SALES TAX.

Auckland Star, Volume LXIV, Issue 135, 10 June 1933, Page 11

SALES TAX.

USE OF MATERIALS.

REFUSAL OF APPLICATION.

MINISTER'S RULING. A definition in general terms of the application of the sales tax to goods in process of manufacture is given by the Rt. Hon. J. G. Coates, Minister of Customs, in a communication received in < Auckland yesterday. i Mr. Coates states that examination | and consideration do not confirm the | view that it was Parliament's intention that all materials, whether employed directly or as instruments in the process of production, should in effect be exempt from sales tax. For example, under sub-section (3) of section 11 of the Act, power is given to the Governor-General-in-Council not to grant refunds in 'such cases' as may be prescribed. It must, therefore, be presumed that it did not necessarily follow that all classes of materials used directly or indirectly in the manufacture of goods would be entitled to refund. "I may say," Mr. Coates adds, "that it appears probable that it may yet be necessary to consider the advisability of using this authority to make the measure moro workable. "The position is that, as a general rule, the following would be regarded as materials used in the manufacture of goods:—(1) Materials that are physically incorporated in the finished product, and (2) materials that are not physically incorporated in tho finished product, but are employed directly in tho process of production in the course of which they are wholly consumed or are recovered to a greater or lesser extent from the operations for future use. "The following would not be regarded as materials used in the manufacture of goods: — (a) Plant, machinery and tools, also materials used in their operation or maintenance; (b) articles and materials used in the maintenance or repair of buildings; (c) articles used

directly or indirectly in the distribution or sale of goods. "Tho liability to sales tax of such goods would depend upon whether or not they were included in any list of exemptions for the time being in force under section 12 of the Act. The following are examples of the foregoing:— (a) Typewriters and weighing machines, also lubricating oil therefor; (b) electric lamp bulbs, electric switches, and paint; (c) office stationery, furniture and equipment, motor vehicles and advertising matter for the sale of goods."