Taxation Ruling

SST 8

Sales tax: classification of printed matter

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FOI status:

May be releasedFOI number: I 1218205

Chapter 1: What this Ruling is about

Overview

1.1 This Ruling explains which printed matter is exempt from sales tax, and also which printed matter is excluded from exemption and is, therefore, taxable. Extracts from the relevant sales tax legislation are reproduced at Appendix 1.

1.2 Unless printed matter is covered by one of the exemption Items contained in Schedule 1 to the Sales Tax (Exemptions & Classifications) Act 1992 (the ST(E&C) Act) it is generally taxable at the Schedule 4 rate, currently 22%. However, some printed matter is taxable at the Schedule 2 rate, currently 12%; see Appendix 2.

1.3 Taxable printed matter can be conditionally exempt in certain circumstances. For example, labels are taxable at the Schedule 4 rate, currently 22%. However, descriptive labels that give product information (weight, contents, etc.) can be purchased free of sales tax by a manufacturer for use in relation to the manufactured goods. ^[F1]

1.4 This Ruling is expressed in non-technical language wherever possible. Appendix 3 provides a check list of the classifications of certain printed matter. It is provided for the convenience of taxpayers to help them meet their obligations under the law. Any person who acts consistently with this Ruling need not seek confirmation of the classification of a particular item of printed matter from the Australian Taxation Office.

Two important principles used throughout this Ruling

The ordinary meaning of words

1.5 Where there is no definition given in the sales tax law of a word or expression that is used, then the ordinary or normal meaning of the word should be applied. ^[F2] Usually, this means referring to current dictionary definitions. ^[F3] The application of dictionary definitions must, in all circumstances, be guided by popular usage and common knowledge. ^[F4] Trade or scientific meanings of words are not normally preferred to the ordinary meanings. ^[F5]

The essential character of the printed matter

1.6 When classifying goods, it is necessary to start by identifying the goods in an objective way. ^[F6] Objective identification involves questions of fact, guided by popular usage and common knowledge. ^[F7]

1.7 'What is necessary is to determine, objectively, the essential character of the publication, to determine what the publication is designed to achieve; what it does.' ^[F8] The essential character of goods derives from the basic nature of the goods, not some characteristic they might have. This may involve, among other things, a consideration of what the goods are made of or what they might be used for. ^[F9]

1.8 The essential character of printed matter is not determined by the subjective intention of the publisher or the motivation of those who use the publication. Neither the actual intentions of the publisher, nor the particular description given to the goods by the publisher or others, are necessarily conclusive. ^[F10] However, the nature of the trade in which a publication circulates or the function that it serves in that trade may be relevant. ^[F11]

Chapter 2: Date of effect

2.1 This Ruling is effective immediately. It replaces private rulings that are inconsistent with it from 10 March 1998. However, if a person will pay less tax because of this Ruling, it can be acted upon immediately. Nothing in this Ruling may be taken as automatically authorising a refund before the date of effect of the Ruling. Credit claims will be considered on their individual merits.

2.2 Sales Tax Ruling ST (NS) 3001 is withdrawn from the date of issue of this Ruling.

Chapter 3: Books, pamphlets, leaflets, periodicals, magazines or printed music

3.1 Subitem 100(1) in Schedule 1 to the ST(E&C) Act exempts printed matter that is a book, pamphlet, leaflet, periodical, magazine or printed music (referred to in this Ruling as 'exempt printed matter'). Subitem 100(2) lists a number of exclusions from exemption. ^[F12] These specific exclusions are dealt with in Chapter 4 .

Books

3.2 A book is a written or printed work of some length, as a treatise or other literary composition, especially on consecutive sheets fastened or bound together. ^[F13]

3.3 For the purposes of the sales tax legislation, a 'book' is 'a collection of sheets of paper or other substance, blank, written, or printed, fastened together so as to form a material whole; which is portable.' ^[F14] Children's picture books printed on cardboard are examples of books consisting of material other than paper.

3.4 The following principles provide guidance in determining whether particular goods are books: ^[F15]

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there must be a collection of sheets or pages, normally containing written or printed material;

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the pages usually contain a work or a collection of materials of some length or substance;

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the pages should be fastened or bound together in some reasonably substantial manner, so as to constitute a composite whole; and

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a collection of single written, printed photographic or artistic materials may be a book when appropriately bound, if the collection constitutes a composite whole by reason of having some connecting theme.

Electronic books

3.5 The exemptions in Chapter 10 of Schedule 1 to the ST (E&C) Act apply only to printed matter, so that electronic books are not exempt under subitem 100(1). Additionally, electronic books do not come within the dictionary definition or the common understanding of the term 'book'. ^[F16]

Loose-leaf publications

3.6 In order to satisfy the principles set out in paragraph 3.4, loose-leaf publications must constitute an integrated whole, sequentially arranged so that the permanent removal of any loose leaf would, in fact, destroy the integrity of the publication. ^[F17]

3.7 Loose-leaf printed matter that is a book should be complete in itself to begin with, but may still require updating. These types of books have certain characteristics. For example, they contain a binder and material for insertion, and the pages are usually numbered and indexed. They make up a complete composite publication, although new material may be added or existing material replaced from time to time.

3.8 Loose leaves that contain replacement or additional information for insertion into existing exempt books, when supplied under an agreement to purchase an up-to-date reference source, are exempt. These updates form an integral part of the exempt book and do not require separate consideration for sales tax purposes.

3.9 A loose collection of material filed in a folder does not automatically become a book. For example, a loose-leaf folder containing a progressive collection of notices and filed in a ring binder is not regarded as a book even if the leaves are numbered sequentially. Folders or similar goods designed to file together a variety of printed material, added in a piecemeal fashion, would not generally be regarded as books since at no point can they be said to be complete.

