Phoenix Steel Sales Pty Ltd and Deputy Commissioner of Taxation - [2001] AATA 25

DECISION AND REASONS FOR DECISION [2001] AATA 25

ADMINISTRATIVE APPEALS TRIBUNAL )

) No WT1999/58

TAXATION APPEALS DIVISION         )
           Re      PHOENIX STEEL SALES PTY LTD
  Applicant
           And    DEPUTY COMMISSIONER OF TAXATION
  Respondent

DECISION

Tribunal Associate Professor S D Hotop, Senior Member Mr R D Fayle, Senior Member

Date19 January 2001
PlacePerth

Decision      The Tribunal affirms the decision under review.
  ...........(sgd S D Hotop)...........
  Senior Member
CATCHWORDS
TAXATION – sales tax – exemptions – metal scaffold planks – whether exempt as industrial safety equipment – whether equipment of a kind ordinarily used in the course of industrial operations to protect persons engaged in those operations.

STATUTES – statutory interpretation – purposive approach – meaning of statutory provision uncertain or unclear – use of extrinsic materials to determine meaning of statutory provision

Acts Interpretation Act 1901 ss15AA, 15AB
Sales Tax Assessment Act 1992 s24
Sales Tax (Exemptions and Classifications) Act 1992 s4, Schedule 1, Item 20

Airovent Pty Ltd v Federal Commissioner of Taxation 98 ATC 4800
Commissioner of Taxation v Chubb Australia Ltd (1995) 56 FCR 557
Deputy Commissioner of Taxation v Stewart (1984) 154 CLR 385; 84 ATC 4146
Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450; 93 ATC 4703
GKN Australia Ltd v Federal Commissioner of Taxation 94 ATC 4417
Hygienic Lily Ltd v Deputy Commissioner of Taxation (1987) 13 FCR 396; 87 ATC 4327
Mayne Nickless Ltd v Federal Commissioner of Taxation 91 ATC 4621
Reece Pty Ltd v Federal Commissioner of Taxation 97 ATC 5005
Telstra Corporation Ltd v Commissioner of Taxation (1996) 68 FCR 566; 96 ATC 4805
The New South Wales Cancer Council v Federal Commissioner of Taxation 99 ATC 4427
Thomson Australian Holdings Pty Ltd v Commissioner of Taxation (1998) 20 FCR 85; 88 ATC 4916

REASONS FOR DECISION

19 January 2001 Associate Professor S D Hotop, Senior Member Mr R D Fayle, Senior Member

This is an application by Phoenix Steel Sales Pty Ltd ("the applicant") for review of a decision, dated 29 March 1999, made on behalf of a Deputy Commissioner of Taxation ("the respondent"). That decision was to disallow an objection by the applicant, dated 11 December 1998, against an assessment of sales tax payable by it in relation to wholesale sales and retail sales of scaffold planks during the period from 19 August 1995 to 31 August 1998 ("the relevant period").
At the hearing the applicant was represented by Mr A Ince, accountant, and the respondent was represented by Mr M Corboy of counsel. The Tribunal had before it the documents ("T documents") lodged by the respondent pursuant to s37 of the Administrative Appeals Tribunal 1975, as modified by s14ZZF of the Taxation Administration Act 1952, and 15 documentary exhibits (marked A1-A15) tendered by the applicant. Oral evidence was given by Bryan Shea, Noel Byrne, Mario Santoro, Paul Burton and Robert Paley, who were called as witnesses by the applicant. No evidence was presented by the respondent.
The Factual Background
The material background facts, about which there is no dispute between the parties and as found by the Tribunal on the basis of the T documents, are as follows.
The applicant, trading as "Phoenix Metalform", manufactures and sells two types of metal scaffold planks, namely:
· the "Safegrip K-30 Plank" – comprising a plank body of "BMT Galvabond" whose dimensions are 400 mm x 3020 mm x 2 mm, and plank ends of "BMT Galvabond strip" whose dimensions are 256 mm x 1.95 mm ("the K-30 plank");
· the "Safegrip H24 Scaffold Plank" – comprising a plank body of "Galvabond" whose dimensions are 400 mm x 2224 mm x 2 mm, and a hooked end plate of "Galvabond" whose dimensions are 139 mm x 220 mm x 3 mm ("the H-24 plank").

Both the K-30 plank and the H-24 plank have raised metal "nodules" on them that provide a non-slip surface. The H-24 plank was designed to meet Australian Standard 1577-1993 (Standards for Scaffold Planks)("AS 1577-1993"). AS 1577-1993 requires that scaffold planks be permanently and legibly marked with:

·     the manufacturer's name or identification;
·     the number of this Australian Standard;
·     the working load limit, in kilograms;
·     for random planks, the allowable span, in metres.

A common use of both the K-30 plank and the H-24 plank is as an integral part of scaffolding systems in building construction and maintenance.
The Evidence
Bryan Shea
Mr Shea told the Tribunal that he is presently a Director of Phoenix Metalform and has been such for the last 17 years. A witness statement, dated 16 December 1999, was tendered in evidence (Exhibit A1) in which Mr Shea described the K-30 plank and the H-24 plank. As regards the former, which he said was known as a "modular design" plank, his statement comments:
"The modular design planks sit within a scaffold frame. These planks form a flat working surface within the scaffold frame. There are no protrusions of the planks for safety purposes."

As regards the H-24 plank, the statement comments:

"The hooked end planks sit on the pipes with a scaffold frame and are inter-locked. This locking feature ensures the planks do not move and provide increased safety for workers."

Mr Shea's statement continues:

"7.Both the metal scaffold planks produced by Phoenix Metalform have the same uses. However, the Safegrip H-24 Scaffold Plank (with hooked end) is only sold within the West Australian market and is smaller and easier to use. For this reason, the Safegrip H-24 Scaffold Plank is more suited to smaller construction sites, while the Safegrip K-30 is more suited to larger construction sites.
8.The metal scaffold planks produced by Phoenix Metalform are commonly used as decking for scaffolding systems on construction sites. Scaffolding planks are an integral part of a scaffolding system.
9.The metal scaffold planks produced do have other uses (apart from decking) and, depending on the construction job, are commonly used in other ways. Other common uses of the metal scaffold planks include:
·safety boards for roof work;
·kick-boards;
·edge protection;
·covering openings;
·barricading;
·hoardings.

10.When the planks are used as kick-boards they are placed on their edge and are slotted in between other planks and the scaffold frame. Some of the kick-boards are wired to other planks and the scaffold frame.
11.Phoenix Metalform has experienced a significant increase in its sales of the Safegrip planks since the introduction of Occupational Safety and Health Regulations regarding the prevention of falls at the workplace.
12.WorkSafe Western Australia is issuing work orders on all sites that have wooden boards. Most of these boards will not meet Australian Standards and are unsafe. Since WorkSafe Western Australia has begun issuing these work orders we have experienced a large increase in demand for our planks."

