Commissioner of Taxation v Clean Investments Pty Ltd [2000] FCA 569 (17 April 2000)

Last Updated: 8 May 2000

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Clean Investments Pty Ltd [2000] FCA 569

SALES TAX - exemptions and classifications - application for refund of sales tax paid in respect of washing machines and dryers - appeals from decision of the Administrative Appeals Tribunal setting aside objection decisions of the Commissioner refusing refund - whether goods were "of a kind ordinarily used for household purposes" within meaning of Sales Tax (Exemptions and Classifications) Act 1935 (Cth), Sch 3, item 1(f) and Sales Tax (Exemptions and Classifications) Act 1992 (Cth), Sch 2, item 1(1)(i) - whether coin operated machines are goods of a kind ordinarily used for household purposes - whether machines having a dry linen capacity equal to, or greater than, 10 kg are goods of a kind ordinarily used for household purposes - whether there must be some nexus between the location of the goods and the goods themselves

WORDS & PHRASES - "goods of a kind ordinarily used for household purposes"

Administrative Appeals Tribunal Act 1975 (Cth), s 44

Sales Tax (Exemptions and Classifications) Act 1935 (Cth), Sch 3: items 1(f) & 2

Sales Tax (Exemptions and Classifications) Act 1992 (Cth), Sch 2: items 1(1)(i) & 1(2)

Deputy Commissioner of Taxation v Stewart [1984] HCA 11; (1984) 154 CLR 385 referred to

Commissioner of Taxation v Sherwood Overseas Pty Ltd (1985) 75 FLR 474 referred to

O R Cormack Pty Ltd v Federal Commissioner of Taxation (1992) 23 ATR 151 considered

Commissioner of Taxation v Chubb Australia Ltd (1995) 56 FCR 557 considered

COMMISSIONER OF TAXATION v CLEAN INVESTMENTS PTY LIMITED

N 1289 & N 1337 OF 1999

EMMETT J

SYDNEY

17 APRIL 2000

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1289 OF 1999

ON APPEAL FROM THE TAXATION APPEALS DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A SENIOR MEMBER

BETWEEN:	COMMISSIONER OF TAXATION Appellant
AND:	CLEAN INVESTMENTS PTY LIMITED Respondent
JUDGE:	EMMETT J
DATE OF ORDER:	5 MAY 2000
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The decision of the Administrative Appeals Tribunal of 13 October 1999 be set aside.

3. The matter be remitted to the Administrative Appeals Tribunal for further consideration according to law.

THE COURT NOTES:

1. The agreement of the parties that there be no order as to costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1337 OF 1999

ON APPEAL FROM THE TAXATION APPEALS DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A SENIOR MEMBER

BETWEEN:	COMMISSIONER OF TAXATION Appellant
AND:	CLEAN INVESTMENTS PTY LIMITED Respondent
JUDGE:	EMMETT J
DATE OF ORDER:	5 MAY 2000
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The decision of the Administrative Appeals Tribunal of 13 October 1999 be set aside.

3. The matter be remitted to the Administrative Appeals Tribunal for further consideration according to law.

THE COURT NOTES:

1. The agreement of the parties that there be no order as to costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1289 & N 1337 OF 1999

ON APPEAL FROM THE TAXATION APPEALS DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A SENIOR MEMBER

BETWEEN:	COMMISSIONER OF TAXATION Appellant
AND:	CLEAN INVESTMENTS PTY LIMITED Respondent

JUDGE:	EMMETT J
DATE:	17 APRIL 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 I have before me two appeals by the Commissioner of Taxation ("the Commissioner"), under section 44 of the Administrative Appeals Tribunal Act 1975 (Cth). Section 44 authorises an appeal on a question of law from a decision of the Tribunal to the Federal Court of Australia. The decision under appeal relates to objection decisions of the Commissioner made in respect of two applications by the respondent, Clean Investments Pty Limited ("the Taxpayer"), for refund of sales tax paid by the Taxpayer to the Commissioner. The Taxpayer at relevant times carried on business as a wholesaler of imported washing machines and dryers and parts for such goods. Both refund applications relate to sales tax paid in respect of the sale of washing machines and dryers.