Covers and binders for books

3.10 Covers and binders that are sold with printed matter, used to bind together the printed matter and sold as one product in the course of an assessable dealing, are taxable at the same rate as the printed matter. Where the covers or binders are sold separately or as replacements, they are not exempt printed matter as there is no specific exemption for parts of books.

Pamphlets and Leaflets

General characteristics of pamphlets and leaflets

3.11 Pamphlets and leaflets have the following general characteristics:

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they contain information aimed at general distribution. ^[F18] (A district or a section of the public would qualify as general distribution; however, a select finite group, such as members of a club, would not.) The courts, in looking at the expression 'section of the public' have stated:

'A club, a literary society, a trade union may all have numerous members, but ... none of these could properly be called a section of the public. They stand on the other side of the line. The distinguishing feature of these latter bodies is that it is an association which takes power to itself to admit or exclude members of the public according to some arbitrary test which it sets up in its rule or otherwise. Each of them does oppose a bar to admission within it. It is not one of the groups into which the community as a matter of necessary organisation or by convention is divided, but it is in a sense an artificial entity which exists for the benefit of its members as members thereof and not as members of the public.' ^[F19]

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they are normally complete in themselves, that is, the information contained in them stands alone; and

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they are made of paper that is not more than 250 grams per square metre (gsm). (The agreed definition provided by the paper industry is that a product with a thickness of more than 250 gsm is cardboard.)

Pamphlets

3.12 A pamphlet is a short treatise or essay, generally controversial, on some subject of temporary interest, or a complete publication of generally less than 80 pages, stitched or stapled and usually enclosed in paper covers. A pamphlet occupies fewer pages than a book. It is composed and issued as a separate work; always unbound. ^[F20]

3.13 A pamphlet is a document that is contained in itself; it is a 'one-off'. A pamphlet would ordinarily be available publicly whether or not on payment of a fee. In other words, the very essence of a pamphlet is that it is available to the public at large and availability is not limited. ^[F21]

3.14 Other terms are sometimes used in place of 'pamphlet'. These products also meet the guidelines for exemption under subitem 100(1). They are defined by The Macquarie Dictionary as follows:

brochure -

a booklet, or piece of folded paper, containing printed advertising or information; and

booklet -

a little book, especially one with paper covers.

Leaflets

3.15 Leaflets are small sheets of paper, ^[F22] flat or folded into leaves, as for distribution, but not stitched. Leaflets contain printed matter, chiefly for gratuitous distribution. ^[F23]

3.16 The word 'leaflet' connotes an item sent through the post or deposited in a mailbox or handed out on the street. It is generally free, and public in the sense that it is made available to the public or a section of it. ^[F24]

3.17 Other terms sometimes used in place of 'leaflet' are defined by The Macquarie Dictionary as follows:

flier (flyer)

a small leaflet;

handbill

a small printed bill or announcement, usually for distribution by hand; and

dodger

a small handbill.

Periodicals

3.18 A periodical is a magazine, journal, etc., issued at regularly recurring intervals. ^[F25] Periodicals generally offer continuity; they would appear under the same title and usually have edition numbers.

Magazines

3.19 A magazine is a periodical publication, usually bound and with a paper cover, containing miscellaneous articles or pieces, in prose or verse, often with illustrations. ^[F26]

Printed music

3.20 Printed music is the written or printed score of a musical composition. ^[F27]

Printed matter that is not exempt under subitem 100(1)

3.21 The following types of printed matter are not exempt under subitem 100(1) as they do not have the essential character of exempt printed matter:

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circulars;

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newsletters (other than periodicals);

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stationery; and

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wall charts, posters, cardboard and stickers.

These classes of goods are discussed below.

Circulars

3.22 A circular is printed matter that is a notice, advertisement, statement or communication to a restricted audience. Examples of circulars are communications to member clubs from an industry association of clubs, or to members of a club from the club itself, advices to shareholders from a company and notices to individual members of the public seeking support for a particular purpose or campaign. Circulars are not leaflets or pamphlets because they are not for general distribution, but are aimed at a particular or restricted audience. ^[F28]

Newsletters (other than periodicals)

3.23 A newsletter is an informal bulletin, such as one circulating among people with a common interest. ^[F29] A newsletter does not have the essential character of a pamphlet because it is not available to the public at large but is issued to a particular or restricted audience. However, a newsletter, viewed objectively, may be a periodical (see paragraph 3.18).

Stationery

3.24 Stationery is printed matter that is incomplete, allowing for the insertion of details such as name, address or other personal details.

3.25 Stationery in book form is specifically excluded from exemption by subitem 100(2) (see paragraph 4.20). Single sheet stationery does not satisfy the criteria for leaflets and pamphlets, as it is not complete in itself, and as such is not exempt under subitem 100(1).

3.26 Certain printed matter, such as insurance policies, loan and credit applications and other commercial publications, may have the essential character of stationery. The sales tax classification of such printed matter may differ depending on the essential character of the document when viewed as a whole. This type of printed matter is often (but not always) in booklet or pamphlet form and often contains two parts. The first part sets out the terms and conditions of the policy, loan or credit application, etc., and the second part is known as the application or proposal form. As a guide to the classification of this category of printed matter, the sales tax classification of insurance policy documents is set out below.

Insurance policies

3.27 Application form - on its own

Where the application form stands alone, that is, it is not attached to the general terms and conditions booklet or pamphlet so as to form part of that insurance policy, it is taxable as stationery because it is incomplete, allowing for the insertion of details.

3.28 Information booklet or pamphlet containing terms and conditions of a policy - on its own, without an application form

Where printed matter simply conveys technical or legal information regarding the terms and conditions of a policy, does not contain an application form, and is not advertising matter (refer paragraphs 4.2 to 4.13), the printed matter is exempt under subitem 100(1).

