TAXATION RULING NO. ST 2219

ST 2219

SALES TAX : SATELLITE EARTH STATIONS : DOMESTIC SATELLITE RECEIVING EQUIPMENT

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FOI status:

May be releasedFOI number: I 1206047

PREAMBLE

Domestic satellite receiving systems are designed to provide T.V. reception for ordinary television sets in remote areas where normal television reception is not possible. T.V. programs are beamed to a satellite which transmits them back to earth receiving stations located in remote areas. The signals are processed by the stations into a form capable of being received by a normal T.V. set. Because the system is not considered as one item of goods for sales tax purposes but several separate identifiable items, the classification of each item has to be considered separately. Ruling No. ST 2114 deals with the classification of the various items.

2. Sales Tax (Exemptions and Classifications) Amendment Act, Act No. 145 of 1985, effective on and after 20 September 1985, omitted the existing item 152, First Schedule, and substituted a new item. Sub-item 152(1), First Schedule, now provides a conditional exemption for satellite earth stations exclusively for non-business use. Sub-item 152(2), First Schedule, covers accessories and parts, other than batteries, for the satellite earth stations covered by sub-item(1). Exemption is confined to earth stations designed to receive the service described as the "Homestead and Community Broadcasting Satellite Service" or such other Aussat satellite service as may be prescribed under the Sales Tax (Exemptions and Classifications) Regulations.

3. While exemption applies only where the system is exclusively for non-business use, paragraph (g) of item 152 provides that, where goods are for both business use and non-business use, the goods shall not be taken to be for business use if the business use constitutes a minimal or insignificant part of the overall use of the goods.

FACTS

4. The usual components of the systems include a reflector panel or screen, the collector horn, low noise amplifier, frequency converter and receiver/converter. The reflector panel/screen which is located outdoors picks up the microwave signals from the satellite and reflects them to the collector horn, positioned adjacent to the panel, which receives the signal and feeds it to the low noise amplifier which, in turn, amplifies the signal and filters out static noise. The frequency converter alters the microwave signal to super high frequency (SHF). A coaxial cable leads the SHF signal to the receiver/converter located on top of or near to a T.V. set which changes the SHF signal to a very high frequency (VHF) signal suitable for television reception. The receiver/converter functions as a demodulator and can also be used as a tuner where there is more than one signal.

5. In some cases the reflector panel antenna has been replaced by a parabolic dish antenna which consists of the dish and a support frame. The kit consists of a central circular dish and ten prefabricated fibreglass petals which have been impregnated with a metallic substance to give it reflective properties. The petals are bolted together around the central dish during assembly on site.

RULING

6. The reflector panel or screen or parabolic dish antenna, collector horn, low noise amplifier and frequency converter which make up a satellite earth station qualify for conditional exemption under sub-item 152(1), First Schedule, from 20 September 1985 when purchased for use exclusively for non-business purposes.

7. The receiver/converter (demodulator) is not considered to be an accessory to the satellite receiving equipment. Rather it is considered to be an auxiliary to a television set and covered by item 48, Second Schedule, and taxable at 30%. Item 48, Second Schedule, specifically mentions demodulators. The receiver/converter is also considered to be an accessory to a television receiver and covered by item 50, Second Schedule. This does not affect the classification of the receiver/converter because goods covered by item 50, Second Sechedule, are also taxable at 30%.

8. The exemption is limited to satellite earth stations exclusively for non-business use. The usual case where exemption will apply will be the domestic householder. Exemption will also apply to a community, or a group within a community, that incorporates a non-profit company for the purpose of acquiring a satellite earth station. On the other hand a business enterprise, e.g. a mining company, that acquires a satellite earth station for use in its business would not be entitled to the exemption.

9. By virtue of paragraph (g) of item 152 minimal or insignificant business use may be disregarded in determining whether a satellite earth station qualifies for exemption. For example, the use of an earth station television service by a primary producer to receive market information, weather forecasts or other information relating to farming activities would not debar exemption if the earth station were otherwise used principally for the reception of television programs for the enjoyment of the primary producer and his or her household.

10. Taxation ruling ST 2114 is modified accordingly.

COMMISSIONER OF TAXATION
27 February 1986

References

ATO references:
NO 85/9193-8

Related Rulings/Determinations:

ST 2230
ST 2114

Subject References:
DOMESTIC SATELLITE RECEIVING EQUIPMENT
SATELLITE EARTH STATIONS

Legislative References:
SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) ACT; ITEM 152; FIRST SCHEDULE;
ITEMS 48
and 50, SECOND SCHEDULE.