SST 16

Sales tax: rate reduction credit

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FOI status:

may be releasedFOI number: I 1020430

Chapter 1: What this Ruling is about

1.1 As part of the Government's move towards a new tax system, the Wholesale Sales Tax (WST) will be replaced by the Goods and Services Tax (GST) from 1 July 2000. To help in the transition from the WST system to the GST, the Government has initiated a series of transitional measures.

Reduction in rate of sales tax

1.2 One transitional measure is the reduction of the rate of sales tax to 22% for all goods covered by Schedule 5 to the Sales Tax (Exemptions and Classifications) Act 1992 (ST(E&C)Act), with the exception of:

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fur skin goods covered by Item 2 in Schedule 5; and

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jewellery and precious stones covered by Item 3 in Schedule 5^[F1].

1.3 The reduction in the rate of sales tax will apply to assessable dealings from 29 July 1999, being the 21st day after the day on which the GST Act received the Royal Assent^[F2]. The GST Act is defined by section 5 of the A New Tax System (Goods and Services Tax Transition) Act 1999 to mean the A New Tax System (Goods and Services Tax) Act 1999 and that Act received the Royal Assent on 8 July 1999.

1.4 This Ruling does not deal with that initiative.

Credit for stock held for sale

1.5 As a consequence of the reduction in the rate of sales tax that will apply to assessable dealings from 29 July 1999, there is also an entitlement to a credit of sales tax to align the amount of sales tax borne on goods held for sale on 29 July 1999 with the amount of sales tax that will be borne on goods purchased from that date.

1.6 If you hold stocks of goods for sale on 29 July 1999 that are covered by Items 4 to 14 of Schedule 5, you are entitled to a credit for the difference between the amount of sales tax you were charged at the 32% rate and the amount you would have been charged if the rate had been 22%^[F3]. For the purposes of this Ruling, this credit is referred to as the 'rate reduction credit'. It can be claimed directly from the Australian Taxation Office (ATO) under the existing sales tax credit provisions^[F4].

1.7 Chapter 2 of this ruling explains the circumstances in which a person is entitled to a credit under these provisions. Chapter 3 explains the effect that certain commercial arrangements and practices have on the application of the credit. Chapter 4 explains how the credit is to be calculated, and Chapters 5, 6 and 7 explain how and when the credit may be claimed and the type of records that should be retained.

Date of effect

1.8 This Ruling is effective immediately.

Chapter 2: Under what circumstances is a person entitled to a rate reduction credit?

The new transitional credit ground

2.1 The new transitional credit ground, TCR4 in Table 3A in Schedule 1 to the Sales Tax Assessment Act 1992 (STAA), provides that a person is entitled to a credit if:

*

the person has borne sales tax on assessable goods covered by any of Items 4 to 14 of Schedule 5 to the ST (E&C) Act, (for the purpose of this Ruling we will refer to these goods as '32% goods'); and

*

those goods are held for sale on the 21st day after the GST Act received the Royal Assent (29 July 1999).

2.2 If you satisfy these criteria, you can claim a credit for the difference between the amount of sales tax you have borne at the 32% rate on those goods and the amount you would have borne if the rate had been 22%.

2.3 Several important concepts and terms in paragraph 2.1 are explained below.

The meaning of 'borne tax'

2.4 You have borne sales tax on goods if:

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you purchased the goods for a price that included sales tax; or

*

you become liable to sales tax on an assessable dealing (such as an importation) with the goods.^[F5]

Assessable goods

2.5 You are only entitled to a rate reduction credit if the goods subject to the claim are assessable goods at the time the credit entitlement arises. The term assessable goods is defined to mean Australian goods (goods that have been manufactured in Australia) or imported goods, but not goods that have been applied to a person's own use in Australia.^[F6] The term application to own use is defined to include, among other things:

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consuming the goods;

*

giving the goods away;

*

granting a lease or any other right or permission to use the goods; and

*

using goods in manufacture, construction, repair, renovation or any other processing^[F7].