3.29 Information booklet or pamphlet containing terms and conditions of a policy with application form attached so as to form a complete item of printed matter

The attachment or inclusion of an application form to the general information booklet or pamphlet that covers the terms and conditions of an insurance contract, may alter the essential character of the booklet or pamphlet. Where the application form is attached by perforation or is glued, sewn or stapled and requires the information contained in the booklet or pamphlet to be read before the form is completed and signed, the complete product takes on the character of legal stationery, which is taxable. This is because the purpose of combining the terms and conditions with the application or proposal form is to form the basis of a contract of insurance. The whole document - that is, the application or proposal form and the terms and conditions - forms the contract of insurance.

3.30 Where the printed matter contains some stationery component that is incidental to, or independent of the main body of the printed matter, such as a slip included in the printed matter to be sent away for further information, the inclusion of the stationery component does not change the essential character of the printed matter.

Wall charts, posters, cardboard and stickers

3.31 These goods do not qualify for exemption under subitem 100(1) as they do not have the essential character of exempt printed matter.

Chapter 4: Specific exclusions from exemption

4.1 Some printed matter that meets the description of a book, pamphlet, leaflet, periodical or magazine set out above, is excluded from exemption by one of the specific exclusions in subitem 100(2), discussed below.

Advertising matter

4.2 Paragraph (a) of subitem 100(2) excludes advertising matter from exemption. The courts have considered the term 'advertising matter' a number of times. They have interpreted the word 'advertise' to mean 'to make generally or publicly known', or 'to give public notice of'. However, the phrase 'advertising matter' has a more limited meaning, and must be restricted to 'published announcements of a business kind'. ^[F30]

4.3 To decide whether a publication is advertising matter, it is necessary to determine, objectively, the essential character of the publication - to determine what the publication is designed to achieve; what it does. ^[F31] For example, a motoring magazine produced by a motoring organisation may contain information such as editorials, technical advice on car maintenance, a guide to new car prices, and holiday and travel tips, but it may also provide brief details of the services the organisation provides and carry paid advertising from other business enterprises. Despite the fact that the publication contains some advertising, it is likely to be exempt from sales tax. The relatively small amount of advertising can only be viewed as being incidental to the essential character of the magazine, which is to provide motoring news and information to its readers.

4.4 In the Rotary Offset case ^[F32] the High Court considered whether the publication The Realtor was advertising matter. That publication was distributed as a means of publicising properties for sale. It contained photographs of the properties on sale, with a brief description of them, and other advertising matter. It also contained 'other material' that made up only a minor part of the whole publication and consisted of real estate articles and information. Gibbs J held that the publication was 'advertising matter'. The publication was designed to promote real estate offered for sale through members of the cooperative of real estate agents. The existence of some articles of general interest did not change its character as advertising matter. Gibbs J stated at ATC 4175; ATR 417:

'... the greater part (about 94% on the average) of the contents of "The Realtor" consisted of announcements which clearly can be described as "advertising matter". Such things as the "fill ins", indexes and mastheads were obviously merely ancillary to the publication as a whole and did not alter its character. ... a publication does not cease to be properly described as "advertising matter" because it comprises some material that does not directly promote the transactions which the advertisements seek to bring about.'

4.5 Similarly, in the ACP case ^[F33] the Federal Court had to determine whether the publication Unique Cars was advertising matter. Editorial content, special features, coming events and a club notice-board constituted 23.5% of the publication. Advertisements for automobiles made up the rest. Hill J held that the publication existed as a medium for publishing advertisements by persons wishing to sell their motor vehicles and the fact that it contained some articles of general interest did not change that character.

4.6 The decisions in those cases can be contrasted with the decision in the Thomson Publications case, ^[F34] which concerned a number of publications including Building Product News. That publication comprised, in addition to a large volume of advertising, short written articles about new building products under the heading 'Product News'. These articles were submitted to the publishers and were examined by them for newsworthiness, accuracy and authenticity as a new product and interest to the readers of the publication. The articles as submitted were then edited with the final edited news articles containing a brief description of the new product, its function and application. A reader wanting more information could complete a card to obtain descriptive literature, price lists and the like concerning the new product.

4.7 More than 60% of the publication was taken up by advertisements, approximately 23% by the new product items and the balance by other editorial matter. After examining the evidence relevant to the new product items' true nature and to the circumstances in which they came to be published, Waddell J held that the product items were news, rather than advertising matter. Waddell J then concluded that the whole of the publication, on an objective view, could not be regarded as advertising matter.

4.8 The decision in this case illustrates that the amount of advertising in a publication, although relevant to establishing the essential character, is not determinative.

4.9 The following principles have been established from the previously mentioned court cases dealing with advertising matter:

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it is necessary to determine, objectively, the essential character of the publication; what it is designed to achieve; what its purpose is;

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the essential character is not determined by the subjective intention of the publisher or the motivation of those who use the publication;

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the mere fact that a publication contains some, or even a substantial amount of, advertising does not necessarily prevent a publication from being exempt, as the amount of advertising is a relevant consideration but is not determinative; and

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the mere fact that a publication contains some editorial matter, news or general information, does not necessarily mean that the publication cannot, when viewed as a whole, be advertising matter.

4.10 Paragraph (a) of subitem 100(2) also excludes from exemption 'printed matter published to advertise any business or products of the publisher or the persons for whom the printed matter is published'. This means that the publication may not be advertising the business of those actually publishing the item, but if it is published on behalf of the person whose business is being advertised, it is still taxable. For example, if a magazine publisher publishes a brochure on behalf of a department store advertising that store's merchandise, the brochure is taxable.

Advertising matter or public relations?

4.11 Some printed matter may be in the nature of public relations material. If it merely reports on particular activities of a company rather than on its business or products, it would not necessarily be advertising. If a particular manufacturer also lists their brand of products and features them prominently in the publication, it would be considered more than mere promotion of image.

