TAXATION RULING NO. ST 2137

ST 2137

SALES TAX: CONVERSION OF POKER MACHINES

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FOI status:

May be releasedFOI number: I 1193150

FACTS

It is common practice for owners of second hand poker machines to have the machines converted to present a "new face" to users for the purpose of increasing player appeal and so increase revenue from the machines.

2. The conversions generally involve the following types of modifications:-

(a)

changing a machine's coin acceptance mechanism and associated parts so that the poker machine can be played with coins of a different denomination, e.g. a 10 cent machine converted to a 20 cent machine;

(b)

changing a particular brand of poker machine to a different model of that same brand of poker machine;

(c)

changing a particular brand multi-line or multi-coin play poker machine to a different brand multi-line or multi-coin play poker machine;

(d)

changing a particular brand single line or single coin play poker machine to a different brand multi-line or multi-coin play poker machine.

They can also involve changing artwork, changing the computer program and installing push/pay buttons.

RULING

3. While the distinction between conversions of goods which are not manufacture and those which are may not always be clear, conversions which have been held to involve manufacture have resulted generally in a change of identity of the goods concerned, i.e. a different thing has been produced by the conversion process. It may well be that a major conversion or reconstruction of a poker machine would involve manufacture. However, in the poker machine conversions of the type referred to above, there is no change in identity of the poker machines. The changes are cosmetic in nature rather than changes of real substance. They do not involve the manufacture of goods.

4. Persons carrying out conversions of poker machines of the type referred will satisfy their sales tax liability by the payment of tax on the parts used in the various conversion processes. Sales tax is not payable on the full price charged for such conversions.

COMMISSIONER OF TAXATION
12 July 1985

References

ATO references:
NO 84/5429-9

Date of effect:
Immediate

Date original memo issued:
4 July 1985

Subject References:
MANUFACTURE: CONVERSION OF POKER MACHINES

Legislative References:
SALES TAX ASSESSMENT ACT (No.1), SECTION 3: DEFINITION OF MANUFACTURE