2.6 If you have used (including for demonstration purposes), leased, hired or loaned 32% goods, you cannot claim the rate reduction credit for those goods even though you held them for sale on 29 July 1999.

Goods covered by Items 4 to 14 in Schedule 5

2.7 While the complete text of Items 4 to 14 is reproduced at Appendix B, the following are examples of the types of goods covered by Items 4 to 14 in Schedule 5 to the ST (E&C) Act:

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studs, tie bars, tie pins and cuff links (Item 4);

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precious metal goods and plated ware (Item 5);

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watches and watch bands (Item 6);

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clocks (Item 7);

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binoculars and opera glasses (Item 8);

*

cameras and automatic photo booths (Item 9);

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photographic enlargers (Item 10);

*

film and slide projectors, viewers and screens (Item 11);

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tape recorders, video recorders, video cameras, radios, televisions and stereo players (Item 12);

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picture tubes for television receivers (Item 13); and

*

slot machines for gambling and amusement operated by coins or tokens (Item 14).

Parts for many of these goods are also covered by Items 4 to 14.

Goods held for sale

2.8 32% goods are held for sale and are eligible for the rate reduction credit if you hold them with the intention of disposal under a contract of sale of goods^[F8].

2.9 While the word sale can have the meaning, in a broad sense, of 'transfer of property for money or credit'^[F9], when it is considered in the context of the WST law its meaning is affected by the definition of application to own use. Under paragraph (d) of that definition^[F10], goods that are used by a person in carrying out any manufacture, construction, repair, renovation or any other process are applied to the own use of the person carrying out that activity. Further, under paragraph (g) of that definition, a sale of goods is not an application to own use for WST purposes. Accordingly, goods you use as parts and materials in repairing customers' goods are not sold but are applied to your own use even though property in them passes to your customers. For this reason, stocks of parts and materials held for use in service contracts, for example, repairs of cameras, are not 'held for sale'. They are not within the scope of transitional credit ground TCR4.

2.10 The supply of watch batteries, watch chains and safety chains by a person who fits them to customers' watches, is a sale rather than an application to own use. You can claim the rate reduction credit for stocks of batteries, bands and chains held on 29 July 1999 for this purpose.

Chapter 3: The effect of certain commercial arrangements and practices on the application of the rate reduction credit

3.1 There are a number of commercial arrangements, commercial practices and terms of trade that affect the application of transitional credit ground TCR4. They will determine whether you hold goods for sale on 29 July 1999, whether you have borne tax on the goods and whether they are assessable goods on that date.

Consignment and 'sale or return' arrangements

3.2 In a commercial sense, you may hold goods for sale by you even though they are currently owned by your supplier. For example, goods held under consignment, 'on approval' or 'sale or return' arrangements are 'held for sale'. However, although you physically hold the goods, they remain the property of your supplier and there has been no assessable dealing on which you have borne tax. You cannot claim the rate reduction credit for goods held under these arrangements on 29 July 1999.

Purchases subject to 'retention of title' clauses

3.3 Some suppliers of goods include in their contracts of sale, a retention of title clause (also known as a reservation of title clause or a Romalpa^[F11] clause). Essentially, these clauses are intended to protect the supplier's interest by delaying the time of the sale until the purchaser pays for the goods.

3.4 Where Romalpa clauses are effective,^[F12] taxpayers are not required to account for sales tax until the contract of sale has ripened into a sale.

3.5 If your supplier accounts for sales tax on the basis of an effective Romalpa clause, 32% goods that have been invoiced to you before 29 July 1999 but not paid for until after 29 July 1999, will be taxable to the supplier at the 22% rate. As the original invoice from your supplier would have included sales tax at the rate of 32%, your supplier would be expected to issue a credit note or some other form of notification to you to reflect the reduction in the sales tax rate on those goods. You cannot claim the rate reduction credit on these goods as you will have borne tax only at the 22% rate.

3.6 If you have claimed a rate reduction credit on such goods and you become aware that the 32% rate on some goods was reduced to 22% by your supplier, any overclaimed tax must be remitted to the ATO.