4.12 All publications claimed to be merely public relations material should first be examined to determine their essential character. The class of persons to whom the publication is distributed may provide some assistance in determining its essential character. For example, a publication dealing with the coal industry may be public relations material if:

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it is distributed to visitors at coal producing sites; to school children and the public generally;

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it recounts the history of coal mining;

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it sets out the environmental and economic impact on the community; and

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it outlines the various uses of coal; but

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it does not advertise any particular products or services of coal producers.

4.13 Printed matter that, on its face, is designed to promote the sale of goods or services, is advertising matter. To further illustrate this point, printed matter that promotes the benefits of belonging to a particular health fund or extols its benefits while also covering health issues, has the essential character of advertising matter. However, these publications can be contrasted with printed matter, published by health funds, that merely promotes an awareness of certain health issues. These publications have the essential character of information publications.

Election material

4.14 Ballot papers are designed to be filled in, and so fit the description of stationery, which is excluded from exemption. However, goods printed for use by the Australian Electoral Commission qualify for exemption under Item 126 in Schedule 1 to the ST(E&C) Act, which exempts goods for use by an Australian government.

4.15 Election literature, such as how to vote papers, is exempt if it has the essential character of a leaflet or pamphlet. Such printed matter is not advertising material as it is not a 'published announcement of a business kind'. It does not promote the products or services of a person or organisation (see paragraphs 4.2 to 4.13). Circulars to constituents headed 'Dear Resident', 'Dear Voter' or the like, do not qualify for exemption as they do not have the essential character of exempt printed matter, even though they are distributed to a section of the public (see paragraph 3.22). Similarly, posters and stickers are also excluded from exemption (see paragraph 3.31).

Programs

4.16 Paragraph (b) of subitem 100(2) excludes from exemption:

'programs (including schedules, syllabuses or guides), or souvenirs, of entertainments, amusements, exhibitions, competitions or sporting events'.

4.17 The Macquarie Dictionary defines the following:

program

1. a plan or policy to be followed, 2. a list of things to be done; agenda, 3. a list of items, pieces, performers, etc., in a musical, theatrical, or other entertainment; playbill.

schedule

1. a plan of procedure for a specified project with reference to sequence of operations, time allotted for each part, etc., 2. a list of items to be dealt with during a specified time.

syllabus

1. an outline or summary of a course of studies, lectures, etc.

guide

3. to lead, direct or advise in any course or action.

souvenir

1. something given or kept for remembrance; a memento.

4.18 The courts have considered the meaning of the term 'guide'. A 'guide' indicates compendious information of an event. A guide that contains information capable of being used at, or in connection with, an event would be excluded from exemption by this paragraph. ^[F35]

4.19 The following points are relevant when determining whether printed matter is a program or guide:

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whether printed matter is a program or guide must be determined objectively;

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it is sufficient to exclude the printed matter from exemption if it is prepared for use at or in connection with the event to which it relates, even though it is not an official publication produced by or on behalf of those organising the function; ^[F36] and

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printed matter may be a program or guide even though it may contain other material related to the events mentioned in the publication. What is important is the overall impression given by the printed matter.

Specified types of books

4.20 Paragraph (c) of subitem 100(2) specifically excludes the following types of books from exemption:

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books of account;

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books of receipts, cheques, deposit slips, bank withdrawal forms, tickets, dockets, labels or order forms;

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books of blotting paper;

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books of sheets (whether or not blank) for writing notes, letters, exercises or accounts, or for record purposes;

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books of sheets for sketching, drawing, colouring or painting (not including children's books containing printed illustrations for copying or colouring or both);

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albums;

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books of samples, menus or calendars;

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booklets of printed matter conveying greetings or sympathy;

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diaries;

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other stationery in book form. (See paragraphs 3.24 to 3.26 for more detail in relation to stationery.)

Printed matter of any trading or other concern

4.21 Paragraph (d) of subitem 100(2) excludes from exemption the following printed matter (including associated reports) of any trading or other concern carried on for the profit of individuals:

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memoranda of association or articles of association;

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balance sheets or statements of accounts;

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prospectuses.

4.22 The expression 'any trading or other concern' is very wide in its application and covers both trading and non-trading organisations. Therefore, the classification of printed matter under this paragraph hinges on the words 'carried on for the profit of individuals'. The Federal Court has looked at the meaning of the word 'individual' where it appears in the sales tax legislation and has found that, where there is no contrary intention shown in the exemption Item, 'individual' means only natural persons. ^[F37]

4.23 In determining whether an organisation is carried on for the profit of individuals, it is necessary to look at its written constitution and memorandum or articles of association. An organisation is not being carried on for the profit of individuals where, by its constituent documents or by operation of law (for example, a statute governing the organisation), it is prevented from distributing its profits or assets among individuals while it is operating and on its winding-up. The organisation's actions must, of course, be consistent with the prohibition.

4.24 The fact that an organisation is carried on to make a profit does not necessarily mean that its printed matter is excluded from exemption by paragraph (d), as long as that profit does not find its way directly or indirectly into the hands, or for the benefit, of individuals. ^[F38]

Associated reports

4.25 To be an associated report to one of the three items of printed matter listed in paragraph (d) of subitem 100(2), the publication would need to be related or connected in some way. Associated reports may also include printed matter issued in conjunction with one of the documents mentioned, to add or correct a deficiency in the document. Reports based on, or prepared from, one of the documents listed in paragraph (d) are considered to be associated reports.

4.26 An annual report that includes a balance sheet, statement of accounts and general information concerning a company's activities, is an associated report. Similarly, any other report that provides further information concerning aspects of a company's balance sheet or financial accounts, articles of association or prospectus, may also be associated reports.

4.27 Printed matter merely providing information concerning a company's activities and no further information concerning any of the documents mentioned in paragraph (d) of subitem 100(2) is not an associated report. Mere reference to paragraph (d) documents would not cause printed matter to be classified as an associated report. Similarly, reference to other printed matter in paragraph (d) documents, or their associated reports, does not mean that printed matter is then automatically classified as an associated report itself. It is the content of the printed matter and its direct relationship to the paragraph (d) document that must be considered when classifying these items.