2 On 15 April 1993 the Taxpayer made an application for a refund of sales tax in the amount of $189,983.59 paid in respect of the period 1 April 1990 to 31 March 1993. The refund application was disallowed on 14 July 1993 and the Taxpayer objected to that decision. On 19 December 1997 the objection was allowed in part and disallowed as to the balance. On 16 February 1998 the Taxpayer applied to have the Commissioner's decision reviewed by the Tribunal in so far as it disallowed the objection.

3 In addition, on 21 June 1996 the Taxpayer made a further application for a refund of sales tax in the amount of $543,223.00. That application related to the period 1 May 1993 to 30 April 1996. The reason for there being two applications is that the new regime of sales tax legislation came into force in the meantime. The second refund application was disallowed on 10 August 1998. The Taxpayer objected to that decision. The objection was also allowed in part and disallowed as to the balance on 11 August 1998. On 17 August 1998 the Taxpayer applied to have the decision reviewed in so far as it disallowed the objection.

4 The Tribunal heard both applications together. By its decision of 13 October 1999 the Tribunal set aside the Commissioner's objection decisions. No other decision was made in lieu of the Commissioner's decision. By notices of appeal filed on 10 November 1999, the Commissioner appealed from the Tribunal's decision.

THE ISSUES

5 The questions of law said to be raised by the appeals were stated as follows:

"(i) What is the correct test to be applied in construing [the relevant item] of the Sales Tax (Exemptions and Classifications) Act 1992 [and the Sales Tax (Exemptions and Classifications) Act 1935 (Cth)].

(ii) Whether [the relevant item] (...`the exemption') is properly to be construed by first considering whether the goods fall within the specific words of the particular paragraph and then considering whether the goods fit within the general words of the preamble to the relevant item.

(iii) Whether the Tribunal erred in law in construing the words `household purposes' where they appear in the exemption by reference to the nature of the purposes served by the goods irrespective of the places where or the circumstances under which those purposes might be served.

(iv) Whether there were any circumstances in which a Tribunal can review a decision on objection and make a determination in relation to a matter not raised for consideration in the objection.

(v) To what extent failure by the Tribunal to reject evidence lead by the applicant at the hearing before it offended the rules of fairness and natural justice."

The ground of appeal that raised the fifth question was abandoned by the Commissioner at the hearing.

6 The fourth question concerned the refund of sales tax paid in respect of parts. The applications for refunds made no reference to parts. However, in the course of its reasons, the Tribunal characterised the question before it as including whether or not the concessional rate of sales tax, to which I shall refer shortly, should be applied to parts for the machines in question. While the Tribunal characterised the question before it in that way, the Tribunal made no formal decision concerning parts. In any event, the Taxpayer does not contest the appeal in so far as any finding was made by the Tribunal in relation to parts.

7 In its reasons, the Tribunal stated the issue before it as follows:

"The task of the Tribunal is confined purely to a consideration of the evidence so as to enable it to furnish an answer to the question of whether or not any of the disputed machines are entitled to the concessional rate of tax."

Goods that fell within certain items of the Sales Tax (Exemptions and Classifications) Acts were taxed at a lower rate than if they did not fall within the particular item. While each refund arose under a different statute, the parties were agreed before the Tribunal that the wording of the relevant items was such that, at least for the purposes of the question to be decided by the Tribunal, there was no difference.