3.7 Accounting for sales tax on the basis of an effective Romalpa clause can involve practical difficulties and significant costs in tracing the fate of goods to determine the time of sale. Your suppliers may take an option which we have made available to them to account for sales tax as if the time of the sale was the earlier of either the time of invoicing or the time of delivery^[F13].

3.8 If your suppliers account for sales tax on this basis, you will have borne tax at the 32% rate even though you may not have paid for the goods until after 29 July 1999. You can claim the rate reduction credit in these circumstances.

3.9 It is strongly recommended that you consult with your supplier to find out the basis upon which it is accounting for sales tax on contracts where a Romalpa clause is involved. This will avoid a situation where you may inadvertently claim a rate reduction credit to which you are not entitled.

Demonstration goods

3.10 Many retailers set goods aside for demonstration use by or for potential customers. After a period, these goods are sold as second-hand or demonstration goods. Often, they are sold with only part of the original warranty attached.

3.11 These goods may be trading stock on hand of a retailer for income tax purposes^[F14]. However, for the purposes of the WST legislation, they have been applied to the retailer's own use and are no longer assessable goods^[F15]. You cannot claim the rate reduction credit for these goods, even though you may intend to sell them when the demonstration use ends.

3.12 Where you hold 32% goods for sale and they are used for demonstration purposes, but that use is negligible or insubstantial and the goods are to be sold as new goods with full warranty attached, those goods have not been applied to your own use. You can claim the rate reduction credit in these circumstances.

Goods put aside on lay-by

3.13 Goods that have been allocated to a customer under a lay-by arrangement are still held for sale until the customer makes the final payment instalment^[F16]. You can claim the rate reduction credit for such goods.

Stock in transit

3.14 Goods that you own but that are in transit to you on 29 July 1999 are 'held for sale' by you^[F17]. Provided you have borne tax on those goods on or before 29 July 1999, you can claim the rate reduction credit.

Returns of 32% goods after 29 July 1999

Returns by customers

3.15 Many retailers have a policy of giving a full credit to customers for returns of unused goods. If you accept returns after 29 July 1999 of 32% goods that you sold before that date, and place them back into your stock for sale, you will have borne tax on them at the 32% rate.

3.16 You can treat the returned goods as having been held for sale at 29 July 1999 and you can include them in your rate reduction credit claim. By accepting the return of these goods and placing them back into your stock for sale, you are effectively cancelling the original sale to your customer.

3.17 If you claim a rate reduction credit for goods returned by your customers, you should keep details in your records of both the original sale to your customer and the return of the item as well as the information about the tax borne.

Returns to suppliers

3.18 Where a retailer has borne tax on the purchase of goods and subsequently returns them to their supplier for a credit of the original purchase price, including sales tax, the retailer has not borne that tax^[F18]. The supplier is entitled to a credit for the full amount of tax charged under credit ground CR1 because the original assessable dealing from the supplier to the retailer has effectively not taken place^[F19]. This applies to goods that are returned because they are defective as well as goods that are returned for other reasons.

3.19 Accordingly, if you return 32% goods that were held for sale on 29 July 1999, you cannot claim a rate reduction credit for those goods. If you have claimed a rate reduction credit and you subsequently return the goods so that tax has not been borne on them, the credit overclaimed must be remitted to the ATO.

Chapter 4: How to calculate the rate reduction credit

4.1 You can calculate the rate reduction credit by the following process:

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identify the quantity of 32% goods that you are entitled to include in your rate reduction credit claim;

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identify or calculate the amount of tax borne on those goods; and, from that,

*

determine the amount of the credit you can claim.

Identifying the quantity of 32% goods held for sale on 29 July 1999.

4.2 In many cases, you will need to, or may want to, undertake a physical stocktake on 29 July 1999 to identify the 32% goods held for sale on which you have borne sales tax.

4.3 Generally, it is not sufficient for you to estimate the quantity of your stock held for sale based on a stocktake you completed for a prior period.