Printed matter of superannuation funds

Investment activities of superannuation funds

4.28 A superannuation fund is a trust fund maintained for the sole purpose of providing monetary benefits for its members on their retirement, death, or attainment of a certain age. ^[F39] The trustees of a superannuation fund are subject to a number of duties imposed to protect the rights and the interests of the fund's members. One of these duties is the duty to invest carefully contributions obtained from members so as to produce both income and capital growth and ultimately to distribute funds to members as superannuation benefits. A trustee must observe the terms of the governing rules of the fund, and carry out the duties that the rules impose upon that trustee. ^[F40] Trustees are required to formulate and give effect to an investment strategy that has regard to the risk, composition and liquidity of the investments, and the timing of its liabilities. ^[F41]

Are superannuation funds trading or other concerns?

4.29 Superannuation funds are trading or other concerns for the purpose of Item 100(2)(d) because they control and invest considerable assets and typically are organised in a business-like way to carry on their activities ^[F42].

Are superannuation funds carried on for the profit of individuals?

4.30 `Profit' refers to a gain or increase measured by a comparsion of financial positions at different points in time. ^[F43] Superannuation funds necessarily intend to produce profit because the duty to invest compels them to seek gains for the members. The question for decision is whether superannuation funds are carried on for the profit of individuals . In the Australian Airlines case, Sundberg and Merkel JJ stated:

' ... if the profit of an organization is distributed directly or indirectly to one or more natural persons, the organisation is carried on for the profit of an individual ...' ^[F44]

It is the fact that the profit of the concern is ultimately distributed that permits a concern to be regarded as carried on for the profit of individuals.

4.31 The labelling of the ultimate distribution as 'benefits' is of no consequence. This is implicitly recognised by Lockhart J, who uses the terms 'profit' and 'benefit' interchangeably in Australian Airlines:

'If profits are ploughed back into the school for the benefit of future generations or to enhance the future growth of the organisation, it is not carried on for the benefit of an individual.' (at ATC 5197; ATR 321 emphasis added)

4.32 Likewise, the Shorter Oxford English Dictionary defines 'profit' to be an 'advantage or benefit ', and defines 'benefit' to include ' pecuniary profit '.

4.33 It is immaterial that the profit may not be immediately distributed. In Australian Airlines Ltd v. FC of T ^[F45] Jenkinson J said:

'... the expression 'for the profit of an individual' is in my opinion to be understood as comprehending a profit in which any one or more identified natural persons will share beneficially.' (emphasis added)

4.34 Carrying on investment activities for the profit of individuals is not ancillary, but fundamental, to the existence of a superannuation fund. The need to:

*

generate profit; and

*

ultimately distribute the profit as superannuation benefits;

is manifested in the very definition of a superannuation fund.

4.35 Superannuation funds are trading or other concerns carried on for the profit of individuals. As a result, annual reports of superannuation funds explaining the statement of accounts and the activities that the superannuation funds undertook to produce their results in a particular year are considered to be associated reports to balance sheets or statement of accounts. They are excluded from Item 100 exemption by paragraph (d) of subitem 100(2). They are covered by Item 1 in Schedule 4 and are currently taxable at 22%.

Catalogues or price lists

4.36 Paragraph (e) of subitem 100(2) excludes catalogues and price lists from exemption. The word 'catalogue', on its own, is capable of a wide range of applications. It can refer to any list or register. However, the courts have held that the meaning of the word 'catalogue' is narrowed by the linking of it with the expression 'price-list'. ^[F46]

Price lists

4.37 Price lists excluded from exemption are those that list the prices at which specified goods are offered for sale, such as a particular liquor distributor's list of what liquor the distributor has for sale at a particular price. These can be contrasted with printed matter that lists prices but is not offering goods for sale, such as a publication listing the prices at which famous paintings have been offered for sale and sold in the last ten years and is, therefore, essentially a reference work.

4.38 Price lists can also be contrasted with guides to valuation, such as a liquor guide used by retailers as a basis from which to bargain for a discount from their distributors and as a guide to the price for which they should sell their stock. Guides to valuation differ from taxable price lists as they do not offer any goods for sale and do not list the prices at which distributors offer goods for sale.

Catalogues

4.39 Catalogues excluded from exemption are those that list and describe the goods offered for sale and draw attention to the items mentioned or help in identifying them or referring to them. An example is a mail order catalogue issued by a vendor that lists and describes the particular goods offered for sale, or a manufacturer's catalogue that lists by part or order number the particular goods for sale and may include specifications or drawings to help in product selection. These are taxable catalogues because they list and describe the goods the particular distributor offers for sale.

4.40 Not all printed matter listing and describing goods is a taxable catalogue. For example, a guide to value usually lists and describes the goods contained in it, but the listing and description is incidental to its essential character as a guide. The dominant feature of a guide to value is not the systematic listing or arrangement of particular goods, but the detailed additional information supplied in the publication that helps the reader to assess the current value or market price of the specified goods. For example, the essential character of a publication that lists all passenger vehicles sold in the last ten years, gives details of each vehicle's features, and sets out the estimated trade and retail prices for each make and model, is a guide to the value of passenger vehicles and not a catalogue of goods.

4.41 A stamp and coin catalogue, listing all issued Australian coins and stamps and estimating their current value, is still a catalogue, but it is not a taxable catalogue. It is essentially a reference publication that provides a guide to coin and stamp values. It does not offer coins or stamps for sale. The listing is incidental to its overall purpose as a guide to the current market value of the coins and stamps.

4.42 Restaurant, hotel or accommodation guides produced by an independent body that visits and rates those venues and presents its findings in a publication, are accepted as guides to value because they describe the attributes of those venues so as to enable the reader to determine whether the venue is 'value for money'.

