system in question is used for purposes and functions that precede the repair and maintenance operations contemplated in item 113E. While it might lead to increased overall efficiency of a manufacturer's maintenance operations, the computer is not used in the course of repair or maintenance operations. The maintenance operations are undertaken at a later point in time.

8. Computer systems used primarily and principally in plant maintenance planning are not covered by item 113E and are taxable at the general rate.

COMMISSIONER OF TAXATION
22 October 1985

References

ATO references:
NO 84/2261-3
BO HOB S/A/9 819 365

Date of effect:
Immediate

Date original memo issued:
27 Aug. 1985

Subject References:
COMPUTERS AIDS TO MANUFACTURE
REPAIRS TO AIDS TO MANUFACTURE

Legislative References:
SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) ACT; ITEM 113E, FIRST SCHEDULE