8 The Taxpayer contends that no question of law is raised by the appeals. I am satisfied, however, that the appeal raises questions of law as to the proper construction of the relevant items in the Sales Tax (Exemptions and Classifications) Acts. The first refund claim raises a question under the Sales Tax (Exemptions and Classifications) Act 1935 (Cth) ("the 1935 Act"). Items 1 and 2 of the third schedule to that Act, so far as relevant, are as follows:

"1. Goods... of a kind ordinarily used for household purposes, namely:-

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

(f) washing machines, wringers and other appliances used for or in connexion with laundering;

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

2. Parts, fittings and accessories for goods covered by item 1 in this Schedule"

The second refund claim raises a question under the Sales Tax (Exemptions and Classifications) Act 1992 (Cth) ("the 1992 Act"). Items 1(1) and 1(2) of schedule 2 to that Act, relevantly, are as follows:

"1(1) The following goods of a kind ordinarily used for household purposes:

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

(i) washing machines and other appliances of a kind ordinarily used in, or in connection with, laundering clothes;

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

1(2) Goods marketed principally as parts, fittings or accessories for goods covered by subitem (1)."

9 The language of the two items is not identical and it may have been possible to mount an argument based on the inclusion of the word "namely" in the 1935 Act. However, it was agreed between the parties before me that there was relevantly no difference between the wording of the two provisions. Thus, the critical language that falls for interpretation is as follows:

"Goods of a kind ordinarily used for household purposes".

10 The Tribunal's reasons were extensive. The matter was heard before the Tribunal over a period of seven full hearing days and generated a substantial body of evidence. The question was whether or not the concessional rate of sales tax should be applied to certain imported washing machines and dryers bearing the brands Maytag, Primus and Speed Queen. The model numbers of the machines that were in dispute are set out in a schedule reproduced in the Tribunal's reasons as follows:

"Maytag Washer Model Numbers:

[1] Coin-Slide	[2] Coin-Dropper	[3] Programmable Coin-Slide	[4] Push-Bar	[5] Heavy Duty Control Panel	[6] Standard Control Panel	[7] Rated Dry Weight Capacity (kgs)
MAT10CS			MAT10PB	MAT11MN	LAT5004	6
MAT23CM			MAT23PB	MAT24CA	LAT112	6
MAT23CS			MAT23PB	MAT24CA	LAT112	6
MAT25CM			MAT25PB	MAT26CA	LAT7300	6
MAT25CS			MAT25PB	MAT26CA	LAT7300	6

Primus Washer Model Numbers:

[1] Coin-Slide	[2] Coin-Dropper	[3] Programmable Coin-Slide	[4] Push-Bar	[5] Heavy Duty Control Panel	[6] Standard Control Panel	[7] Rated Dry Weight Capacity (kgs)
	W7		W7			7
	W10		W10			10
	HS10		HS10			10
	GF10		GF10			10
	GF7		GF7			7
	R6	R6	R6			6
	R7	R7	R7			7
	R10	R10	R10			10
	F10		F10			10
	F7		F7			7

Speed Queen Washer Model Numbers

[1] Coin-Slide	[2] Coin-Dropper	[3] Programmable Coin-Slide	[4] Push-Bar	[5] Heavy Duty Control Panel	[6] Standard Control Panel	[7] Rated Dry Weight Capacity (kgs) [see Note]
EA1111			EA1111			6
EG1120			EG1120			7
EG5121			EG5121			7
RG6190			RG6190			2 x 7
SG4990			SG4990			7

Note:

Dry weight capacities shown as 2 x 7 indicate the capacity of twin stack dryer models. Each such model has two drums each with a capacity of 7 kilograms.

Maytag Dryer Model Numbers:

[1] Coin-Slide	[2] Coin-Dropper	[3] Programmable Coin-Slide	[4] Push-Bar	[5] Heavy Duty Control Panel	[6] Standard Control Panel	[7] Rated Dry Weight Capacity (kgs) [see Note]
MDE11CS			MDE11PB	MDE11MN		2 x 7
MDE27CS			MDE27PB	MDE27MN		2 x 7
MDE22CS			MDE22PB			2 x 7
MDE10CS			MDE10PB	MDE10MN	LDE7304	7
MDE26CS			MDE26PB		LDE7600	7
MDE24CS			MDE24PB	MDE24MN	LDE212	7
MDG11CS			MDG11PB	MDG11MN		2 x 7
MDG27CS			MDG27PB	MDG27MN		2 x 7
MDG22CS			MDG22PB			2 x 7
MDG10CS			MDG10PB	MDG10MN	LDG7304	7
MDG26CM MDG26CS			MDG26PB	MDG26CA	LDG7600	7
MDG24C			MDG24PB	MDG24CA	LDG212	7

Note:

Dry weight capacities shown as 2 x 7 indicate the capacity of twin stack dryer models. Each such model has two drums each with a capacity of 7 kilograms."