In his oral evidence-in-chief Mr Shea elaborated on the various uses of the K-30 plank and the H-24 plank mentioned in paragraphs 8 and 9 of his witness statement. He said that the term "decking" (which he described as "a very common use for the planks") refers to that section of scaffolding on which the worker stands. The phrase "safety boards for roof work" refers, he said, to the use of the planks in the construction of "steel-framed homes" to enable access in the roof section of the house. The term "kick-boards" refers to the use of the planks wherein they are positioned on their sides in such a way as to prevent objects from falling over the edge of the decking. He described "kick-boards" as an integral part of a scaffolding system. The use of the planks for "edge protection" involves the planks being placed around the perimeter of the construction to prevent objects from falling over the edge. By the expression "covering openings" he was referring to the use of the planks to cover openings (eg for stairwells) so that workers did not fall through them. Finally, Mr Shea confirmed that both the K-30 plank and the H-24 plank meet the requirements of AS 1577-1993.
In cross-examination Mr Shea was also questioned about the different uses of the K-30 plank and H-24 plank. As regards decking, he agreed that by that term he meant the scaffolding platform created by the planks on which workers would stand and which they would use as a means of accessing the working area at height as well as storing equipment, building materials and the like. He said that when he referred to the planks being used as "safety boards for roof work" he was referring to their use as walkways in the roof section of the house under construction and he agreed that such use is not as part of a scaffolding system. As regards the use of the planks to cover openings, however, he agreed that such use may be part of a scaffolding system which was also used by the workers to work at height and store materials. He also explained that by the term "barricading" he was referring to the use of the planks for the purpose of barricading or fencing off an area, such as a pit or hole. He added that such use of the planks is "very minimal".
Noel Byrne
Mr Byrne told the Tribunal that he has been employed as an inspector by WorkSafe Western Australia for 10 years and he is presently the team leader of the general construction team which was formed with the specific aim of promoting compliance with the occupational safety and health legislation on construction sites and in building work. His function as team leader is to co-ordinate and monitor the investigative activities of the (approximately) 30 inspectors concerned with the construction industry. As regards his qualifications he said that he holds an Associate Diploma in Occupational Health and Safety and Certificates of Competency in, inter alia, scaffolding, rigging and crane driving.
Mr Byrne referred to the "Code of Practice for Prevention of Falls at Workplaces", dated 3 September 1997 ("the Code"), developed by the WorkSafe Western Australia Commission, an extract of which was tendered in evidence (Exhibit A7). Sub-Chapter 1.5, which is headed "Hazard Identification, Risk Assessment and Risk Control", contains (at 1.5.3) a "hierarchy or preferred order" of risk-control measures ranging from the most effective to the least effective. That "hierarchy or preferred order of control" is as follows:
"elimination – removing the hazard or hazardous work practice from the workplace. This is the most effective control measure;
substitution – substituting or replacing a hazard or hazardous work practice with a less hazardous one;
isolation – isolating or separating the hazard or hazardous work practice from people involved in the work or people in the general work areas from the hazard. This can be done by installing screens or barriers or marking off hazardous areas;
engineering control – if the hazard cannot be eliminated, substituted or isolated, an engineering control is the next preferred measure. This may include modifications to tools or equipment, providing guarding to machinery or equipment;
administrative control – includes introducing work practices that reduce the risk. This could include limiting the amount of time a person is exposed to a particular hazard; and
personal protective equipment – should be considered only when other control measures are not practicable or to increase protection."

In a witness statement, dated 26 October 1999, which was tendered in evidence (Exhibit A6), Mr Byrne stated that the use of scaffolding – which he described as "a temporary framework that is used to support workmen and materials during the erection or repair of a building" – is a method of risk control and would fall within the category of "engineering control" in WorkSafe Western Australia's "hierarchy or preferred order of control". Mr Byrne's witness statement continues:

"14.Scaffolding planks must meet certain requirements under Australian Standards. These requirements have changed over time with the focus on reducing workplace injuries increasing. Scaffolding decks are required to contain a width of specified planks for added safety. The width is greater than the width required for a person to stand and move along a deck to carry out their work. This extra width provides greater protection against falling or tripping.
15.There have been a number of modifications to scaffolding planks including a change in their end angle to incorporate a locking device to stop the scaffold twisting and the planks falling through. The modifications have been made to improve their safety function.
16.Scaffolding planks do provide access for workers working at height. However, scaffolding planks do have a safety function and can be regarded as safety equipment.
17.During my time at WorkSafe Western Australia I have seen the use of scaffolding planks increase. Scaffolding planks are now used more frequently and for a number of various applications. Scaffolding planks are also often left in place for longer periods of time, even once the access requirements of the building trades are complete. This is largely due to the Duty of Care requirements placed on employers by the legislation in providing a safe working environment for workers.
18.The application of scaffolding has changed over the years. No longer are forty-gallon drums with a plank of wood used. Scaffolding planks are now used when erecting two storey houses and repairing buildings. The scaffolding planks act as a catch deck for workers working at height. They prevent falls.
19.Scaffolding planks are also widely used as 'kick-boards'. The scaffolding planks are placed on their edge along the outside of the scaffolding deck. The use of scaffolding planks in this way prevents workers' materials from falling off the scaffolding deck. It protects workers working below. This is a common use of scaffolding planks. The use of scaffolding planks in this manner is purely to protect workers.
20.The erection of a scaffolding system is very important. If it is not erected correctly then the safety features it provides will be reduced. WorkSafe Western Australia issues Certificates of Competency in scaffolding system erection. This shows that you are adequately trained and are aware of the hazards of scaffold system erection. You can only erect a scaffolding system above four metres if you hold a Certificate of Competency.
21.In my view scaffolding planks, while they provide access, are also used for the safety of people working at heights. Scaffolding planks assist in the prevention of falls from height, and WorkSafe Western Australia recommends their use when working at height."

In his oral evidence Mr Byrne said that one of the primary roles of scaffolding is to protect workers. He also said that there are "numerous situations" where the sole purpose of scaffolding is to protect workers and to protect the general public from construction activities (Transcript, pp 19,23).
Mario Santoro
Mr Santoro told the Tribunal that he has had over 20 years experience in the building industry, for the last 2 years of which he has been employed by Modern Scaffold (a division of Seacrest Homes). He said that he is presently a sales representative with Modern Scaffold and his functions include ensuring that scaffolding at building sites complies with the safety requirements of WorkSafe. A witness statement by Mr Santoro, dated 28 October 1999, which was tendered in evidence (Exhibit A13), reads as follows:
"…
2.Over recent years, the trend for worker protection in the building industry has increased significantly. A major change in this area has been the increased use of scaffolding to ensure the safety of workers working at heights, including two storey buildings and roofing contractors.
3.Scaffold planks are an integral part of any scaffold system. For safety purposes, we usually use scaffolding 5 planks wide around our buildings. In certain cases with limited access, scaffolding may only be three planks wide.
4.Scaffold planks are also used as kick boards. These are scaffold planks placed on their sides around the edge of scaffolding to prevent materials being knocked off the scaffolding, thus protecting those working below. The only function of the kick board is as safety.
5.Scaffolding on building sites has always been used to some extent for access. There are stringent requirements to protect roof workers which includes edge protection or scaffolding erected around the perimeter of the roof. In many cases, it is either impractical or impossible to erect handrails (such as in the case of metaldeck roofing) and scaffolding must be used in this circumstance. Because the scaffolding is there, the workers may use it for access.
6.In my experience, the increased use of scaffolding and scaffolding planks to protect workers working at heights has reduced injuries from falls in the building industry.
7.This increased emphasis on safety has resulted in an increase in the use of scaffolding planks on work sites …".