4.4 However, you can determine the quantity of 32% goods held for sale on 29 July 1999, without the need to undertake a physical stocktake on that date, if you:

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maintain a continuous, accurate record of your stock on hand by recording all stock movements such as purchases, sales, returns, spoilage and breakage;

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undertake regular stocktake(s) throughout the year;

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count all items of stock at least once during the year; and

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adjust your stock records for discrepancies identified by your stocktakes.

4.5 In addition to making adjustments to the actual stock balance from your most recent stocktake for recorded stock movements up to 29 July 1999, you should also make allowance for stock shortages such as those due to shop-lifting and theft. This adjustment could be based on the average rate of shortage identified in previous stocktakes.

4.6 When you undertake a stocktake or calculate the quantity of 32% goods held for sale, you should ensure that you do not include goods that are not covered by TCR4. As explained in Chapter 3 of this Ruling, these could include goods held in stock under consignment, 'sale or return' or 'approval' arrangements, demonstration goods, goods for use in repair contracts and goods that you have returned for credit to your supplier.

Determining the sales tax borne on the 32% goods.

4.7 The most accurate method of identifying the amount of tax borne on a particular article of stock is to trace the acquisition or importation back to source documents such as purchase invoices. Where your stock system identifies each article of stock, its cost and the amount of sales tax charged to you, your rate reduction credit should be calculated directly from that sales tax figure.

4.8 If your system does not record sales tax as a separate component of cost, then, for goods purchased in Australia, you can calculate the amount of tax borne by applying a simple formula to the tax-inclusive cost price. This is explained in paragraph 4.19 of this Ruling.

4.9 The tax that you have borne on goods you have imported will have been charged on a different basis to that applied for goods purchased in Australia. A different formula must be used to calculate the tax borne on imported goods. This is explained in paragraphs 4.20 to 4.25 of this Ruling.

4.10 Before you apply a formula to your tax-inclusive cost, you must exclude any costs on which you were not charged sales tax. This is explained in paragraphs 4.26 to 4.32 of this Ruling.

4.11 Goods such as single use cameras, may have been taxed at a special composite rate and you may not be able to calculate the amount of tax borne by using a simple formula. The approach to take in these circumstances is explained in paragraphs 4.41 to 4.43 of this Ruling.

Stock valuation methods

4.12 In many businesses, it is impractical or commercially unrealistic to trace the actual tax-inclusive cost of each particular article of stock. You can use any method of valuing your stock of 32% goods, provided it identifies the cost price on which you have borne tax, either for each line of stock or for your whole stock of 32% goods.

4.13 You cannot use a method which is based on the value of your most recent purchases, or the value at which you could replace the stock, unless the goods that you have on hand on 29 July 1999 have not been subject to any price increases since you purchased them. If you use this stock valuation method and your purchase prices have increased since you purchased the goods, you must make adjustments to reduce the resultant cost figure to equate to the actual price for which you purchased the 32% goods.

4.14 Of the methods that are accepted for valuing trading stock on hand for income tax purposes^[F20], FIFO ("first in, first out") and average cost are the preferred methods for identifying the tax-inclusive cost of 32% goods for which you are claiming the rate reduction credit. You can use the other methods detailed below if they give an accurate calculation of the tax-inclusive cost of your 32% goods on hand or if appropriate adjustments are made so that your method achieves that result.

4.15 The retail inventory (or calculated cost or point of sale) method will provide a sufficiently accurate cost valuation where:

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your gross profit margin is set to take account of stock that is on hand at 29 July 1999 and was purchased at a price lower than your most recent purchases; or

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you turn your stock over in a short period of time so that your current retail prices, when reduced by your gross profit margin, equate to your actual purchase prices; or

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a further adjustment is made, after your selling prices are reduced by your gross profit margin, to reflect movements in cost prices while the stock was on hand; and

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mark-downs to retail selling prices are added back.