4.43 Certain imported trade catalogues are exempt from sales tax under Item 105. (Refer to paragraph 5.11 of this Ruling.)

Books of maps

4.44 Paragraph (f) of subitem 100(2) in Schedule 1 excludes from exemption books covered by subitem 10(3) in Schedule 2. Subitem 10(3) in Schedule 2 applies to books consisting principally of maps, but does not include books marketed principally for use in schools, colleges or universities. Read together, paragraph (f) of subitem 100(2) in Schedule 1 and subitem 10(3) in Schedule 2 result in books consisting principally of maps and marketed principally for use in schools, colleges or universities being exempt from sales tax. All other books of maps are taxable at the Schedule 2 rate (see Appendix 2). For example, street and road directories (even where they contain substantial indices), as well as atlases, are taxable. ^[F47]

4.45 The term 'maps' is not limited to road, topographical and other similar maps. It includes cadastral plans (that depict a particular area of a town or district in detail) and aerial photographs that have been re-touched to show up topographical features (as opposed to aerial photographs taken for their pictorial value).

4.46 It is a question of fact in each case whether such a book is marketed principally for use in schools, colleges or universities. Where such books are principally sold through school bookshops or through shops that specialise in school, college or university books, they are exempt from sales tax.

Chapter 5: Other exempt printed matter

5.1 This Chapter deals with other exemptions for goods provided in Chapter 10 of Schedule 1 to the ST(E&C) Act.

Newspapers

5.2 Item 101 in Schedule 1 to the ST(E&C) Act exempts newspapers. The word 'newspaper' is not defined in the sales tax legislation and it must be given its ordinary meaning. 'The ordinary understanding of the word newspaper is, a publication containing a narrative of recent events and occurrences, published regularly at short intervals from time to time.' ^[F48]

5.3 A newspaper does not only contain news; it may also contain comment on the news and on public and private affairs, literary, artistic and dramatic criticisms, notices of public and private interest, and advertisements.

5.4 To establish whether a particular publication is a newspaper requires an examination of the publication's form, contents and its use. ^[F49] The test of what is a newspaper is one of popular usage. The matter is entirely a question of fact to be decided upon inspection of the document guided by common knowledge. ^[F50]

5.5 In summary, the Court cases on newspapers have established the following principles:

*

what is a newspaper, and by inference part of a newspaper, is a question of fact;

*

it is to be determined according to popular usage and is largely a matter of impression;

*

it is not to be determined by what the publication calls itself;

*

popular usage itself reflects changing techniques of newspaper production; and

*

advertising, as common experience and the cases show, is a significant and necessary part of a modern newspaper without which, by inference, its publication would not be economically viable. ^[F51]

5.6 Section 12 of the Sales Tax Assessment Act 1992 (the STAA) refers to inserts in newspapers and magazines being treated as separate goods. For further information regarding inserts refer to Chapter 6 .

Manuscripts

5.7 Item 102 in Schedule 1 to the ST(E&C) Act exempts manuscripts. A manuscript is a book, document, letter or musical score, written or typed by the author of the work. A manuscript is used as the basis for typesetting or producing a printed version of the book, document, letter or musical score. ^[F52]

Tourist pamphlets

5.8 Exempt printed matter published (or to be published) by a non-profit body solely for the purpose of advertising tourist resorts or providing information about tourist traffic is exempt under Item 103 in Schedule 1 to the ST(E&C) Act.

5.9 A non-profit body means a society, institution, organisation or other body that is not carried on for the profit of individuals. ^[F53] For more detail on non-profit organisations refer to paragraph 4.23 to 4.24 of this Ruling.

Printed matter for use by agricultural society

5.10 Printed matter for use by a non-profit body (as defined in paragraph 5.9) established and maintained principally for the advancement of agriculture, is exempt under Item 104 in Schedule 1 to the ST(E&C) Act. In this Item, printed matter includes printed award ribbons and printed badges made of cloth or felt.

Imported trade catalogues

5.11 Imported trade catalogues, but not including catalogues imported for sale or distribution, are exempt under Item 105 in Schedule 1 to the ST(E&C) Act.

Other imported printed matter

5.12 Certain imported printed matter may be exempt under Items 106, 114, 122 and 187 in Schedule 1 to the ST(E&C) Act. These items are linked to the Customs Tariff.

Foreign tourist promotion agencies

5.13 Certain printed matter for distribution free of charge by a tourist promotion agency of a foreign country for the purpose of promoting visits to the foreign country may be exempt under Item 133 in Schedule 1 to the ST(E&C) Act.

Postage stamps

5.14 Item 107 in Schedule 1 to the ST(E&C) Act exempts postage stamps. A postage stamp is an official stamp on an envelope or postcard, in the form of a printed adhesive label, as evidence of prepayment of a designated postage. ^[F54] This item includes used imported postage stamps, cancelled postage stamps that satisfy this definition but not non-official stamps, priority paid or airmail stickers.

Printed matter for religious use

5.15 Subitem 155(1) in Schedule 1 to the ST(E&C) Act exempts goods for use by a person mainly (that is, more than 50%) for the purposes of church services. Subitem 155(2) exempts goods for use by a person mainly in religious devotion, not including goods of a kind ordinarily used for purposes of a non-religious kind. With respect to printed matter to be used mainly for the purposes of church services, a purchaser is required to provide the supplier with an appropriate exemption declaration. Printed matter covered by subitem 155(2) is always exempt and no exemption declaration is required. ^[F55]

Chapter 6: Inserts in newspapers, magazines, etc.

6.1 The sales tax legislation was amended in 1990 to ensure that otherwise taxable printed matter (such as advertising brochures) is not exempt from sales tax simply because it is inserted into an exempt publication (such as a newspaper).

6.2 The effect of the amendment, now set out in section 12 of the STAA, is to treat printed matter inserted into printed matter covered by exemption Item 100 or 101 in Schedule 1 to the ST (E&C) Act as separate goods from the exempt publications. Because they are treated as separate goods, the printed matter inserts are only exempt from sales tax if they are covered by a sales tax exemption Item. However, not all printed matter inserts are to be treated as separate goods.

