4Sale value of goods

4 Sale value of goods

(1) Subject to subsections (2), (3) and (5) of this section, to section 4A and to subsections (5B) and (5C) of section 18 of the Sales Tax Assessment Act (No. 1) 1930 in their application in accordance with section 12 of this Act, for the purposes of this Act, the sale value of goods shall be the amount for which those goods are sold by a registered person, or a person required to be registered, who purchased the goods from the manufacturer thereof, to an unregistered person or to a registered person who has not quoted his certificate in respect of that purchase: Provided that where goods are sold by retail by a registered person who has quoted his certificate when purchasing the goods the sale value of the goods shall be the amount which would be the fair market value of those goods if sold by him by wholesale, but if the Commissioner is of opinion that the amount set forth in any return by the registered person as the sale value of any such goods is less than the amount which would be their fair market value if sold by wholesale, the Commissioner may alter the amount set forth in the return to the amount which, in his opinion, would be the fair market value of the goods if sold by wholesale, and the amount as so altered shall be the sale value of the goods for the purposes of this Act. (2) Subject to subsection (5), where: (a) goods have been sold after 20 September 1978 by a person (in this subsection referred to as the vendor), being a registered person or a person required to be registered, to a person (in this subsection referred to as the purchaser), being an unregistered person or a registered person who has not quoted his certificate in respect of the purchase of the goods; and (b) the goods: (i) were purchased by the vendor from the manufacturer of the goods; (ii) were manufactured for the purchaser in whole or in part out of materials supplied by the purchaser; and (iii) were sold by the vendor to the purchaser for an amount that is less than: (A) if the goods are of a class which the vendor himself sells by wholesale—the amount for which the goods could reasonably be expected to have been sold by the vendor by wholesale if all the materials used in the manufacture of the goods had been purchased by the manufacturer in the ordinary course of his business from a person with whom he was dealing at arm’s length; or (B) in any other case—the amount for which the vendor could reasonably be expected to have purchased identical goods from a manufacturer if the manufacturer had, in the ordinary course of his business, manufactured the identical goods for sale wholly out of materials purchased in the ordinary course of his business from a person with whom he was dealing at arm’s length and had sold the identical goods to the vendor by wholesale; the sale value of the goods, for the purposes of this Act, is: (c) where all the relevant materials used in the manufacture of the goods consisted of goods the sale values of which were exempt from sales tax by virtue of the Sales Tax (Exemptions and Classifications) Act 1935: (i) if the goods are of a class which the vendor himself sells by wholesale—the amount for which the goods could reasonably be expected to have been sold by the vendor by wholesale if all the materials used in the manufacture of the goods had been purchased by the manufacturer in the ordinary course of his business from a person with whom he was dealing at arm’s length; or (ii) in any other case—the amount for which the vendor could reasonably be expected to have purchased identical goods from a manufacturer if the manufacturer had, in the ordinary course of his business, manufactured the identical goods for sale wholly out of materials purchased in the ordinary course of his business from a person with whom he was dealing at arm’s length and had sold the identical goods to the vendor by wholesale; (d) where all the relevant materials used in the manufacture of the goods comprised: (i) excluded goods; (ii) goods the sale values of which were not exempt from sales tax by virtue of the Sales Tax (Exemptions and Classifications) Act 1935; or (iii) excluded goods and goods referred to in subparagraph (ii); the amount charged to the purchaser by the vendor in respect of the goods; or (e) in any other case—the sum of: (i) the amount for which the vendor could reasonably be expected to have purchased by wholesale materials identical in all material respects with the relevant materials used in the manufacture of the goods which consisted of goods the sale values of which were exempt from sales tax by virtue of the Sales Tax (Exemptions and Classifications) Act 1935 from another person who sold by wholesale the materials identical in all material respects with the relevant materials in the ordinary course of his business; and (ii) the amount charged to the purchaser by the vendor in respect of the goods. (3) Subject to subsection (5), where: (a) goods have been sold after 20 September 1978 by a person (in this subsection referred to as the vendor), being a registered person or a person required to be registered, to a person (in this subsection referred to as the purchaser), being an unregistered person or a registered person who has not quoted his certificate