11 The machines in dispute are of two categories. The first category, which is shown in columns one, two and three of the schedule, are described as machines that either have a coin slide mechanism, a coin dropper mechanism, or a programmable coin slide mechanism in order to make them operative. The second category of disputed machines include those that have a dry linen capacity of 10 kilograms or greater.

12 For the purposes of its reasons, the Tribunal adopted three definitions. The machines set out in columns one, two and three of the schedule, all of which are coin operated, were described as "commercial machines". Machines that have a dry linen capacity of 10 kilograms or greater were referred to as "industrial machines". Other washing machines and dryers, in respect of which the Commissioner conceded that the concessional rate applied, were referred to as "domestic machines". While there had originally been a dispute concerning some categories of machines that ultimately fell within the definition of "domestic machines", that dispute had been resolved prior to the matter coming before me.

13 The question can therefore be stated as follows:

* whether coin operated machines are goods of a kind ordinarily used for household purposes; and

* whether machines having a dry linen capacity of 10 kilograms or greater, are goods of a kind ordinarily used for household purposes.

FACTUAL FINDINGS

14 In the course of its reasons, which ran to approximately 100 pages, the Tribunal made a number of findings. I shall summarise the relevant findings.

15 Machines with dry linen capacity of up to 7.5 kilograms and which do not feature coin operations of any kind are usually sold by retail to customers for use in nuclear family households. By nuclear household the Tribunal meant a household in which a couple and their children reside.

16 Commercial machines require coin operation because they are commonly sold for use in shared laundry facilities. Such shared laundry facilities include the following:

* public housing, including flats, home units and townhouses;

* company and strata title home units;

* town houses and other privately owned medium density housing;

* Aboriginal and other community housing;

* housing provided by public benevolent institutions;

* supervised care retirement units and hostels, including housing provided by public benevolent institutions;

* nursing homes;

* residential colleges of universities, schools and other educational institutions;

* seminaries;

* defence forces barracks;

* goals and other corrective institutions;

* employee quarters, including those for hospital, agricultural, forestry, mining and construction employees;

* caravan parks;

* private hotels;

* hostels;

* lodges and self-care resorts;

* guesthouses;

* motels; and

* public hotels.

17 In respect of some, but not all shared laundry facilities, cost sharing in respect of the machines is a relevant consideration in order to preserve equity between various users. That consideration applies typically in blocks of home units that have shared laundry facilities. It also applies to caravan parks, hotels, motels and residential housing of various types. However, there are also shared laundry premises, such as army barracks and gaols, whose habitants also require the use of machines on a shared basis, but are not required to pay for their use.

18 Another class of premises, in which machines with coin operated activating mechanisms are commonly required, are laundromats, sometimes referred to as laundrettes, or simply laundries. In that regard, "routers" and "renters" are a particular feature of the industry. A renter purchases a machine and rents it to a user, which will usually be a laundrette, but might also be one of the classes of shared premises to which I have referred. The renter will receive a fixed rent calculated by reference to the cost of the machine and its anticipated life. A renter is not entitled to a share of the coins deposited in the machine. The router, however, obtains a licence to place a machine in shared premises. The router is obliged to service the machine and is entitled to all, or a share, of the coins that are deposited in it.

19 Coin mechanism machines fall into different categories, as indicated in the three columns of the table. The details of the differences do not appear to be significant. Machines can be programmed to take coins of different denominations. In some cases, the program might operate to yield a profit, as for example, in the case of a caravan park or a laundromat. Other machines might be programmed so as to yield no profit. Such an arrangement might occur in a block of units.

20 In some blocks of units, the body corporate will exact no charge because it will have exacted a charge through a levy. In some circumstances, locked electrical connections, one for each unit, will ensure that each unit bears the cost of electricity used by it.