6.3 Printed matter inserts are treated as separate goods where the printed matter is inserted separately into the remainder of the publication after it has been made (for example, advertising catalogues delivered to a newsagent separately for insertion into the publication when it is sold to the consumer), or where the printed matter insert differs from most of the remainder of the publication in any one of the following respects:

*

it has a different sheet size; for example, where an advertising brochure has a smaller sheet size than the remainder of the publication;

*

it is printed by a different process; for example, where a full colour advertising catalogue is inserted into the publication; or

*

it consists of different paper or other material; for example, where a lotto or bingo ticket is inserted into the publication.

6.4 Printed matter inserts that are treated as separate goods include glossy flyers, advertising brochures, sale catalogues, scratch lottery and bingo tickets, application forms, prospectuses or promotional material, which are merely placed loose within exempt publications (such as newspapers).

6.5 Printed matter inserts are not treated as separate goods where:

*

the publication is a newspaper and the printed matter insert is a news, sport, entertainment, travel, leisure or similar section (other than an advertising section); or

*

the publication is a magazine or similar publication (other than a newspaper) and the printed matter insert is a detachable part that is attached by perforation or is glued, sewn or stapled to the remainder of the publication.

6.6 In either of the above cases the publication and the printed matter insert is classified as a single item. For example, an insert in a newspaper (other than an advertising insert) is exempt because the newspaper is exempt under Item 101 in Schedule 1 to the ST(E&C) Act.

6.7 Printed matter attached to the front or back of relevant exempt publications (known as 'onserts') are treated as inserts for the purposes of section 12. For example, a small diary either glued to the front, back or inside page of an exempt magazine is not treated as separate goods and is part of the exempt publication.

6.8 Goods, other than printed matter, such as perfume sachets attached to a page within an exempt publication do not fall for consideration under section 12. A printer of the publication is entitled to quote his or her sales tax registration number for goods such as perfume sachets purchased by that printer, for use by the printer as raw materials that become an integral part of the manufactured publication. ^[F56]

Commissioner of Taxation
10 December 1997

APPENDIX 1

Printed matter covered by Schedule 1, Sales Tax (Exemptions and Classifications) Act 1992

Item 100: [Books, magazines etc.]

(1)

Books, pamphlets, leaflets, periodicals, magazines or printed music.

(2)

This Item does not cover:

(a)

advertising matter (including matter that is published in order to advertise any business or products of the publisher or of the person or persons for whom the matter is published or is to be published);

(b)

programs (including schedules, syllabuses or guides), or souvenirs, of entertainments, amusements, exhibitions, competitions or sporting events;

(c)

the following books:

(i)

books of account;

(ii)

books of receipts, cheques, deposit slips, bank withdrawal forms, tickets, dockets, labels or order forms;

(iii)

books of blotting paper;

(iv)

books of sheets (whether or not blank) for writing notes, letters, exercises or accounts, or for record purposes;

(v)

books of sheets for sketching, drawing, colouring or painting (not including children's books containing printed illustrations for copying or colouring or both);

(vi)

albums;

(vii)

books of samples, menus or calendars;

(viii)

booklets of printed matter conveying greetings or sympathy;

(ix)

diaries;

(x)

other stationery in book form;

(d)

the following matter (including associated reports) of any trading or other concern that is carried on for the profit of individuals:

(i)

memoranda of association or articles of association;

(ii)

balance sheets or statements of accounts;

(iii)

prospectuses;

(e)

catalogues or price lists;

(f)

books covered by subitem 10(3) in Schedule 2.

Item 101: [Newspapers]

Newspapers.

Item 102: [Manuscripts]

Manuscripts.

Item 103: [Tourist pamphlets, etc.]

Books, pamphlets, leaflets, periodicals or magazines published (or to be published) by a non-profit body solely for the purpose of advertising tourist resorts or providing information about tourist traffic.

Item 104: [Printed matter for use by agricultural society]

Printed matter for use by a non-profit body established and maintained principally for the advancement of agriculture. In this Item, "printed matter" includes printed award ribbons and printed badges made of cloth or felt.

Item 105: [Imported trade catalogues]

Imported trade catalogues, but not including catalogues imported for sale or distribution. [local entry only]

Item 106: [Printed matter of insubstantial value]

(1)

Printed matter covered by item 33A in Schedule 4 to the Customs Tariff. [local entry only]

(2)

This Item does not cover:

(a)

printed matter designed to advertise the sale or hire of goods, or the provision of services, by any person in Australia;

(b)

overseas travel literature or other printed matter relating to overseas travel.

Item 107: [Postage stamps]

Postage stamps.

Item 114: [Imported printed matter]

(1)

Imported printed matter covered by item 23C in Schedule 4 to the Customs Tariff. [local entry only]

(2)

Pictorial illustrations covered by item 26 in Schedule 4 to the Customs Tariff. [local entry only]

Item 122: [Imported trophies, medallions, prizes etc.]

(1)

Imported goods being trophies covered by item 25A in Schedule 4 to the Customs Tariff. [local entry only]

(2)

Imported goods being decorations, medallions or certificates covered by item 25B in Schedule 4 to the Customs Tariff. [local entry only]

(3)

Imported goods being trophies or prizes covered by item 25C in Schedule 4 to the Customs Tariff. [local entry only]

Item 133: [Foreign tourist promotion agencies]

(1)

The following printed matter for distribution free of charge by a tourist-promotion agency of a foreign country for the purpose of promoting visits to the foreign country:

(a)

books, folders, guides, magazines and pamphlets;

(b)

unframed photographs and photographic enlargements;

(c)

framed or unframed posters;

(d)

printed window transparencies;

(e)

illustrated calendars;

(f)

illustrated or unillustrated maps;

(g)

transport timetables;

(h)

lists and yearbooks, sponsored by the agency, of hotels or other places of accommodation.