In his oral evidence-in-chief Mr Santoro said that a notable development in recent times has been the use of scaffolding in the construction of single storey houses, whereas in the past such houses would be built without the use of scaffolding. He said for the last 4-5 years, because of safety requirements, in the case of a roof which is above a certain pitch scaffolding must be erected around the perimeter of the building to ensure that no one falls off the roof to the ground. He agreed that nowadays the use of scaffolding for the protection of workers is a "significant use" of scaffolding.
In cross-examination Mr Santoro agreed that, whereas in the past scaffolding may not have been used by bricklayers or in the construction of single storey houses, nowadays scaffolding is used to provide a safer means of access for workers as compared with other means of access such as ladders or 44 gallon drums.
Paul Burton
Mr Burton told the Tribunal that he has had about 20 years experience in the construction industry and holds a Diploma in Applied Science in Safety and Health. He is presently employed by John Holland Construction & Engineering Pty Ltd as the Business Improvement Manager for Western Australia and the Northern Territory. He prefaced his evidence with the statement that all views expressed by him in his evidence are his personal views and not necessarily those of his employer.
A witness statement by Mr Burton, dated 25 October 1999, which was tendered in evidence (Exhibit A14), reads as follows:
"…
2.Before being employed by John Holland I was a Safety Manager for the Leighton Contractor $90 million Wandoo contract. Prior to that I was a Safety Officer for the Master Builders Association for just over two years.
3.As the Business Improvement Manager for John Holland I focus on occupational safety and health issues, environmental issues, quality assurance and improving the way John Holland conducts its business.
4.John Holland is an Australasian company with branches in every state of Australia. John Holland operates in the construction and engineering industry. John Holland is involved in the resource sector, the building sector, civil engineering works and the fabrication of pre-cast steel.
5.John Holland uses scaffolding for civil engineering works and for work it carries out in the building and heavy industry sectors. John Holland hires a considerable amount of scaffolding to conduct its operations in these areas. Scaffolding planks are an integral part of a scaffolding system.
6.John Holland generally uses metal scaffolding planks with perforated holes to conduct its work. These metal scaffolding planks provide better grip to workers and are a consistent length. This means there is no overhang of planks.
7.In the first instance, the purpose of scaffolding was to provide access to allow employers to have work completed at height.
8.I am aware of the WorkSafe requirements in relation to preventing falls from height. John Holland complies with these requirements. John Holland places a large focus on controlling risk to prevent any injury to workers.
9.A scaffolding system provides access but it also serves as a means of risk control. A scaffolding system in an 'engineering' solution to the safety problem of working at height. When working at height, the use of a scaffolding system is preferred, rather that the use of safety harnesses, as it provides a higher level of risk control.
10.When using a scaffolding system, five to six scaffolding planks per bay are used to ensure the bay is completely filled in. Two scaffolding planks per bay would provide the same access but this would increase the risk of a worker falling from height. By using extra scaffolding planks the workers are provided with a higher level of safety. Similarly, scaffolding planks are often used to fill a void to prevent workers falling through that void.
11.Over recent years, as a Safety Officer with the Master Builders Association and as the Business Improvement Manager with John Holland, I have seen an increase in the use of scaffolding planks. There has been a significant increase in the use of scaffolding planks within the housing sector. This is largely as a result of the need to provide a safer working environment.
12.While I was employed with the Master Builders Association, there was a real push to stop workers using drums and a plank of wood, and to use a scaffolding system instead when working at height. The use of a scaffolding system has the potential to reduce the number of fall injuries, and to provide a safer 'standard' industry and practice methodology.
13.A number of large house builders committed to using scaffolding systems when working at height. For example, scaffolding systems started being used when building two-storey houses. This commitment was made to prevent falls when working at height. Scaffolding has become the preferred system for when working at height.
14.Scaffolding systems are now often left up while roof workers complete their job. The scaffolding system is not required for access for roof workers to do their job. However, it is often left up to provide a safer way of completing their job. The scaffolding system significantly reduces the capacity of a roof worker falling.
15.Scaffolding is required to be tagged under law (Occupational Safety and Health Regulations 1996). The scaffolder tags a scaffolding system to say that it complies with the law prior to it being used by worker(s). In addition, when a scaffolding system is erected that is over two metres, it must have hand railing for safe working practices.
16.Australian Standards require that kick-boards are used on scaffolding systems. Kickboards are used to prevent materials being knocked off the scaffolding deck. They protect workers working below. John Holland generally does not use scaffolding planks as kickboards but they are commonly used in this way."

In his oral evidence-in-chief, Mr Burton said that, at John Holland construction sites, scaffolding is used as a means of access and egress but is also used solely for the purpose of overhead protection. He expressed the view that, whereas in the 1980s scaffolding was regarded simply as providing a means of access to enable workers to work at height, nowadays scaffolding is regarded as providing a safe system of work at height.
Robert Paley
A witness statement by Mr Paley, dated 31 July 2000, which was tendered in evidence (Exhibit A15), reads as follows:
"1.… I have been employed by the Chamber of Commerce and Industry of Western Australia for the past six years as Advisor, Occupational Safety and Health.
2.As Advisor, Occupational Safety and Health, I am responsible to the Manager of Occupational Safety and Health. My main roles involve:
·advise members on how to manage their safety and health issues;
·provide practical solutions for health and safety risk reduction in the workplace;
·prepare safety management plans;
·on-site inspections to carry out safety audits, provide training on health and safety issues, provide advice on safety management.
3.Previous to my current position, I was involved in the mining industry as a safety and environmental officer. My positions included Safety Coordinator with Robe River Iron Associates and RGC Mineral Sands.
4.I am a qualified rigger and hold an Advanced Rigging Certificate. I also hold a wide range of technical qualifications. As both a Rigger and in my previous role I have had extensive experience on construction sites.
5.The Chamber of Commerce and Industry of Western Australia is the State's strongest and most influential business organisation with more than 6000 members.
6.As part of its service to members the Chamber of Commerce and Industry's Occupational Safety and Health Service offers a range of both on and off-site services of the type referred to above.
7.Fall prevention is a major safety issue in many workplaces. Fall prevention is covered in the Occupational Safety and Health Regulations.
8.Fall prevention covers both:
·the risk of workers falling from heights; and
·the prevention of injuries resulting from objects falling from height onto workers operating at lower levels.
9.Among the services I provide is assisting members with the risk assessment process for fall prevention. In some cases this will involve situations where WorkSafe has issued a non-compliance or prohibition notice. I look at what is practicable in each situation and where necessary provide recommendations to address the risk. The use of scaffolding is one of the risk controls outlined in the Regulations to prevent falls from height. An example of this would be an employer using scaffolding as edge protection to prevent workers operating on a roof from falling.
10.Often the most practicable way you can work safely at height is with the use of a scaffolding system. Scaffolding planks are an integral part of a scaffolding system.
11.There are various uses of scaffolding systems and scaffolding planks. The use of scaffolding has however changed over time. There is now an increased emphasis on the protection of workers. This is reflected in the more stringent requirements of the Regulations. This has resulted in the use of scaffolding having changed from being predominantly one of access to being increasingly used for the protection of workers.
12.There are many instances of scaffolding and scaffolding planks being used predominantly, if not solely, for the protection of workers. These uses include as:
·     hoarding;
·     barricades;
·     covering for openings;
·     kick boards;
·     guard rails;
·     edge protection.
13.Whilst scaffolding and scaffolding planks can be used for access, in many cases access is provided by other means such as ladders, etc. Scaffolding and scaffolding planks have a significant function in the protection of workers from falls or injuries. I regard them as safety equipment in the same way as helmets and safety harnesses. Scaffolding and scaffolding planks are another way of protecting workers.
14.Over the years there has been an increase in the use of scaffolding and scaffolding planks. This has been because of a number of factors, including:
·     employers, as part of their social responsibilities, taking an increased interest in the safety of their workers;
·     the increase in Regulations and requirements for minimising hazards and the protection of workers;
·     the high costs associated with injuries resulting from falls. Such costs include prosecutions, cost of workers compensation premiums, medical costs, damages, etc.
15.This increased emphasis on safety and fall prevention has resulted in many companies better managing their safety issues by, for example, the use of specialist safety advisors either on staff or such as those provided by the Chamber of Commerce and Industry.
16.For those in the building industry, the increased use of scaffolding to satisfy the Regulations relating to fall protection has resulted in an increased need for scaffolding and scaffolding planks and a corresponding increase in costs of providing that equipment.
17.The increased use of scaffolding can be demonstrated in that it is now often left in place for the duration of a job. For example, it will now often remain in place while roof workers complete their job. Previously the scaffolding system was taken away and roof workers used ladders or walked on the roof/roof beams to carry out their job. The scaffolding is not required for the workers to gain access however it significantly reduces the chance of a worker falling from height. It also protects those working below from any falling debris.
18.The use of scaffolding as a fall prevention device is a well established use in the construction industry."