21 Machines in laundromats may be unattended, may be attended in part or may be attended at all times by employees. Typically, a user will come into the laundromat to do his or her own washing and will deposit coins in the machine to activate it for that purpose. Attendants may be on hand to supervise and, when needed, to assist. Inferentially, there is no attendant on duty for machines in shared premises.

22 One of the machines in dispute, a Maytag machine, features a coin slide which is set above a money drawer. The whole apparatus is contained in a security housing of steel and has two security locks, thus making it difficult to penetrate. The coin slide mechanism, however, can be replaced very easily at low cost by a push bar mechanism. Nevertheless, in that case the money box portion is retained, albeit that it then becomes redundant. It is not difficult or expensive to transform a coin operated machine into a push switch or button controlled machine.

23 Line drawings before the Tribunal did not indicate any significant difference between commercial machines and domestic machines. Indeed, the Tribunal found that coin operated machines are very much like domestic machines. To an undiscerning eye, leaving aside the coin operation mechanism, there does not appear to be any significant difference.

24 However, the Tribunal found as a fact that there are differences between commercial machines and domestic machines, as those terms were defined by it. The first and obvious distinction found is the use of the coin mechanism in commercial machines, a feature that is not present in domestic machines. Commercial machines have control panels that are both more robust and yet less complex than is the case with domestic machines. That is so because commercial machines will be operated more frequently and by more users. The very fact that they will be used by multiple users requires that the operating instructions be simple and the machines durable.

25 Those machines defined by the Tribunal as industrial machines, being those having a dry linen weight capacity of 10 kilograms or greater, are commonly used by factories, hotels and other large institutions to launder their own laundry. Commercial machines and industrial machines appear to be more expensive than domestic machines, although not to any great extent, even apart from differing sales tax treatment afforded to them.

THE TRIBUNAL'S CONCLUSION

26 The ultimate conclusion of the Tribunal was that commercial machines and domestic machines are within the same genus or class and that, accordingly, commercial machines are entitled to the concessional rate. The Tribunal also found that the evidence in respect of the 10 kilogram machines favoured a conclusion, on the balance of probabilities, that they too are entitled to the concessional rate. The Tribunal therefore concluded that the objection decisions of the Commissioner should be set aside.

27 The Tribunal, in its reasons for reaching that conclusion, adopted a number of propositions as follows:

(a) the relevant items should not be construed narrowly;

(b) the relevant items and the opening words should be construed as a whole;

(c) while it is likely that the essential character test has been rejected, it is conceivable that it does retain some residual relevance;

(d) in construing the items, it is necessary to consider first whether the goods are within the specific words (plainly so in this case) and then to consider whether they fit the general words of the preamble;

(e) the fact that the goods are used outside the relevant household does not preclude the application of the items;

(f) concurrent use does not prevent the application of the items;

(g) to inquire whether households ordinarily have such articles would be far too narrow a view.

28 The Tribunal considered that the mere adaptation of a piece of laundry equipment so as to ensure that its starting mechanism is coin operated did not deserve the importance attributed to it by the Commissioner. The Tribunal expressed awareness of the fact that gas heaters in the home, in the United Kingdom in particular, operate through the deposit of coins. The Tribunal also referred to coin meters for television sets in living rooms. The Tribunal considered that a coin operating mechanism might be thought of as no more than a precondition to the commencement of operation of a machine. Once the machine has been activated, its function is entirely independent of the starting mechanism, which then becomes temporarily obsolete.

29 The Tribunal considered that it was "decidedly odd" to conceive of the use of a washing machine in shared premises as not being a "household use". In a block of units, a member of the household goes to the shared laundry accommodation to use the common washing machine or dryer. Such a person does so precisely because the particular household or family of that member does not have its own separate and private washing machine and dryer. In a caravan park or hotel residence the use is similarly a household purpose according to the Tribunal's reasoning. The Tribunal considered that it was not a prerequisite of use that it occur "within a household".

