Sales Tax Determination

STD 96/6

Title: Classification of brushes

• Please note that the PDF version is the authorised consolidated version of this ruling and amending notices.
  This document has been Withdrawn.
  View the Withdrawal notice for this document.

FOI status:

may be releasedFOI number: I 1218181

Background

From time to time a dispute between the Australian Taxation Office (ATO) and a taxpayer over the sales tax classification of goods will be determined by a Court or an Administrative Appeals Tribunal.

When the decision of a Court or AAT is final, the ATO will review its interpretation of the relevant area of the sales tax law in light of the Court or AAT decision. Changes to, or confirmation of, the ATO view will then be made via a sales tax determination.

The Full Federal Court recently considered the sales tax classification of certain household paint brushes and, in its decision, also commented on the classification of toothbrushes, nail, hair, clothes and pastry brushes.

This determination outlines the Court's decision and its impact on the classification of these brushes.

Issue

What sales tax rate applies to:

*

paint brushes;

*

brushes such as shoe, nail, hair and clothes brushes;

*

cleaning brushes;

*

pastry brushes; and

*

toothbrushes

Decision

*

paint brushes are covered by item 1 in Schedule 4 to the Sales Tax (Exemptions & Classifications) Act 1992 (E & C Act). The current Schedule 4 sales tax rate is 22%;

*

shoe, nail, hair and clothes brushes are also covered by item 1 in Schedule 4 ;

*

cleaning brushes are covered by item 1(1)(k) in Schedule 2 to the E & C Act. The Schedule 2 rate is currently 12%;

*

pastry brushes are covered by item 1(1)(s) in Schedule 2 to the E & C Act; and

*

toothbrushes are exempt from sales tax under item 89(1) in Schedule 1 to the E & C Act.

Date of effect

Except in respect of shoe brushes, this Determination confirms previous ATO advice and is effective immediately. Any person who has been acting on the basis that shoe brushes are taxable at the concessional rate (currently 12%) under Schedule 2 to the E & C Act, has until 1 August 1996 to comply with this Determination.

Reasons

We have based our decision on the following legislative provisions: Sales Tax (Exemptions and Classifications) Act 1992; item 89(1) in Schedule 1; Items 1(1)(k) and 1(1)(s) in Schedule 2; and case law: K Mart Australia Ltd v FC of T 96 ATC 4155; (1996) 31 ATR 524

In K Mart Australia Ltd v FC of T the taxpayer challenged the ATO view that paint brushes were covered by item 1 in Schedule 4 to the E & C Act. K Mart argued that paint brushes were covered by item 1 in Schedule 2 in that they were goods of a kind ordinarily used for household purposes and also fell within the term brushes which appears in item (1)(1)(k) in Schedule 2 .

It was agreed by K Mart and the ATO that the paint brushes satisfied the opening words of Schedule 2 , that is, goods of a kind ordinarily used for household purposes .

Therefore, the only issue before the Court was whether paint brushes were brushes in the context in which that expression occurs in item 1(1)(k) .

Item 1(1)(k) reads as follows;

'The following goods of a kind ordinarily used for household purposes:

...

(k)

brooms, mops, dusters, brushes, buckets and basins;

...'

The Court decided that the paint brushes were not covered by item 1(1)(k) for the following reasons;

*

the context in which a term appears may affect its meaning and may lead to a meaning that might not otherwise apply if the term appeared in isolation;

*

the term brushes appears in the collocation of words that have an association or obvious use for cleaning purposes; viz: brooms, mops, dusters, brushes, buckets and basins ; and

*

if the word paint brushes were to be included as one of the meanings attributable to brushes for the purposes of item 1(1)(k) in Schedule 2 it would sit uneasily with the description of the other goods listed in that item. The same conclusion would be reached in respect of a toothbrush, a nail brush, a clothes brush or a pastry brush.

The decision of the Court makes it clear that the term brushes , where it occurs in the context of item 1(1)(k) , refers to brushes used for cleaning or analogous purposes, not for activities such as personal grooming or preparing food. Accordingly, paint brushes, nail, hair and clothes brushes are taxable at the Schedule 4 rate.

Whilst not addressed by the Court, shoe brushes are considered by the ATO to be another example of brushes that are not covered by item 1(1)(k) .

The Court also referred to toothbrushes and pastry brushes as examples of other brushes that are not covered by item 1(1)(k) . However, toothbrushes are exempt from sales tax under item 89(1) in Schedule 1 to the E & C Act, whilst pastry brushes are taxable at the concessional rate (currently 12%) as kitchen utensils and hardware under item 1(1)(s) in Schedule 2 .

Communication of the Decision

This determination has been made available for publication by the sales tax publishing houses.

Commissioner of Taxation
1 May 1996

References

ATO references:
NO 96/3333-2

Related Rulings/Determinations:

ST 2179

Subject References:
- classification
- clothes brushes
- hair brushes
- nail brushes
- paint brushes
- pastry brushes
- shoe brushes
- toothbrushes

Legislative References:
Sales Tax (Exemptions and Classifications) Act 1992
Item 89(1) in Schedule 1
Item 1(1)(k) in Schedule 2
Item 1(1)(s) in Schedule 2
Item 1 in Schedule 4

Case References:
K Mart Australia Ltd v FC of T
96 ATC 4155
(1996) 31 ATR 524