In his oral evidence, Mr Paley elaborated on the safety uses of scaffolding and scaffolding planks listed in paragraph 12 of his witness statement. He explained that the term "hoarding" refers to the use of scaffolding to protect persons below from falling objects. He instanced the use of scaffolding as hoarding on city building construction sites to protect pedestrians, as well as on construction sites generally to protect workers. By the expression "guard rails" he was referring to the guard rails that are now required to be placed around the roof of a house under construction. As regards those various safety uses, Mr Paley said that scaffolding planks would necessarily be used for the purpose of providing hoardings, barricades, coverings for openings and kick-boards, and, in accordance with legislative safety requirements, should be used for the purpose of providing edge protection. He said that in the case of guard rails, however, scaffolding planks could, but would not necessarily, be used for that purpose.
The Relevant Legislative Framework
Section 16 of the Sales Tax Assessment Act 1992 ("the Assessment Act") sets out the general rules for taxing "assessable dealings". The expression "assessable dealing" is defined in s5 of the Assessment Act to mean "any dealing covered by Table 1" – that is, Table 1 in Schedule 1 to that Act. Table 1 sets out all the assessable dealings that can be subject to sales tax: s16(1). The list of assessable dealings set out in Table 1 includes, in the case of goods manufactured in Australia:
"wholesale sale by a person who manufactured the goods in the course of any business"

and

"retail sale by a person who manufactured the goods in the course of any business".

Section 24 of the Assessment Act provides:
"An assessable dealing is not taxable if:
(a)the goods are covered by an exemption Item that is in force at the time of the dealing; and
(b)all the requirements of that Item have been met at or before the time of the dealing."

The expression "exemption Item" is defined in s5 of the Assessment Act to mean an Item or subitem in Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1992 ("the Exemptions Act"). Section 4 of the Exemptions Act relevantly provides:

"(1)Schedule 1 has effect for the purposes of those parts of the Assessment Act that refer to exemption Items. The Schedule does not by itself have the effect of exempting an assessable dealing from sales tax.
(2)In broad terms, Schedule 1 has the following effects (through the Assessment Act):
(a)if all the requirements of an exemption Item are satisfied at or before the time of an assessable dealing, the dealing is not taxable;

…".

Schedule 1 to the Exemptions Act is headed "Exemption Items" and is divided into 15 Chapters. Chapter 1, which is headed "Goods for use in business and industry", is itself divided into 5 Sub-Chapters. Sub-Chapter 1.2, which is headed "Manufacturing and industrial etc", contains, amongst others, Item 20 which, at the relevant time, was as follows:
"Item 20: [Industrial safety equipment]
Equipment of a kind ordinarily used in the course of industrial operations to protect persons engaged in those operations, including masks, respirators, shields, goggles, visors, helmets, belts and machine guards."

Pursuant to s16(2) of the Assessment Act, if none of the exemption Items in Schedule 1 to the Exemptions Act is applicable in the case of an assessable dealing, that assessable dealing is a "taxable dealing" and sales tax is payable by the person specified in column 3 of Table 1 in Schedule 1 to the Assessment Act, at the time of the dealing as specified in column 4 of that Table. In the case of wholesale sale and retail sale of goods manufactured in Australia, the person specified in column 3 of Table 1 as the person liable to pay the tax is the "seller", and the time of the dealing, as specified in column 4 of Table 1, is the "time of sale".
The Issue
The decisive issue in the present case is whether the K-30 planks and the H-24 planks ("the scaffold planks"), the subject of wholesale sales and retail sales by the applicant during the relevant period, fall within Item 20 in Schedule 1 to the Exemptions Act. It is common ground that, if Item 20 is not applicable in the circumstances of this case, the abovementioned wholesale sales and retail sales of the scaffold planks are "taxable dealings" and the applicant is liable to pay sales tax in respect thereof, pursuant to s16 of the Assessment Act.
The Submissions
It is common ground that the scaffold planks and scaffolding systems constitute "equipment of a kind ordinarily used in the course of industrial operations", within the meaning of Item 20 in Schedule 1 to the Exemptions Act. The matter in dispute is whether that equipment (namely, the scaffold planks) is equipment "of a kind ordinarily used … to protect persons engaged in those operations", within the meaning of Item 20.
The Applicant's Submissions
The submissions made by Mr Ince may be summarised as follows:
·     Item 20, being an exemption Item created for the purpose of promoting or encouraging safety in industrial operations, should be liberally construed: Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450 at 457; 93 ATC 4703 at 4708-4709 (per French J).
·     Item 20 requires merely that the equipment be of a kind "ordinarily" – in the sense of normally, commonly or regularly – used in the course of industrial operations to protect persons engaged in those operations. In that respect Item 20 is broader than its predecessor (namely, Item 113G in the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935) which required that the equipment be of a kind used "exclusively, or primarily and principally," in the course of industrial operations to protect persons engaged in those operations. GKN Australia Ltd v Federal Commissioner of Taxation 94 ATC 4417 – in which it was held that various component parts of scaffolding systems did not fall within Item 113G - is, therefore, distinguishable from the present case.
·     In order for the scaffold planks to fall within Item 20 it is sufficient if they fall within a class or genus of equipment which has an "appreciable or significant" ordinary or common use for the purpose of protecting workers in industrial operations. It matters not that they may also have other ordinary or common concurrent uses or even another predominant concurrent use: Deputy Commissioner of Taxation v Stewart (1984) 154 CLR 385 at 390-391, 397-398; 84 ATC 4146 at 4149, 4153; Hygienic Lily Ltd v Deputy Commissioner of Taxation (1987) 13 FCR 396; 87 ATC 4327.
·     The appropriate class or genus of equipment in this case is scaffold planks that satisfy AS 1577-1993. The evidence in this case establishes that equipment falling within that class or genus – as do the scaffold planks – is ordinarily or commonly, and not merely incidentally, used solely to protect workers engaged in industrial operations in various ways including:
·providing protection from falling objects (eg kick-boards, edge protection, hoarding);
·providing protection from falling from height or into voids (eg covering openings, barricading);
and therefore falls within Item 20. The fact that such equipment is also ordinarily used to provide access to persons working at height in industrial operations does not take it outside the ambit of Item 20. Indeed, even if such equipment were used predominantly to provide such access – which was not conceded – it would still qualify for the Item 20 exemption by reason of its abovementioned ordinary or common safety uses.
·Item 20 should not be construed having regard to the specific examples of equipment mentioned therein, nor should its ambit be confined to equipment which is designed and used specifically for the purpose of providing safety protection: Mayne Nickless Ltd v Federal Commissioner of Taxation 91 ATC 4621 at 4623; Airovent Pty Ltd v Federal Commissioner of Taxation 98 ATC 4800 at 4807.
·Even if it be correct to say that Item 20 does not extend to equipment "which, whilst it has an important protective function, at the same time plays a central role in the conduct of the industrial operations in respect of which the protection is given" (Mayne Nickless, at 4633), it is not correct to describe the scaffolding planks as central to the industrial operation. Rather, they form an essential part of scaffolding systems commonly used to protect workers from, inter alia, falling from height or into voids and from being hit by falling objects. In many cases the scaffold planks may, as a "by-product", also provide easier means access for those workers, but that does not detract from their significant use for protecting the workers.
·The intention that scaffolding not fall within Item 20 should not be attributed to Parliament by reason of the express exclusion of scaffolding from Item 39 ("Materials for repair or construction of buildings etc") and from Item 49 ("Metal materials"). The specific exclusion of particular goods from one exemption Item does not necessarily preclude those goods from falling within another exemption Item: The New South Wales Cancer Council v Federal Commissioner of Taxation 99 ATC 4427 at 4435. Furthermore, the recent amendment to Item 20 – whereby the word "mainly" was substituted for the word "ordinarily" (see Sales Tax (General)(Industrial Safety Equipment) Act 2000 (No 98, 2000), s6 and Sched 1) – clearly indicates that Item 20, as formerly worded, covered a wider range of equipment.