30 The Tribunal accepted that commercial machines are used to an overwhelming extent in either laundromats or shared premises. It is the coin operation that ensures that that is so. The user of the machine at the laundromat does so precisely because he or she does not have the same facility available at home. The Tribunal considered, however, that commercial machines are almost inevitably used for a purpose which admits of no other apposite type of description as an adjective than "household". While many commercial machines are operated by laundromat owners, for example, for profit, the use by persons in laundromats who do not possess their own machines will nonetheless aptly fall within the concept of "household" use.

31 The Tribunal considered that the important question was that of specifying the class or genus of which the disputed machines were members. The Tribunal considered that there are undoubtedly some differences between commercial machines and domestic machines. Nevertheless, the Tribunal did not consider that the differences are such that the two classes do not fall within the same genus. Rather, the Tribunal considered that the manner in which the commercial machines are used and the function that they perform points strongly towards a conclusion that they fall within the same genus as domestic machines. The Tribunal considered that the fact that there are differences could not be determinative. The Tribunal concluded that commercial machines, although stronger or more robust than domestic machines, and notwithstanding that there are certain other differences, fall within a genus that includes domestic machines.

32 The Tribunal considered in respect of the 10 kilogram machines that the weight of evidence favoured a conclusion that they are most aptly characterised as commercial machines rather than industrial machines. Some industrial machines are coin operated while some are of a push button type that does not require a coin. The Tribunal was of the view that, in respect of industrial machines, the Taxpayer had made out a case that, although not as strong as the case in relation to commercial machines, entitled the industrial machines to the concessional rate.

REASONING ON APPEAL

33 The question of law that appears to me to arise in relation to the washing machines and dryers in dispute concerns the proper interpretation of the preamble to each of the relevant items. The question is whether it is sufficient that the machines in dispute are utilised by numerous persons to do household laundry or to launder clothes and other linen of households. Alternatively does the preamble require, as the Commissioner contends, that there be some relevant nexus between the location of the use of the goods and the goods themselves, namely, that the goods are of a kind ordinarily used in the immediate confines or curtilage of a household dwelling.

34 There is no basis for the Commissioner to challenge the Tribunal's finding of fact as to the first question. On the other hand the Tribunal made no finding as to the latter question. Indeed, the Tribunal indicated that that was not a consideration in so far as it observed that the fact that the goods are used outside the relevant household does not preclude the application of the concessions.

35 The interpretation of the words of the preamble has been considered in a number of different contexts. However I do not consider that any of the decisions on the preamble is decisive as to the question that arises on these appeals.

36 The word "household" must be understood in its ordinary English meaning, appearing as it does as part of an expression in the preamble. "Household" is defined as follows by the New Shorter Oxford Dictionary:

"The people living in a house, esp. a family in a house; a domestic establishment."

The Macquarie defines "household" as follows:

"The people of a house collectively; a family, including servants, etc.; a domestic establishment."

The definition of the word "household" as an adjective in both dictionaries includes relevantly: "Of or pertaining to a household; domestic." In addition, the Macquarie definition defines household as an adjective as "used for maintaining and keeping a house".

37 Thus "household" can mean an establishment, as distinct from the people who make up a household. Household purposes, therefore, might be purposes pertaining to a household or to a domestic establishment.

38 It is clear that the use contemplated by the preamble is not limited to exclusive use. So much appears from the decision of the High Court in Deputy Commissioner of Taxation v Stewart [1984] HCA 11; (1984) 154 CLR 385 at 397, 401 and 402. Thus where a supplier of lottery tickets manufactured machines which it entrusted to customers, the customers used the machines notwithstanding that they were also being used, in a sense, by the supplier. The customer, however, had exclusive possession of the machines.

39 The use of the adjective "household" suggests that the intention was to distinguish the particular goods in question from similar goods that have uses outside a "domestic establishment": see Commissioner of Taxation v Sherwood Overseas Pty Ltd (1985) 75 FLR 474 per Olney J at 478 to 479. There the question was whether mechanical devices for the automatic vacuum cleaning of a household swimming pool were goods of a kind ordinarily used for household purposes. Olney J considered that the goods in question were entitled to the concession. However, the goods were of a nature that they would be used within the curtilage of a dwelling or household in the physical sense and, accordingly, the case does not assist in the resolution of the question before me.