This subitem does not apply if more than 25% of the printed matter consists of commercial advertising.

(2)

The following goods for use by a tourist-promotion agency of a foreign country mainly for the purpose of promoting visits to the foreign country:

(a)

documents for reference purposes containing information about museums, universities, spas or other institutions;

(b)

yearbooks, telephone and telex directories, lists of hotels or other places of accommodation, and catalogues of fairs;

(c)

samples or specimens, of negligible value, of national handcrafts;

(d)

samples or specimens of articles of national costume or of cultural items;

(e)

flags of the foreign country;

(f)

pictures, paintings, drawings, engravings, lithographs and framed photographs and photographic enlargements;

(g)

sculptures, tapestries and other similar works of art;

(h)

art books;

(i)

dioramas, scale models, lantern slides, photographic negatives and printing blocks;

(j)

show-cases, stands and similar articles for use in free public exhibitions, displays or performances (not including goods of a kind on sale to the general public in Australia or the external Territories or goods that consist principally of commercial advertising matter).

(3)

In this Item, "tourist-promotion agency" means:

(a)

a national tourist organisation established or accredited by the foreign country;

(b)

a person or body appointed as a representative of such an organisation.

Item 187: [Imported goods of insubstantial or negligible value]

(1)

Imported goods of insubstantial value that are covered by item 32A in Schedule 4 to the Customs Tariff. [local entry only]

(2)

Imported goods of insubstantial value that are covered by item 32B in Schedule 4 to the Customs Tariff. [local entry only]

(3)

Imported goods being samples of negligible value that are covered by item 33B in Schedule 4 to the Customs Tariff. [local entry only]

APPENDIX 2

Printed matter taxable at 12% Item 10, Schedule 2, Sales Tax (Exemptions and Classifications) Act 1992

Item 10: [Maps, atlases, globes etc.]

(1)

Maps, but not including advertising matter.

(2)

Geographical, topographical and astronomical globes.

(3)

Books that consist principally of maps, but not including books marketed principally for use in schools, colleges or universities.

(4)

In this Item:

"advertising matter" includes matter that is published in order to advertise any business or products of the publisher or of the person or persons for whom the matter is published or to be published;

"maps" includes road maps, tourist maps and navigators' charts.

APPENDIX 3

Printed matter classification examples

Previously released to the public in (unnumbered) draft form on 18 October 1995

and then as draft Sales Tax Ruling SST D7 on 16 April 1997

References

ATO references:
NO 95/8666-1 97/2506-7 97/10062-4

Subject References:
classification of printed matter

Legislative References:
AIA 22(1)(aa)
SISA 52(2)(f)
STAA 12
ST(E&C)A 3(2)
ST(E&C)A Sched 1: Items 18
19
27
100
101
102
103
104
105
106
107
114
122
126
127
133
155
187
ST(E&C)A Sched 2: Items 1
10
ST(E&C)A Sched 4: Item 1

Case References:
ACP Publishing Pty Limited v. FC of T
93 ATC 4773
(1993) 26 ATR 456

A-G v. Bradbury and Evans
(1851) 7 Exch 97
155 ER 872
Australian Airlines Ltd v. FC of T
96 ATC 4324
(1996) 32 ATR 261
Casley-Smith and Ors v. F S Evans and Sons P/L and District Council of Stirling (No 4)
(1988) 49 SASR 339
DFC of T v. Rotary Offset Press Pty Ltd
71 ATC 4170
(1971) 2 ATR 411
DFC of T v. Thomson Publications (Australia ) Pty Limited
79 ATC 4296
(1979) 10 ATR 1
Downland Publications Limited v. DFC of T
82 ATC 4093
(1982) 12 ATR 784
Downland Publications Limited v. DFC of T
83 ATC 4137
(1983) 14 ATR 122
FC of T v. Australian Airlines Limited
96 ATC 5187
(1996) 34 ATR 310
FC of T v. Thomson Australian Holdings Pty Limited and Ors
89 ATC 4696
(1989) 20 ATR 983
Feltex Commercial Interiors Pty Ltd trading as Co Design v. FC of T
90 ATC 4925
(1990) 21 ATR 920
Herbert Adams Pty Ltd v. FC of T
(1932) 47 CLR 222
John Fairfax and Sons Limited v. FC of T; Mirror Newspaper Limited v. FC of T
88 ATC 5033
Re Income Tax Acts (No 1)
[1930] VLR 211
Nomad Industries of Australia Pty Ltd and Anor v. FC of T
86 ATC 4036
(1986) 17 ATR 193
Re Professional Teaching Publications and Collector of Customs
(1991) 25 ALD 149
Re Spanish Prospecting Company Ltd
[1911] 1 Ch 92
Rotary Offset Press Pty Ltd v. DFC of T
72 ATC 4212
(1972) 3 ATR 319
Russell (Inspector of Taxes) v. Scott
[1948] AC 422
Scott v. Commissioner of Taxation of the Commonwealth (No. 2)
(1966) 40 ALJR 265
Thomson Australian Holdings Pty Ltd and Ors v. FC of T
88 ATC 4916
(1988) 19 ATR 1896
Thompson and Anor v. Federal Commissioner of Taxation
(1959) 102 CLR 315
Universal Press Pty Ltd v. FC of T
89 ATC 5234
(1989) 20 ATR 1758
Uno Tech Pty Ltd v. FC of T
94 ATC 2016
AAT Case 9374
(1994) 28 ATR 1006
Zerox Pty Ltd v. DFC of T
97 ATC 4277
(1997) 35 ATR 349
Case 57/95
95 ATC 464
AAT Case 10,523
(1995) 32 ATR 1001
Case 48/96
96 ATC 470
AAT Case 11,138
(1996) 33 ATR 1156