The Respondent's Submissions

The submissions made by Mr Corboy may be summarised as follows:
·Parliament's intention in enacting the Exemptions Act was that scaffolding components would continue to be subject to sales tax and would not be covered by any exemption Item, and that intention is made manifestly clear in the Explanatory Memorandum relating to, inter alia, the Sales Tax (Exemptions and Classifications) Modification (General) Bill 1995, read with the Explanatory Memorandum relating to the Sales Tax (Exemptions and Classifications) Bill 1992. The Tribunal should give effect to Parliament's intention, pursuant to ss 15AA and 15AB of the Acts Interpretation Act 1901, in determining the ambit of Item 20 in Schedule 1 to the Exemptions Act.
·The Sales Tax (Exemptions and Classifications) Act 1995 amended Schedule 1 to the Exemptions Act by specifically excluding "scaffolding" from exemption Items 39 and 49 in that Schedule – the only exemption Items which it was thought might otherwise cover scaffolding. To exempt scaffolding under Item 20 would, therefore, create an internal inconsistency amongst the exemption Items in Schedule 1 to the Exemptions Act and lead to a manifestly absurd result that Parliament cannot have intended: Reece Pty Ltd v Federal Commissioner of Taxation 97 ATC 5005 at 5013.
·The wording of Item 20 is to be construed, and its ambit determined, having regard to the 8 examples of equipment specifically mentioned therein. Although those examples are not exhaustive of the ambit of Item 20, they nevertheless "illuminate" the meaning of the preceding general words in that Item and also, therefore, its ambit: Mayne Nickless Ltd v Federal Commissioner of Taxation 91 ATC 4621 at 4623, 4633; Airovent Pty Ltd v Federal Commissioner of Taxation 98 ATC 4800 at 4808.
·The 8 specified examples of equipment in Item 20 have a common feature – namely, they are all pieces of equipment which are designed and used specifically for the purpose of providing safety protection, and do not otherwise form part of, and are not otherwise necessary for, the conduct of an industrial operation; whereas scaffolding systems – the relevant genus or class of equipment for the purpose of applying Item 20 in the present case – do form an essential part of, and play a central role in, any industrial operation in which they are used in that they constitute the very means by which the industrial operation will be conducted at height, and any safety features or safety functions thereof are merely incidental or coincidental. A scaffolding system, therefore, does not fall within the genus or class of equipment defined in Item 20.
·Item 20, properly construed, only covers equipment whose ordinary use is to protect persons engaged in industrial operations – that is, equipment whose essential character is that of industrial safety equipment. Item 20 does not cover equipment whose ordinary use or essential character is other than that of industrial safety equipment even where that equipment co-incidentally performs a safety function or incorporates safety features – such as, for example, a hammer with a non-slip handle, or pliers with rubber grips. In the case of such equipment the relevant safety feature says nothing about the ordinary use or essential character of the equipment.
·The increasing use of scaffolding, by reason of occupational safety and health legislation, merely reflects a growing recognition of the fact that scaffolding provides a safer means of access in industrial operations than other means of access such as ladders and harnesses. That trend, however, has not altered the essential character or ordinary use of scaffolding, which remains that of a working platform for providing access at height in industrial operations. Likewise, the safety features and functions of scaffolding, and the uses of the scaffold planks for safety purposes (for example, as kick-boards, edge protection, hoardings, barricades and void coverings), have not altered their abovementioned essential character or ordinary use. Those features, functions and uses are, instead, merely incidental to that essential character or ordinary use and are not in themselves sufficient to bring the scaffold planks within the class of industrial safety equipment covered by Item 20.

Consideration of Submissions and Findings on Material Questions of Fact
The Interpretation of Item 20

The following propositions in relation to the interpretation and application of Item 20 in Schedule 1 to the Exemptions Act are established by the authorities:

The language of Item 20 should be construed in accordance with its ordinary meaning or popular usage: Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450 at 464; 93 ATC 4703 at 4714; Telstra Corporation Ltd v Commissioner of Taxation (1996) 68 FCR 566 at 572; 96 ATC 4805 at 4809; Airovent Pty Ltd v Federal Commissioner of Taxation 98 ATC 4800 at 4803.
Item 20 is concerned with equipment "of a kind ordinarily used in the course of industrial operations to protect persons engaged in those operations". In determining whether Item 20 applies in a particular case, the question is not whether the relevant equipment itself is ordinarily used in the manner, and for the purpose, specified in Item 20, but rather whether that equipment is "equipment of a kind" ordinarily so used: Diethelm Manufacturing (above) at FCR 470; ATC 4718; Airovent (above) at 4803.
The expression "ordinarily used" in Item 20 qualifies both the phrase "in the course of industrial operations" and the phrase "to protect persons engaged in those operations" in that Item: Mayne Nickless Ltd v Federal Commissioner of Taxation 91 ATC 4621; Airovent (above) at 4804.
Item 20 is not confined to the 8 kinds of equipment listed therein. That list of equipment is merely an inclusive, not an exhaustive, statement of the kinds of equipment falling within Item 20. The 8 listed kinds of equipment are to be regarded as more specific examples of the broader class of equipment which is covered by Item 20: Mayne Nickless (above) at 4623, 4632-4633; Airovent (above) at 4806-4808.

The ordinary meanings of the key expressions in Item 20, as relevantly defined in The Macquarie Dictionary (3rd ed), are as follows:
"equipment" means "anything used in or provided for equipping"; "equipping" means "furnishing or providing with whatever is needed for services or for any undertaking";
"ordinarily" means "in ordinary cases; usually; in the ordinary way"; "ordinary" means "such as is commonly met with; of the usual kind; … customary; normal";
"industrial operations" include activities performed in the course of trade, manufacture or productive labour;
"protect" means "cover or shield from injury or danger".

The Tribunal has no difficulty in accepting the agreement of the parties that the scaffold planks and scaffolding systems constitute "equipment of a kind ordinarily used in the course of industrial operations", as that phrase is commonly understood, for the purposes of Item 20 in Schedule 1 to the Exemptions Act, and the Tribunal so finds. The critical issue in this case is, of course, whether the scaffold planks also constitute "equipment of a kind or ordinarily used … to protect persons engaged in [industrial] operations", within the meaning of Item 20.
In addressing that issue it is first necessary, as Hill J stated in Commissioner of Taxation v Chubb Australia Ltd (1995) 56 FCR 557 at 569-570; 95 ATC 4186 at 4195, to determine "the kind of goods to which the particular goods belong" – in other words, to define the "genus" to which those goods belong. In the present case the parties sought to define the genus to which the scaffold planks belong somewhat differently: Mr Ince (for the applicant) submitted that the appropriate genus is "scaffold planks that satisfy AS 1577-1993", whereas Mr Corboy (for the respondent) sought to define the genus more generally as "scaffolding systems". In the Tribunal's opinion the appropriate genus in the present case is more precisely defined as "metal scaffold planks designed to meet Australian Standard AS 1577-1993".
Having defined the genus, the next question is whether equipment of that genus or kind is "ordinarily used … to protect persons engaged in [industrial] operations". In Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450; 93 ATC 4703 the Full Court of the Federal Court of Australia considered the application of Item 1(a) in the Third Schedule to the Sales Tax (Exemptions and Classifications) Act 1935 which referred to "(g)oods … of a kind ordinarily used for household purposes, namely – (a) furniture …". The question for determination was whether certain chairs sold by the appellant fell within Item 1(a). French J said (at FCR 460; ATC 4711):
"The question whether goods are 'ordinarily used for household purposes' does not depend critically upon the use to which they are in fact put but an assessment of their 'essential character'. That assessment does not involve fine semantic distinctions but a judgment which pays regard to the commercial realities of their manufacture and sale."

His Honour then referred to various authorities, including Thomson Australian Holdings Pty Ltd v Commissioner of Taxation (1998) 20 FCR 85; 88 ATC 4916 in which Davies J (at FCR 86; ATC 4917) described the essential character of goods as "what essentially the goods are, not some characteristic that the goods might have" and added:

Essential character derives from the basic nature of the goods, from what they are, though composition, function and other factors necessarily play a part."

