TAXATION RULING NO. ST 2101

ST 2101

SALES TAX: PIPE INSULATION FOR PIPING INSTALLED IN HOT WATER, REFRIGERATION AND CHILLED WATER SYSTEMS

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FOI status:

FACTS

Aeroflex, and other similar products marketed under names such as Bradflex Generation II, Ensolex, Bradslex, Calslex, Actroslex, Insulock, Armaflex and Templex, are closed cell insulation materials sold in both tubular and sheet form.

2. While these materials have some use as a protective material on bicycle handlebars and surf and ski racks, in the main they are used in insulating pipes associated with permanent hot water and refrigeration or chilled water installations in buildings and other fixtures.

3. The pipe insulation is, in essence, pipe lagging that is designed to eliminate the loss of warmth or chill from pipelines, and was produced to replace lagging as the insulation used on hot water systems.

RULING

4. Aeroflex and other similar products are taxable at the general rate. However, the products qualify for the conditional exemption provided in sub-item 83(3) in the First Schedule to the Sales Tax (Exemptions and Classifications) Act. That sub-item provides conditional exemption for boards, sheets and linings to be used in the construction or repair of, and wrought into or attached to so as to form part of, buildings or other fixtures. Where the piping to be insulated is, or is to be, installed so as to form part of a building or other fixture, for example, in hot water, refrigeration or chilled water installations, Aeroflex and other similar closed cell insulation materials for that piping qualifies for conditional exemption under sub-item 83(3), First Schedule. When Aeroflex and similar products are to be used in other circumstances such as on bicycle handlebars and surf and ski racks it is taxable at the general rate, which currently is 20%.

COMMISSIONER OF TAXATION
23 November 1984

References

ATO references:
NO 83/5509-6

Date of effect:
Immediate

Subject References:
PIPE INSULATION
PIPE LAGGING

Legislative References:
SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) ACT, SUB-ITEM 83(3), FIRST SCHEDULE