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TAXATION RULING NO. ST 2272

ST 2272

SALES TAX : RE-REFINING OF OIL

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FOI status:

May be releasedFOI number: I 1209972

PREAMBLE

Taxation Ruling No. ST 2174 states that, where the operations of recycling oil amount to no more than a restorative or cleaning process which brings the oil back to as near as possible to its original condition, manufacture is not involved. The recycling process does not alter the basic nature of the oil or bring any new product into existence. In the particular circumstances of ST 2174, the recycling process enabled hydraulic oil to be used again as hydraulic oil.

2. Some oil manufacturers carry out a process which is known generally as "re-refining" but is sometimes referred to as "recycling". In the re-refining process used oil, generally sump oil, is converted into a base oil by a series of processes which remove water, burn off light fuel and remove other impurities.

3. The base oil is either used by the manufacturer as a raw material in the production of oil products or is sold as a base oil to other oil manufacturers for use in the production of oil products.

RULING

4. "Re-refined" oil produced in the above manner is a different product from the oil out of which it has been produced. The re-refining of oil constitutes manufacture for sales tax purposes. The base oil produced from the re-refining processes is taxable at 20%. Where, however, it is used by the manufacturer as a raw material in the production of other goods or sold for use as raw materials in the manufacture of goods, it would normally be sold in non-taxable circumstances under quotation of certificate.

COMMISSIONER OF TAXATION
1 August 1986

References

ATO references:
NO 83/12579-9
BO Syd.22/B/D6/84 P2

Date of effect:
Immediate

Date original memo issued:
13.9.1985

Related Rulings/Determinations:

ST 2174

Subject References:
RE-REFINED OIL

Legislative References:
SALES TAX ASSESSMENT ACT (NO.1); SECTION 3


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