French J came to the following conclusion (at FCR 465; ATC 4714):

"In the present case the essential character of the chairs in issue was correctly identified as office furniture. That characterisation reflects the market in which the chairs were manufactured and sold having regard, inter alia, to their quality, cost, design, and intended and actual purchasers. While they were chairs sometimes used for household purposes, and performing physical functions similar to such chairs, they were not of a kind ordinarily so used. Having regard to the purpose of Item 1 and applying the canons of popular usage and objective characterisation with due regard to the market purposes to which I have referred, the chairs in question fell outside Item 1."

In the same case, Hill J (with whom Whitlam J agreed) said (at FCR 470-471; ATC 4718-4719):

"Because sales tax is a tax ordinarily imposed upon the last wholesale sale in the course of the flow of commerce between manufacture (or importation) and consumption, it may be said that generally the task of classification to determine whether particular goods fall within a particular Item is one which looks at the essential character of the goods themselves rather than the purpose of the purchaser or the proposed destination of the goods in the mind of the manufacturer or importer: Deputy Commissioner of Taxation (Cth) v Lincoln Industrial Cleaners Pty Ltd [1975] 2 NSWLR 499. The reason why the Court is impelled to search for objective criteria to be found within the goods themselves, rather than subjective purpose, is discussed by Griffith CJ and Barton J in their dissenting judgments in Chandler v Collector of Customs (1907) 4 CLR 1719, a case dealing with the related problem of classification in customs legislation.
Phrases such as 'essential character' have sometimes been used to express this search for objective criteria, as is illustrated by the judgment of French J which I have had the privilege of reading. And there may be cases where the search for the essential character of an item may be useful in determining whether particular goods constitute advertising matter or a catalogue: cf Thomson Australia Holdings Pty Ltd v Commissioner of Taxation (1988) 20 FCR 85. In other cases the phrase 'essential character' may be thought itself to suffer some lack of precision.
In each case, however, the precise language of the item must be borne in mind. If the item, as here, calls for a determination of whether the goods themselves are of a particular kind, that issue must, no doubt, be determined objectively but, with respect to what French J has said, is little assisted by a consideration of the particular 'realities of their manufacture and sale'.
Once it is appreciated that the question for issue is concerned with the kind of goods in question rather than the actual goods, it is clear that evidence such as was given in the case as to the market into which the actual goods are sold will be of little relevance. The fact that a high proportion of the chairs in question were bought for office use would tell little as to the use of the kind of goods, the genus, of which the particular goods in question form a part. Similarly, it seems to me that a finding that the goods are of high quality making them too expensive for general sale for use in households will be of little or no significance. This will be particularly so if the class of goods in question is capable of encompassing goods of high quality as well as goods of lesser quality."
(original emphasis)

Later his Honour said (at FCR 472; ATC 4720):

"… I think the proper approach is to ask, in respect of the goods in question, whether they are of a kind ordinarily used for household purposes. This approach requires consideration of each of the particular chairs in question. Of some of them the question may readily be answered in the negative. A high back executive office chair is clearly not a chair of a kind ordinarily used for household purposes. Rather , it is of a kind ordinarily used for office purposes. The question, however, becomes more complicated with smaller chairs of a kind which may, on the one hand, be used in an office and on the other hand, are, in accordance with the evidence, sold by retail outlets such as Ikea, Freedom Furniture and Harvey Norman for what are clearly household purposes. The onus lies upon the appellant to show, in respect of each of the items of goods, that they are of a kind ordinarily used for household purposes."

His Honour then summarised the propositions established by the evidence in that case and concluded (at FCR 473; ATC 4720):

"The evidence does not, it seems to me, permit a conclusion on the balance of probabilities that any of the types of chairs sold by Diethelm is of a kind ordinarily used for household purposes. That may not be surprising, as the case was apparently run on the basis that either all of the chairs were within the Item or none were. It is quite possible, given that some of the chairs in question are of the same kind as those sold by Ikea and Freedom Furniture, that if it had adduced further evidence the appellant might have established that some of the chairs at issue in the present proceedings were of a kind ordinarily used for household purposes. However, Diethelm had the burden of proof. To the extent that it has not established on the evidence that a particular chair was of a kind ordinarily used for household purposes, it must fail."

Having regard to the submissions presented, and the authorities cited, by the parties in this case, it seems to the Tribunal that the ambit of Item 20 in Schedule 1 to the Exemptions Act and, in particular, its application in the circumstances of this case, are attended by some uncertainty. On the one hand, it is open to the Tribunal to find, on the whole of the material before it, that, as submitted by the applicant, the genus or class of equipment into which the scaffold planks fall – namely, metal scaffold planks designed to meet Australian Standard AS 1577-1993 – is nowadays, and was during the relevant period, ordinarily – in the sense of commonly or usually or customarily – used not only to provide access at height, in the form of a working platform as an integral part of a scaffolding system, to persons engaged in industrial operations, but also to protect persons engaged in industrial operations (for example, as kick-boards, edge protection, hoardings, barricades, void coverings), and, accordingly, falls within the terms of Item 20. On the other hand, it is also, in the Tribunal's opinion, open to it to find, in accordance with the respondent's submissions, that the ambit of Item 20 should be confined, having regard to the 8 examples of industrial safety equipment specifically listed therein, to the kind of equipment whose essential character is that of industrial safety equipment, and that, accordingly, the scaffold planks, whose essential character is, instead, that of an integral part of scaffolding systems providing access at height in industrial operations, do not fall within Item 20, notwithstanding any safety function or purpose that they may co-incidentally perform or serve.
In these circumstances the Tribunal is required to adopt a construction of Item 20 that would promote the purpose or object underlying that Item, rather than a construction that would not promote that purpose or object: s15AA of the Acts Interpretation Act 1901. Furthermore, given the abovementioned uncertainty or obscurity regarding the meaning and ambit of Item 20, it is appropriate, in the Tribunal's opinion, for it to have regard, pursuant to s15AB(1) of the Acts Interpretation Act 1901, to "extrinsic material" which is capable of establishing the purpose or object underlying Item 20 and thereby assisting in the ascertainment of its meaning. In this connection the Tribunal notes that judges of the Federal Court of Australia have, in the past, had occasion to refer to extrinsic material for the purpose of ascertaining the meaning of exemption Items in sales tax legislation: see, for example, Mayne Nickless (above) at 4629 (Ashley J), cf at 4624 (Fullagar J); Diethelm Manufacturing (above) at FCR 456, 464; ATC 4708, 4714 (French J).
Section 15AB of the Acts Interpretation Act 1901 relevantly provides:
"(1) Subject to subsection (3), in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:
(a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
(b) to determine the meaning of the provision when:
(i)the provision is ambiguous or obscure; or
(ii)the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable.
(2)Without limiting the generality of subsection (1), the material that may be considered in accordance with that subsection in the interpretation of a provision of an Act includes:
…
(e)any explanatory memorandum relating to the Bill containing the provision, or any other relevant document, that was laid before, or furnished to the members of, either House of the Parliament by a Minister before the time when the provision was enacted;
(f)the speech made to a House of the Parliament by a Minister on the occasion of the moving by that Minister of a motion that the Bill containing the provision be read a second time in that House;
…
(3)In determining whether consideration should be given to any material in accordance with subsection (1), or in considering the weight to be given to any such material, regard shall be had, in addition to any other relevant matters, to:
(a) the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; and
(b) the need to avoid prolonging legal or other proceedings without compensating advantage."

