TAXATION RULING NO. ST 2026

ST 2026

RETREADED TYRES

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FOI status:

May be releasedFOI number: I 1104163

FACTS

The processes involved in retreading tyres are very similar to those involved in the manufacture of new tyres except that in one instance a worn casing is used and in the other a "green" casing. Used casings may be retreaded by a hot (Orbitread) or cold (Bandag) process. Briefly, in the hot process the casings after inspection are buffed to remove old rubber and texturize it. The casings are then sprayed with a rubber cement and placed on an Orbitread machine which converts cold strip-slab rubber stock into a ribbon of hot rubber which is stitched to the tyre casing. A tube is then placed inside the casing and inflated to provide support for the curing process which cures the rubber on the casing and imprints a pattern in the cured rubber tread. The cold process is somewhat similar except that a length of precured pattern tread is used instead of hot rubber. This eliminates the curing process. After preparing the casing and affixing the tread the case is placed in a bonding chamber to complete the bonding process.

RULING

2. Manufacture can take place where a commercially distinct article has been formed from a combination of secondhand and new goods. Decisions of the High Court in FCT v. Jack Zinader Pty Ltd (1949) 78 CLR 336 and Adams v. FCT (1948) 8 A.T.D. 332 support such a proposition. In view of the sophisticated processes used in producing a retreaded tyre and the fact that the processes result in a commercially distinct product it has been decided that the process of retreading tyres constitutes manufacture. The finished product is not excluded from the definition of "goods" in section 3(1) of Sales Tax Assessment Act (No.1) because it does not satisfy the terms of excluding paragraphs (a) or (b) of the definition.

3. The ruling is effective from 1 June 1983.

COMMISSIONER OF TAXATION
15 April 1983

References

ATO references:
NO ST 23/1 P1 F333

Date of effect:
01.06.83

Date original memo issued:
30.11.82

Related Rulings/Determinations:

ST 2107

Subject References:
RETREADED TYRES
MANUFACTURE OF GOODS
TYRES - RETREADED

Legislative References:
SALES TAX ASSESSMENT ACT (NO.1) SECTION 3(1)

Case References:
- Adams v. FCT
(1948) 8 A.T.D. 332

- FCT v. Jack Zinader Pty Ltd
(1949) 78 CLR 336