TAXATION RULING NO. ST 2155

ST 2155

SALES TAX : SALE VALUE OF PRINTED MATTER PRODUCED BY IN- HOUSE PRINTERS

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FOI status:

May be releasedFOI number: I 1199255

PREAMBLE

The definition of "manufacturer" in sub-section 3(1) of Sales Tax Assessment Act (No. 1) specifically includes a printer. Printing in all its stages is manufacture for sales tax purposes.

2. Persons who, in the course of carrying on a business other than printing, produce printed matter for their own use are known as in-house printers. They are usually organisations such as banks, insurance companies, finance companies and other commercial organisations. The printed matter produced by them is generally for their own use. Nevertheless as producers of printed matter they are manufacturers under the sales tax law.

3. Sub-section 17(1) of Sales Tax Assessment Act (No. 1) imposes a sales tax liability on taxable goods manufactured by a taxpayer and applied to his own use. Sub-section 18(3) sets out the sale value applicable to such goods manufactured by a person and applied to his own use. The sale value is either :-

(a)

the amount for which the goods could reasonably be expected to be sold by the manufacturer by wholesale where the goods so applied by the manufacturer are of a class which he himself sells by wholesale; or

(b)

in any other case, the amount for which the goods could have been purchased from another manufacturer in the ordinary course of business.

RULING

4. Generally in-house printers do not sell the printed matter they produce so there are no wholesale sales to act as a guide in setting sale values. Paragraph (a) above therefore has little or no application. The sale value for in-house printers is generally determined under paragraph (b) of sub-section 18(3) and in applying paragraph (b) it will be acceptable if tax is paid on a sale value equal to total manufactured cost increased by 10%. Total manufactured cost is the sum of all printing costs including materials, direct labour and overhead costs.

5. It is recognised, however, that, because the printing operations of many in-house printers are of a minor nature when compared to their "normal" business operations, many would not maintain records sufficient to enable them to arrive at a figure for total manufactured cost using actual cost figures. While actual cost figures are normally available for materials and direct labour, it is common practice for in-house printers to rely upon the calculation of an arbitrary figure for overhead costs.

6. To establish a uniform approach to calculating the sale value in these circumstances, it is acceptable for in-house printers who do not maintain actual cost figures for overheads to adopt a figure for overhead expenses of 150% of direct labour cost.

7. The sale value of printed matter produced by in-house printers and applied by them to their own use may, therefore, be calculated as follows where actual overhead costs are not maintained :-

8. For the purposes of the formula, the "direct labour cost" component for each particular job will be taken to mean total gross wages incurred in actual printing operations on persons directly involved in those operations, e.g. machine operators, cutters, collaters and binders.

COMMISSIONER OF TAXATION
25 July 1985

References

ATO references:
NO ST 22/29 P2
BO SYD 22/B/D. 16/13

Date of effect:
1 Oct. 1984

Date original memo issued:
5 June 1984

Related Rulings/Determinations:

ST 2133

Subject References:
PRINTER MATTER
PRINTERS

Legislative References:
SALES TAX ASSESSMENT ACT (NO. 1) 1930; SECTIONS 3,
17 AND
18