Mr Corboy (for the respondent) referred the Tribunal to the Explanatory Memorandum relating to, inter alia, the Sales Tax (Exemptions and Classifications) Modification (General) Bill 1995 ("the 1995 EM") which relevantly states:
"Outline of the sales tax legislation package for the 1995-96 Budget
The changes to the sales tax law announced in the 1995-96 Budget are contained in four separate Bills.
Taxation Laws Amendment (Budget Measures) Bill 1995
…
Sales Tax (Exemptions and Classifications) Modification (Excise) Bill 1995
Sales Tax (Exemptions and Classifications) Modification (Customs) Bill 1995
Sales Tax (Exemptions and Classifications) Modification (General) Bill 1995
These Bills will modify the operation of the Sales Tax (Exemptions and Classifications) Act 1992 (E&C Act), as modified by any other Act, to the extent necessary to give effect to the changes briefly described below:

scaffolding, wall and floor safes and racking and shelving systems excluded from exemption;
…
General outline and financial impact
…
Scaffolding, racking and shelving and wall and floor safes
Modifies the sales tax law to ensure that sales tax is paid on scaffolding components, wall and floor safes and racking and shelving systems. Recent court decisions have overturned or put in doubt the long standing treatment of these items.
…
Chapter 4: Scaffolding, racking and shelving and wall and floor safes
Overview
4.1Schedule 1 to the Bills will modify the sales tax law to ensure that sales tax is paid on scaffolding components, wall and floor safes and racking and shelving systems.
Summary of the modifications
Purpose of the modifications
4.2The modifications will give effect to the longstanding policy on the treatment of scaffolding components, wall and floor safes and shelving systems.
Date of effect
4.3These modifications will apply to dealings with goods after 7.30 pm eastern standard time on 9 May 1995. [Clause 5]
Background to the legislation
4.4A wide range of building materials are currently exempt from sales tax, under Items 39 to 49 of Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1992 (E&C Act). Item 39 provides exemption for certain goods of a kind ordinarily used as raw materials in the construction or repair of buildings or other structures attached to land.
4.5In recent court cases, it has been held that scaffolding components and wall and floor safes are exempt, because they consist of exempt building materials. These decisions have also put in doubt the treatment of racking and shelving systems. The decisions are at odds with the long standing treatment of these goods, which can be identified as goods with their own distinct character.
Explanation of the modifications
4.6Scaffolding, wall and floor safes, racking and shelving systems, and components, fittings, accessories and attachments for these goods, will be excluded from the exemption by these amendments. This will be achieved by specifically excluding them from the two exemption Items which could apply to these goods, that is, Items 39 and 49 of the E&C Act. [Items 1, 2, 3 and 4 of Schedule 1]
4.7The rate of tax applicable to scaffolding, wall and floor safes, racking and shelving systems, and components, fittings and accessories and attachments for these goods, will then generally be taxed at 21 per cent, unless the goods can be classified under Item 1 of Schedule 2 as goods of a kind ordinarily used for household purposes.
…".

The three sales tax bills referred to in the 1995 EM were subsequently enacted (see Acts Nos 91-93 of 1995), thereby amending Items 39 and 49 in Schedule 1 to the Exemptions Act by expressly excluding, inter alia, "scaffolding" from each of those exemptions Items, with effect from 9 May 1995.

Mr Corboy also referred the Tribunal to the Explanatory Memorandum relating to the Sales Tax (Exemptions and Classifications) Bill 1992 ("the 1992 EM"). That Bill was, of course, subsequently enacted as the Exemptions Act. Before referring in detail to the relevant contents of the 1992 EM, the Tribunal will first quote a relevant extract from the Second Reading Speech made to the House of Representatives by the Minister assisting the Treasurer in relation to the abovementioned Bill ("the 1992 Second Reading Speech"). That extract is as follows:
"…
The Sales Tax (Exemptions and Classifications) Bill will identify those goods which will be exempt from sales tax, either absolutely or in certain circumstances. It will also classify the remaining goods for the purpose of determining the rate of sales tax to be paid on them.
The Bill will contain guidelines clarifying the circumstances in which exemptions may be claimed to make it easier for persons to decide if they are entitled to claim exemption. The Bill will require persons claiming exemption to intend to use the goods in circumstances for a minimum period.
The Bill will also require goods generally to be used for more than 50% in exempt circumstances in order for exemption to apply. Other goods will be exempt if they are for use exclusively in a stipulated way. Some goods will be exempt if they are for use to a sufficient extent in a specified way.
There will be a further requirement that, apart from leases, the person who claims the benefit of an exemption will be the person who will have to actually use the goods in the exempt way.
Another change which will make the application of the sales tax laws more certain is the use of standard terminology. In the existing law, different terms with similar or overlapping meanings are used to describe similar concepts. In the new law, in keeping with the policy of plain English drafting, key concepts which recur in descriptions of goods will be expressed in uniform or standard terminology each time those particular concepts are referred to.
Although the scope of existing exemptions and classifications will be preserved as nearly as possible, the adoption of standard terminology will result in some small change to some items. These changes are explained in detail in the Explanatory Memorandum circulated with this Bill.
…".

The 1992 EM relevantly states:

"…
Chapter 1 General outline and financial impact
Main Features of Bill
The main purposes of the Exemptions and Classifications Bill will be:-

to identify goods which are exempt from sales tax, either unconditionally or in particular circumstances; and
to classify other goods for the purpose of determining the rate of sales tax to be imposed on those goods.
The Exemptions and Classifications Bill will replace the Sales Tax (Exemptions and Classifications) Act 1935 but not repeal it. Although the scope of existing exemptions and classifications for sales tax purposes will be preserved as nearly as possible, there are some areas of change.
…
Summary of Main Changes
The main changes to the existing law proposed by the Bill are summarised below. Where relevant, a statement of the particular revenue impact of the change has been included.
Changes of general application
Changes in Structure and groupings of Schedule Items
Change: The goods covered by Items in the Schedules in the new law will be described in simpler language. Some items will be omitted and replaced with new or re-structured Items which are easier to read and cover the same goods. The order in which the Items appear will be changed, so that similar kinds of goods will be grouped more closely together.
Financial impact: Nil.
…
Chapter 4
Standard expressions of general application
A. Introduction
4.1This chapter discusses certain standard expressions which will be used in the Schedules to the Bill. Each of these expressions will have the same meaning each time it appears. This chapter also discusses some of the notations found throughout the Schedules.
4.2In the existing Sales Tax (Exemptions and Classifications) Act 1935, similar concepts are expressed in different ways in different items. This has led to confusion and difficulties in interpretation. To overcome this problem, standard expressions will be adopted in the new law to replace a variety of the existing phrases. Each standard expression will represent a particular concept. It will not be possible always to use the standard expressions, because of the vast variety of situations covered by the Schedules, but clarity and certainty will be promoted by using standard expressions wherever possible. Inevitably, this will mean that the treatment of goods under the proposed legislation will change, but most of the changes will be minor.
B.Explanation and Commentary
…
Of a kind ordinarily used
4.21Some goods will be exempted, or classified at a certain rate, because they are goods of a kind ordinarily used in a particular way. This description envisages a settled or common use of goods. Goods which are ordinarily used in more than one way can qualify for exemption, or be classified at a certain rate, if one of the settled or common uses of the goods falls within the description of 'goods of a kind ordinarily used' in a particular way. In measuring ordinary use, it is the actual ordinary use of the goods by users or buyers of the goods, as opposed to the ordinary use contemplated by manufacturers or vendors, which will determine if goods fall within the description of goods of a kind ordinarily used in a particular way.
Example: There is an exemption for goods of a kind ordinarily used for repairing footwear. If there are goods which are of a kind ordinarily used in repairing footwear, i.e. the goods are commonly used for that purpose, then the goods will be exempt even though they can also be used for some other purpose.
Note 1:In Schedule 1, the standard expression goods of a kind ordinarily used will indicate always exempt goods.
Note 2:The term goods of a kind ordinarily used will be used in the new law in place of references in the existing law to "of a kind used", "of a kind ordinarily used" or "of a kind used exclusively or primarily and principally".
…
Chapter 6Schedule 1 – Goods for use in business or industry
Introduction
The following chapters contain details of the goods included in the Schedules to the Exemptions and Classifications Bill. While the goods listed will generally match descriptions of goods contained in the existing law, there will be some key differences. The major difference will be that the order of Items will be changed, particularly in Schedule 1.
…
Item 20 – Industrial safety equipment
General description: Equipment of a kind ordinarily used in the course of industrial operations to protect persons engaged in those operations.
Note: Parts will also be available.
Change: No substantive change. The existing Item covers equipment of a kind used exclusively, or primarily and principally to protect people. Wherever these words appear they will be replaced in the new law with of a kind ordinarily used.
Existing Item: 113G.
Links to other Items: None.
…".
(original emphasis)

It emerges clearly from the 1992 EM that the purpose or object underlying Item 20 in Schedule 1 to the Exemptions Act was that its substantive operation would be the same as that of the existing equivalent exemption Item – namely, Item 113G in the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935. The change in the language of Item 20, as compared with its predecessor, Item 113G, was made merely as a matter of form with a view to introducing "uniform or standard terminology" in exemption Items in accordance with the policy of plain English drafting and in order to promote "clarity and certainty": see the 1992 Second Reading Speech and the 1992 EM set out in paragraph 37 above.
Item 113G in the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935 relevantly provided as follows:
"ITEM 113G (1) Equipment of a kind used exclusively, or primarily and principally, in the course of industrial operations to protect persons engaged in those operations, including masks, respirators, shields, goggles, vizors, helmets, belts and machine guards".