40 In O R Cormack Pty Ltd v Federal Commissioner of Taxation (1992) 23 ATR 151, Davies J grappled with the preamble to item 1 of the 1935 Act. The taxpayer in that case claimed an exemption from sales tax on paint brushes and painting equipment under an item concerning "brooms, mops, dusters, brushes, buckets, dippers and basins". That is another subparagraph of item 1 of the third schedule to the 1935 Act. Davies J considered that all the goods with which he was concerned may be possessed by many households. He considered that it was usual for households to possess and use tools for gardening, carpentry, plumbing, painting or like purposes. The fact that such goods may be ordinarily kept in a garage or shed, rather than in a house itself, would not preclude them from being household goods. His Honour considered that the concept of a household encompasses the ordinary household environs. While the decision is not decisive for the issue before me, it does indicate an acceptance of "household" in a physical sense rather than the persons who might make up a household.

41 In Commissioner of Taxation v Chubb Australia Ltd (1995) 56 FCR 557, the question was whether safes could be characterised as goods of a kind ordinarily used for household purposes. The question was not whether households ordinarily have such articles; that would be far too narrow a view (per Burchett J at 559). The fact that something is ordinarily used for one purpose does not preclude a conclusion that it is also ordinarily used for quite a different purposes (per Burchett J at 560).

42 However, the statute does not employ the expression "used in a household", but "used for household purposes". Burchett J considered that the word household, when employed as an adjective, had the primary significance of "belonging to a household" or "domestic". His Honour considered that if the use to which an article is ordinarily put requires it to be placed in a domestic establishment, the words "used for household purposes" would generally be satisfied (at 560).

43 In the same case Hill J observed (at 570) that:

"...the Item does not require consideration of whether the relevant kind of goods is ordinarily used in households. The Item requires consideration of `household purposes'. It draws attention to the purposes for which the kind of goods are used, not the location of that use."

His Honour drew a distinction between domestic safes on the one hand and industrial and commercial safes on the other. One difference between the kinds of safe is the type of goods ordinarily kept in each kind of safe. At the extremes his Honour considered the categories of domestic and commercial or industrial safes to be so divergent that there is a category of safe that could not be said to be ordinarily used for domestic purposes. At the other extreme there were clearly safes of which, on the evidence, it could be said that they were used for domestic purposes and were ordinarily so used. The safe keeping of money, jewellery and valuables and important family papers was clearly a domestic purpose (at 570).

44 Hill J emphasised that the question at issue was not whether particular safes were for use in households or were ordinarily used for household purposes but whether they were of a kind ordinarily used for household purposes (at 571-2). His Honour considered that:

"...the evidence is such as to enable an inference to be drawn that at least some of [the safes in question] were in fact used in households, inferentially for household purposes."

The evidence was, in his Honour's view, such as to permit a conclusion to be drawn in respect of particular models of safes (at 572):

"...that they were of a kind ordinarily used for household purposes in that they were of a kind used in households to contain and keep safe household valuables, moneys and documents..."

45 The observations made in Commissioner of Taxation v Chubb Australia Ltd (above) are not decisive so far as the issue before me is concerned. Reference was made to goods being of a kind used in a household, although the question is whether they are used for household purposes. The observations to which I have referred assume that use for household purposes is use in a household. A further assumption seems to be that the use of a large safe outside the household would not be use for household purposes, even if it might ordinarily be used by householders. For example, a large commercial or industrial safe might be used by a bank or safe deposit company for receipt of household valuables. There does not appear to be any suggestion that such a use would be a use for household purposes.

46 I consider that the notion of goods used for household purposes signifies use pertaining to a household. Whether "household" means the persons who make up the household or the physical establishment, it must be possible to demonstrate that the particular kind of goods are goods ordinarily used for the purposes of a household. It is not sufficient to show that members of many households happen to be permitted, by paying a fee, to place washing in a particular machine, even if that washing could be characterised as household washing.