4.16 The standard cost method is rarely used to value retail stocks outside the manufacturing sector. In the absence of regular reviews of the standard which might cause the value to approximate the actual cost, standard cost is not an acceptable method of calculating the amount of the rate reduction credit.

4.17 Other methods such as LIFO and base cost are not acceptable.

Calculating the tax borne

4.18 For the purposes of calculating the rate reduction credit, you can treat any tax-paid stock of goods covered by Items 4 to 14 as having been subject to tax at the 32% rate, even though any goods purchased before 1 July 1995 would have been taxed at a lesser rate^[F21].

Goods you purchased in Australia

4.19 You can calculate the sales tax borne as:

Sales tax borne = 32/132 of the tax-inclusive cost price,


provided the tax-inclusive cost price contains only the following components:

*

the taxable value on which you bore sales tax; and

*

that sales tax.

Goods you have imported

4.20 Where you have imported 32% goods, the tax paid to Customs was calculated by applying the 32% rate to a taxable value comprising 120% of the sum of the customs value (often the overseas invoice value) and the customs duty.^[F22] However, the value recorded for cost in many stock systems is the landed cost of the goods. This may be more than, but is often less than, the taxable value.

4.21 The most accurate and, in many cases, the simplest method of identifying the amount of tax borne on importation will be by reference to each line entry on the entry for home consumption document prepared at the time of importation.

4.22 If this is not practical and your records do not identify tax as a separate component, you cannot apply the formula explained in paragraph 4.19 above.

4.23 If you have imported goods that were subject to customs duty at the zero rate, you can calculate the amount of tax borne as 27.75% of the tax-inclusive cost provided you first exclude from your total cost, any other costs that have not been included in the customs value. In addition to the un-taxed charges discussed at paragraphs 4.26 to 4.31 of this Ruling, there are other costs associated with importations that, generally, are not included in the customs value. These are discussed in paragraph 4.32 of this Ruling.

4.24 If customs duty has been levied on the goods you have imported, you may use the method of calculation described in the previous paragraph. However, this will give a result that is slightly less than the amount of tax you paid to Customs.

4.25 Alternatively, if your recorded cost is less than the taxable value on which you were charged tax, you may treat that value as a tax-inclusive price and apply the formula at paragraph 4.19 above. This also may result in a slight underclaim of your entitlement.

Charges that have not been taxed

4.26 Your recorded cost price for each line of stock may include charges that were not included in the taxable value on which you have borne tax. You must exclude the value of these charges from your recorded cost before applying a formula to the tax-inclusive cost to calculate the amount of tax borne. The more common of these charges are discussed in the following paragraphs.

4.27 Where they are the subject of a separate contract that is not essential to the contract of sale of the goods to you, charges such as inward freight and insurance costs, finance charges and optional warranty charges do not form part of the taxable value of the wholesale sale of goods to you^[F23].

4.28 Some 32% goods such as digital cameras might incorporate tax advantaged computer programs (TACPs). The value of those programs, known as the exempt part of the taxable value, will have been excluded from the taxable value^[F24].

4.29 Many 32% goods are sold with other goods such as instruction manuals and AC adaptors that are exempt from tax^[F25]. Although your supplier charges a single price for the complete packaged goods, the value of the exempt goods may be excluded from the taxable value of the 32% goods

4.30 Where your 32% goods include TACPs, instruction manuals or AC adaptors, the invoice from your supplier may show a single price for both the 32% goods and the exempt part of the taxable value or the exempt goods, but the amount of sales tax will reflect the value of the 32% goods only. If you are using a formula to calculate tax borne from your tax-inclusive value, you may find it more convenient to identify the amount that the exempt part or exempt goods represent and deduct that from your total cost, along with the other charges that have not been taxed.

4.31 At the time that this Ruling was written, many suppliers will have made, or will be making, claims for a refund of sales tax charged on AC adaptors on the basis that they will be refunding that amount to you. Their refund claims are likely to be based on Safe Harbour values detailed in Sales Tax Determination STD 1999/1. If you have been charged tax on exempt AC adaptors and you believe the supplier will offer a refund on those goods after you have lodged your rate reduction credit claim, we recommend that you exclude the Safe Harbour value when calculating your claim to avoid having to make a subsequent adjustment when the refund is received. The Safe Harbour values are set out in Appendix C.