In GKN Australia Ltd v Federal Commissioner of Taxation 94 ATC 4417 the Federal Court of Australia (Foster J) held that scaffolding components did not fall within Item 113G on the ground that their "main role" – that is, their "primary and principal role" – was "to play an integral part in the structure of the scaffolding for use in building operations", and their contribution to safety, although important, was "properly to be seen as incidental" (at 4421). The Court went on the hold, however, that certain of the scaffolding components fell within sub-items 82A(1) (piping or tubing), 82A(2) (fittings for piping or tubing), and 86(1) (metal materials) in Division XII of the First Schedule, which was headed "Building materials". The Tribunal notes that sub-items 82A(1) and 82A(2) are included amongst the predecessors of Item 39 in Schedule 1 to the Exemptions Act, and sub-item 86(1) is the predecessor of Item 49 in that Schedule.

As previously indicated (see paragraph 36 above), Items 39 and 49 in Schedule 1 to the Exemptions Act were amended by the Sales Tax (Exemptions and Classifications) Modification (General) Act 1995, so as expressly to exclude "scaffolding" from each of those exemption Items, with effect from 9 May 1995. In explaining those amendments the 1995 EM referred, in sub-Chapter 4.5, to "recent court cases" which had held that, inter alia, scaffolding components are exempt from sales tax because they consist of exempt building materials and went on to state:
"The decisions are at odds with the long standing treatment of these goods, which can be identified as goods with their own distinct character".

The Tribunal assumes that the abovementioned "recent court cases" and "decisions" include GKN Australia (above). Sub-Chapters 4.1 and 4.2 of the 1995 EM make it clear that the purpose of the abovementioned amendments was "to ensure that sales tax is paid on scaffolding components" and thereby "give effect to the longstanding policy on the treatment of scaffolding components". The amendments themselves were explained in sub-Chapter 4.6 as follows:

"Scaffolding, wall and floor safes, racking and shelving systems, and components, fittings, accessories and attachments for these goods, will be excluded from exemption by these amendments. This will be achieved by specifically excluding them from the two exemption Items which could apply to these goods, that is, Items 39 and 49 …".
[emphasis added]
The inferences which, in the Tribunal's opinion, are necessarily to be drawn from the abovementioned provisions of the 1995 EM are that:

the "longstanding policy" referred to was that scaffolding and scaffolding components were to be subject to sales tax;
that "longstanding policy" pre-dated the GKN Australia Case;
Item 20 was not intended to cover scaffolding and scaffolding components, notwithstanding the change in the wording of Item 20 as compared with its predecessor, Item 113G.

Having regard to the relevant contents of the 1992 Second Reading Speech, the 1992 EM and the 1995 EM, the Tribunal is satisfied that the purpose or object underlying the enactment of Item 20 in Schedule 1 to the Exemptions Act was that the existing substantive position, whereby scaffolding and scaffolding components were subject to sales tax, would be maintained and not be changed, and that, accordingly, Item 20 would not cover scaffolding and scaffolding components.
The Tribunal would add, however, that, although, as appears from the 1992 EM, the purpose of object underlying Item 20 was not to effect any substantive change, as compared with the substantive operation of its predecessor, Item 113G, the substitution of the phrase "ordinarily used" (in Item 20) for the phrase "used exclusively, or primarily and principally" (in Item 113G) was not particularly apt to give effect to that purpose or object: see, for example, Airovent (above) at 4803-4804, 4808. Furthermore, there is an apparent internal inconsistency in the 1992 EM itself in that, whereas it states that the substitution of the phrase "ordinarily used" (in Item 20) for the phrase "used exclusively, or primarily and principally" (in Item 113G) involves no substantive change, it also assumes (at sub-Chapter 4.21) that goods may be "ordinarily used in more than one way". Nevertheless, the fact remains that the purpose or object underlying Item 20 in Schedule 1 to the Exemptions Act was such that that exemption Item would not cover scaffolding and scaffolding components.
It remains for the Tribunal, in accordance with s15AA of the Acts Interpretation Act 1901, to arrive at a construction of Item 20 that would promote, rather than a construction that would not promote, that purpose or object. In these circumstances the appropriate construction of Item 20 is, in the Tribunal's opinion, a construction similar to that advanced by Mr Corboy (for the respondent) – namely, that Item 20 only covers kinds of equipment whose "essential character" is that of industrial safety equipment and whose ordinary or customary use is, consistently with its "essential character", to protect persons engaged in industrial operations; Item 20 does not cover kinds of equipment whose "essential character" and ordinary or customary use are other than that of industrial safety equipment even where such equipment coincidentally performs a safety function or incorporates safety features. So construed, Item 20 does not cover scaffolding and scaffolding components – such as the scaffold planks – because they comprise equipment whose essential character and ordinary or customary use remain that of a means of access at height involving a working platform for persons engaged in industrial operations, notwithstanding any safety features they may coincidentally possess or any safety purposes or functions they may coincidentally serve or perform.
Finally, the Tribunal notes that, in arriving at the abovementioned construction of Item 20 in Schedule 1 to the Exemptions Act, it has had regard, not only to the 1992 Second Reading Speech and the 1992 EM, but also to the 1995 EM. In the Tribunal's opinion that was appropriate in this case. Although the list of categories of extrinsic material set out in s15AB(2) of the Acts Interpretation Act 1901 refers, in para (e), to "any explanatory memorandum relating to the Bill containing the provision … that was laid before … either House of the Parliament by a Minister before the time when the provision was enacted" (emphasis added), that list is inclusive, and not exhaustive, and, furthermore, subs (2) of s15AB is expressed not to limit the generality of subs (1) of that section. Subsection (1) of s15AB confers a broad discretion to give consideration to any extrinsic material which is "capable of assisting in the ascertainment of the meaning" of the relevant statutory provision in the circumstances specified in paras (a) and (b) of that subsection. It is apparent from the foregoing paragraphs in these reasons that the Tribunal regards the 1995 EM as of assistance in resolving the obscurity or uncertainty, and ascertaining the true meaning, of Item 20.
Conclusion
The Tribunal concludes, therefore, that the scaffold planks do not fall within Item 20 in Schedule 1 to the Exemptions Act and that, accordingly, the wholesale sales and retail sales of the scaffold planks by the applicant in the relevant period were "taxable dealings" and the applicant is liable to pay sales tax in respect of those "taxable dealings", pursuant to s16 of the Assessment Act. It follows that the objection decision, dated 29 March 1999, made on behalf of the respondent in this matter was correct.
Decision
For the above reasons the decision under review, being the objection decision dated 29 March 1999, is affirmed.
I certify that the 46 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor S D Hotop, Senior Member
Mr R D Fayle, Senior Member
Signed:
..................................(sgd S Railton)..................................
Associate
Dates of Hearing   10, 11 August 2000
Date of Decision  19 January 2001
Counsel for the Applicant         Mr A Ince
Solicitor for the Applicant
Counsel for the Respondent    Mr M Corboy
Solicitor for the Respondent    Australian Government Solicitor