47 In his speech on the second reading of the Bill that first introduced the concession, the then Treasurer said:

"There is a wide demand for exemption of furniture and household goods. These goods cover a very wide range, indeed, and the cost of a complete exemption would be so heavy as to render this impracticable at present. It is proposed, however, to reduce from the general rate of 12 _{Click here for Picture} per cent. to a special rate of 10 per cent. a wide range of furniture and household goods as specified in the Bill. It is believed that this will appreciably reduce the costs of house establishment."

Two things can be gleaned from those observations. The first is that the concession is for household goods. The second is that the proposal is intended to reduce the costs of home establishment. Clearly, of course, one cannot use the words used by a Minister on a second reading speech to change the language of the statute. However, to the extent that there is ambiguity, it is permissible to have regard to the object of the provisions.

48 The object, as gleaned from the Treasurer's statement, is to reduce the costs of home establishment by reducing the cost of household goods. The object of the concession is to benefit those establishing a household in any physical sense. I consider that it is necessary to focus on those intended to benefit from the concession. Those who are intended to benefit from the concession will be those who become owners, or exclusive possessors, of the goods in question, for the purpose of establishing a household.

49 The expression, "used for household purposes," directs attention to the persons whose use is important. In my view, it also directs attention to the concept of a household in a physical sense. I do not consider that non-exclusive use by many householders in shared laundry facilities, or in a commercial facility such as a laundromat, is relevantly use for household purposes. The question is whether the purpose of persons who have exclusive proprietary or possessory right or interest in relation to the machines can be a relevant purpose.

50 The Tribunal's findings indicate that the purpose of the persons who have proprietary or possessory rights in relation to the machines will be to generate income from customers, or perhaps to provide a service to guests of hotels, or caravan parks, or occupants of shared accommodation. The purpose of those persons who have an exclusive proprietary or possessory interest in the machines, is not a household purpose. It is not a purpose pertaining to a domestic establishment.

51 There was no finding by the Tribunal that commercial machines or industrial machines are goods of a kind used for the purposes of a household, by the members of the household, to the exclusion of others. In practical terms, machines in the disputed categories would be of a kind ordinarily used for household purposes in the relevant sense if they are of a kind ordinarily to be found within a domestic establishment. It would be curious for a domestic establishment to keep its washing machine and drier away from the physical premises or curtilage of the premises which constitute the household.

52 I consider that the Tribunal has misdirected itself in concluding that goods might be said to be of a kind ordinarily used for household purposes in circumstances where there is no connection physically between such goods and a household. Putting it another way, where the members of a particular household have no exclusive possessory or proprietary interest or right in relation to a kind of goods, I do not consider that it can be said that the goods are of a kind ordinarily used for household purposes.

53 Of course, if there had been a finding that goods having a coin operated mechanism, are ordinarily found within a domestic establishment, that would be sufficient. Similarly, if there were a finding that goods having a dry linen capacity of 10 kilograms or greater, were ordinarily found within a domestic establishment, that also might be sufficient. There was, however, no inquiry as to those questions. It may well be, of course, that there was no evidence to support such a conclusion.

54 In my view, the Tribunal made an error of law. It follows, that the decision of the Tribunal should be set aside and the matter should be remitted to the Tribunal for further consideration according to law. I see no reason why that further consideration need be given by any differently constituted Tribunal. That, however, is a matter for the President of the Tribunal.

55 I will list the matter on 5 May for the purpose of making orders. The Commissioner should bring in short minutes to give effect to the conclusion that I have reached. If there is any argument about costs, I will deal with that question on that day.

I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated: 5 May 2000

Counsel for the Appellant:	Mr D McGovern & Mr A O'Brien
Solicitor for the Appellant:	Australian Government Solicitor
Counsel for the Respondent:	Mr J A Higgins
Solicitor for the Respondent:	Grahame W. Howe & Co.
Date of Hearing:	6, 7 & 17 April 2000
Date of Judgment:	17 April 2000