4.32 The recorded value for cost of goods you have imported may include other charges such as overseas freight, agents' fees, wharf charges and storage which usually are not subject to tax because they do not form part of the customs value set by the Collector of Customs^[F26]. These should be excluded from the total cost before applying a formula.

Adjustments to the recorded or calculated amount for tax borne

4.33 Arrangements between suppliers and purchasers often include express or implied conditions which provide for discounts or rebates from the amount payable by the purchaser to the supplier. Certain of these discounts or rebates such as trade discounts, volume rebates, deferred credits and prompt payment or settlement discounts reduce the price for which the goods are sold and, therefore, also reduce the sales tax payable^[F27].

4.34 Price reductions such as settlement discounts or trade discounts are usually deducted in advance of payment. Deferred credits and volume rebates are not calculated until some time after the transaction has been completed, in which case they may be paid as a refund to the purchaser. In either case, the credit reduces the taxable value and, therefore, the amount of sales tax payable by the supplier.

4.35 As a retailer you will receive a refund or credit from the supplier that includes components attributable to both the taxable value of the original transaction and the sales tax. The amount of sales tax borne by you is reduced by the tax component of the discount or rebate^[F28].

4.36 If you receive credits or refunds representing discounts or rebates which reduce the amount of sales tax borne on 32% goods held for sale on 29 July 1999, the tax borne must be adjusted to allow for the discounts or rebates before you calculate the rate reduction credit.

4.37 If, at the time of lodging your claim, you know you will receive discounts or rebates that reduce the amount of sales tax borne on 32% goods, you should allow for them when calculating your claim to avoid having to make adjustments after it has been lodged. If you have lodged your claim and later receive discounts or rebates that reduce the amount of tax borne on 32% goods, the credit will have been overclaimed and must be remitted to the ATO.

Calculating the amount of the rate reduction credit claim

4.38 The amount of the rate reduction credit claim for 32% goods is the difference between the tax borne and the amount that would have been borne if the rate had been 22%.

4.39 After identifying or calculating the amount of sales tax borne on the goods for which you are entitled to claim the credit, you can calculate the amount of the credit by applying the following formula:

Rate reduction credit = 10/32 of the sales tax borne.


Tax borne must be net of the adjustments explained in paragraphs 4.26 to 4.37 of this Ruling.

4.40 You cannot use this formula where you have been charged a 'composite' rate of sales tax that represents tax payable on a mixture of 32% goods and goods taxed at another rate.

Composite rates of sales tax

4.41 Single use or 'disposable' cameras that are covered by subitem 9(1) in Schedule 5 to the ST(E&C)Act, also include photographic film which is covered by Item 1 in Schedule 4 to that Act and taxed at the 22% rate. Rather than charge two separate amounts, each with sales tax added at different rates, some suppliers have been given permission by the ATO to charge a single price with a single 'composite' amount of tax. Depending on the kind of camera, these rates approximate 25% to 28%.

4.42 Because a number of different composite rates will have been charged on your stock of single use cameras, you cannot calculate the rate reduction credit by applying the same methodology used for goods which have borne tax at the 32% rate. Generally, it will be necessary to identify the amount or rate of tax charged to you and calculate the taxable value for the complete camera, from which the calculation to tax at the 22% rate can be made.

4.43 The following example explains how this is done:

Chapter 5: When to claim the rate reduction credit

5.1 The entitlement to the rate reduction credit arises on 29 July 1999 and it can be claimed at any time within the 3 year period provided for by subsection 51(3) of the STAA. However, we have put special procedures in place so that we can process claims and issue refunds as soon as possible. These procedures will only be in place for a short time, so we recommend that claims be lodged as soon as possible.

