TAXATION RULING NO. ST 2225

ST 2225

SALES TAX : SALE VALUE OF JOB PRINTING

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FOI status:

May be releasedFOI number: I 1075989

PREAMBLE

A review has been completed of the sale value of printed matter produced to a customer's individual order, commonly described as "job printing". Sales of printed matter in these circumstances are almost wholly retail sales.

2. The sale value of goods manufactured by a person and sold by him by retail is determined by paragraph 18(1)(b) of Sales Tax Assessment Act (No. 1) as either:-

(i)

the amount for which the goods could reasonably be expected to have been sold by the manufacturer by wholesale if the goods are of a class which the manufacturer himself sells by wholesale; or

(ii)

in any other case, the amount for which the manufacturer could reasonably be expected to have purchased identical goods from another manufacturer if the other manufacturer had, in the ordinary course of his business, manufactured the identical goods for sale and had sold them to the firstmentioned manufacturer by wholesale.

FACTS

3. Job printers produce to the orders of customers a variety of different kinds of printed matter which by their nature are not ordinarily sold by wholesale, e.g. invitations, consolations, business and other cards, letterheads and stationery items, advertising matter etc. Orders vary widely in volume and other characteristics. With each type of order the price can vary significantly from one printer to another depending upon such factors as competition, nature of the order, volume of the order, frequency of orders from a customer and terms on which accounts are to be paid.

4. The expression "job printing" does not refer to contracts for printing continuous stationery, race books, and other kinds of stationery that are for sale through retailers. Contracts of this nature are often described as "commercial printing". The incidence of wholesale sales of job printing, i.e. interprinter sales, represents only about 1% of total sales of job printing.

5. Occasionally job printers may sub-contract jobs to other printers, generally to accommodate the printer taking the orders. Accommodation may be necessary because of machine breakdown, an excess of work on hand or the need for specialised services, e.g. raised lettering.

6. Most job printers do not make any wholesale sales of job printing or interprinter purchases of job printing for sale by retail. Of those who do, few are party to such transactions regularly enough to establish wholesale prices for particular categories of job printing. Generally, job printers operate on low margins because of the competition in that field of printing and because they deal direct with the consumer or purchaser.

RULING

7. Job printers are generally unable to establish a bona fide sale value lower, or at best significantly lower, than their own retail selling price (tax exclusive). Consequently, the sale value of job printing is the full tax-exclusive selling price, because that represents a fair and reasonable wholesale value for job printing.

8. A job printer who makes regular bona fide sales by wholesale of a specific class of printed matter or makes regular bona fide purchases of a specific class of printed matter may be able to establish a sale value lower than his tax-exclusive retail selling price for the same class of goods. The class of goods to which this would apply would need to be comparable to that class sold by wholesale in such characteristics as size, volume sold in relevant orders, description and quality.

9. A job printer who makes regular bona fide sales by wholesale of goods of a particular class can establish a sale value under sub-paragraph 18(1)(b)(i) for retail sales of that class equivalent to the price for which the goods are sold by wholesale.

10. A job printer who makes regular bona fide purchases of a particular class of printed matter for sale by retail establishes a sale value under sub-paragraph 18(1)(b)(ii) for the same class of goods manufactured by him and sold by retail.

11. Where a job printer considers that he can establish a sale value lower than retail selling price (tax exclusive) under paragraph 18(1)(b) for any particular lines of jobs the matter should be taken up with the appropriate branch taxation office.

COMMISSIONER OF TAXATION
7 March 1986

References

ATO references:
NO 83/12737-6
BO SYD. 22/B/D22/1 P2

Date of effect:
25 November 1985

Subject References:
JOB PRINTING SALE VALUE OF

Legislative References:
SALES TAX ASSESSMENT ACT (NO. 1) SECTION 18