Senate

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Ralph Willis, MP)

Chapter 4 - Scaffolding, racking and shelving and wall and floor safes

Overview

4.1 Schedule 1 to the Bills will modify the sales tax law to ensure that sales tax is paid on scaffolding components, wall and floor safes and racking and shelving systems.

Summary of the modifications

Purpose of the modifications

4.2 The modifications will give effect to longstanding policy on the treatment of scaffolding components, wall and floor safes and shelving systems.

Date of effect

4.3 These modifications will apply to dealings with goods after 7.30 p.m. eastern standard time on 9 May 1995. [Clause 5]

Background to the legislation

4.4 A wide range of building materials are currently exempt from sales tax, under Items 39 to 49 of Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1992 (E & C Act). Item 39 provides exemption for certain goods of a kind ordinarily used as raw materials in the construction or repair of buildings or other structures attached to land.

4.5 In recent court cases, it has been held that scaffolding components and wall and floor safes are exempt, because they consist of exempt building materials. These decisions have also put in doubt the treatment of racking and shelving systems. The decisions are at odds with the long standing treatment of these goods, which can be identified as goods with their own distinct character.

Explanation of the modifications

4.6 Scaffolding, wall and floor safes, racking and shelving systems, and components, fittings, accessories and attachments for these goods, will be excluded from exemption by these amendments. This will be achieved by specifically excluding them from the two exemption Items which could apply to these goods, that is, Items 39 and 49 of the E & C Act. [Items 1, 2, 3 and 4 of Schedule 1]

4.7 The rate of tax applicable to scaffolding, wall and floor safes, racking and shelving systems, and components, fittings, accessories and attachments for these goods, will then generally be taxed at 21 per cent, unless the goods can be classified under Item 1 of Schedule 2 as goods of a kind ordinarily used for household purposes.