Chapter 6: How to claim the rate reduction credit

6.1 The rate reduction credit is claimed under the provisions of the existing WST law using a new transitional credit ground TCR4. A special refund application form is available by calling the Rate Reduction Hotline on 1800 634 905. Instead of sending it to your local branch of the ATO, you should complete that form and send it to:

6.2 If you lodge regular sales tax returns, you can offset the credit against your current sales tax liability. However, we have put special procedures in place to enable us to process rate reduction credit claims and to issue refunds in the shortest possible time. We encourage you to use this service rather than making your claim in conjunction with your current sales tax return.

6.3 To ensure that rate reduction credit claims are being made correctly, as well as examining a number of rate reduction credit claims made on the special application form, we will also be identifying a number of cases where rate reduction credits are offset in the sales tax return.

6.4 It is not necessary for you to forward evidence of your entitlement to the credit with the application form. However, you should attach to your application for refund, a summary sheet of your calculations. This information will help us to determine which cases need to be examined to ensure that the right amount of credit is being claimed. It will also help us process your claim as quickly as possible. An example of a summary sheet is attached at Appendix D.

Chapter 7: Retaining your records

7.1 Whether you claim the credit using the special refund application form or offset the credit in your sales tax return, you must retain records of the calculation of the amount of the claim for 5 years from the date you lodge your rate reduction credit claim^[F29]. We may inspect these records either before or after processing your claim for the credit.

Commissioner of Taxation
21 July 1999

Appendix A

Table 3A: Transitional credit grounds

Appendix B

Goods affected by the reduction of the 32% sales tax rate to 22%

Appendix C

Safe Harbour Values for AC adaptors

Extract from Sales Tax Determination STD 1999/1

Valuation of AC adaptors

(a)

............

(b)

In the following situation a taxpayer may apply the Safe Harbours set out in the table below in determining the value attributable to an AC adaptor:

*

an AC adaptor is packed with other goods, one of which is an electronic appliance to which the AC adaptor supplies power; and

*

the goods are sold together as a product bundle for one inclusive price; and

*

the parties to the sale have not allocated a particular amount to the AC adaptor.

Appendix D

Calculation Summary for Sales Tax Rate Reduction Credit

Sales Tax Rate Reduction Credit calculations:

Formula 1

Rate Reduction Credit = 10/32 of Sales Tax Charged to You

Formula 2

Sales Tax Charged to You = 32/132 of Sales Tax Inclusive Cost

Formula 3

Sales Tax Charged by Customs = 27.75% of Tax Inclusive Cost

References

ATO references:
NO NAT 99/10146-6

Related Rulings/Determinations:

SST 6
SST 7
SST 9
STD 98/5
STD 1999/1
IT 2289
IT 2350
IT 2648
IT 2670
TR 95/7
TR 95/48

Subject References:
Application to own use
Assessable goods
Borne tax and tax borne
Credits
Exempt part of taxable value
Goods held for sale
Retention of title clauses
Romalpa clauses
Tax advantaged computer programs
Transitional credit ground

Legislative References:
Sales Tax Assessment Act 1992 section 5
section 11
section 45
section 127
Part 4
Schedule 1
AD10 in Part B of Table 1
CR1 in Table 3
TCR4 in Table 3A
Sales Tax (Exemptions & Classifications) Act 1992 subitem 43(3)(a)
100(1) of Schedule 1
Item 1 of Schedule 4
Items 4 to 14 of Schedule 5
A New Tax System (Goods and Services Tax Transition) Act 1999 section 5
Items 2, 2A, 3 and 4 in Schedule 1
Sale of Goods Act 1923(NSW) subsection 6(1)

Case References:
Aluminium Industrie Vaassen BV v. Romalpa Aluminium Ltd
[1976] 2 All ER 552
[1976] 1 WLR 676

Dick Smith Electronics Pty Ltd v FC of T
97 ATC 5089
(1997) 37 ATR 346
FC of T v Myer Stores Ltd
98 ATC 4384
(1998) 38 ATR 447