SALES TAX.

Press, Volume LXIX, Issue 20881, 14 June 1933, Page 10

SALES TAX.

MATERIALS USED IN MANUFACTURE. RULING FROM THE MINISTER. In a communication received at Auckland from the Minister for Customs, the Rt. Hon. J. G. Coatcs, a definition is given in general terms of the application of the sales tax to goods in the process of manufacture. Mr Coates states that it does not necessarily follow from the wording of the act that all classes of materials used directly or indirectly in the manufacture of goods are entitled to a refund of the tax.

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 thfe 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 more 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 physijcally incorporated in the finished product, and (2) materials that are not physically incorporated in the finished product, but are employed directly in the 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. "The liability to sales tax of such goods would depend upon whether cr 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."