in respect of the purchase of the goods; (b) the goods were purchased by the vendor from the manufacturer of the goods; and (c) the goods were manufactured for the purchaser in whole or in part out of materials sold to the manufacturer: (i) by the purchaser; or (ii) by another person who did so at the request of, or under an agreement with, the purchaser; the sale value of the goods, for the purposes of this Act, is: (d) if the goods are of a class which the vendor himself sells by wholesale—the amount for which the goods could reasonably be expected to have been sold by the vendor by wholesale if all the materials used in the manufacture of the goods had been purchased by the manufacturer in the ordinary course of his business from a person with whom he was dealing at arm’s length; or (e) in any other case—the amount for which the vendor could reasonably be expected to have purchased identical goods from another manufacturer if the other manufacturer had, in the ordinary course of his business, manufactured the identical goods for sale wholly out of materials purchased in the ordinary course of his business from a person with whom he was dealing at arm’s length and had sold the identical goods to the vendor by wholesale. (4) Where: (a) goods (in this subsection referred to as the relevant goods) have been sold by a registered person, or a person required to be registered, who purchased the goods from the manufacturer, to an unregistered person or to a registered person who has not quoted his certificate in respect of the purchase of the goods; (b) the Commissioner is satisfied that, having regard to any connection between the vendor and the purchaser of the relevant goods or to any other relevant circumstances (including circumstances arising out of any agreement entered into between the vendor and the purchaser, or out of any other agreement, that was related, directly or indirectly, to the sale of the goods), the vendor and the purchaser were not dealing with each other at arm’s length in relation to the transaction; and (c) the Commissioner is also satisfied: (i) that the amount for which the relevant goods were sold is less than the amount (in this subsection referred to as the arm’s length price) for which, in the opinion of the Commissioner, the relevant goods could reasonably be expected to have been sold if the vendor and the purchaser had been dealing with each other at arm’s length in relation to the transaction; or (ii) that: (A) the purchaser could have purchased identical goods from another person (not being a manufacturer of identical goods) by wholesale and obtained delivery of the identical goods at or about the time when the purchaser obtained delivery of the relevant goods; and (B) the amount for which the relevant goods were sold is less than the amount (in this subsection referred to as the alternative price) for which, in the opinion of the Commissioner, the identical goods could reasonably be expected to have been sold to the purchaser; the Commissioner shall alter the sale value of the relevant goods to the amount ascertained in accordance with the following paragraphs: (d) if the Commissioner is satisfied as to the matter mentioned in subparagraph (i) of paragraph (c) but not as to the matters mentioned in subparagraph (ii) of that paragraph—an amount equal to the arm’s length price; (e) if the Commissioner is satisfied as to the matters mentioned in subparagraph (ii) of paragraph (c) but not as to the matter mentioned in subparagraph (i) of that paragraph—an amount equal to the alternative price; (f) if the Commissioner is satisfied as to the matter mentioned in subparagraph (i) of paragraph (c) and also as to the matters mentioned in subparagraph (ii) of that paragraph—an amount equal to the lesser of: (i) the arm’s length price; and (ii) the alternative price. (5) Where the Commissioner alters the sale value of goods in pursuance of subsection (4), the sale value so altered shall be the sale value of the goods for the purposes of this Act. (6) For the purposes of this section, the sale value of goods shall not be increased by any amount payable in respect of sales tax but, when the goods are sold in bond, the sale value shall be increased by the amount of any duty of excise to which the goods would be subject if entered for home consumption at the time at which they are sold. (7) For the purposes of this section: (a) goods manufactured for a person (in this subsection referred to as the customer) shall be taken to have been manufactured in whole or in part out of materials supplied by the customer if the goods were manufactured in whole or in part out of materials: (i) which were supplied by the customer or by another person at the request of, or under an agreement with, the customer; or (ii) which the customer purchased, or agreed to purchase, from the manufacturer; and (b) the materials which were so supplied or purchased and were used in the manufacture of the goods shall be taken to have been the relevant materials used in the manufacture of the goods. (8) In this section: (a) a reference to excluded goods shall be read as a reference to goods, including commodities, of a kind referred to in paragraph (a) or (b) of the definition of goods in subsection (1) of section 3 of the Sales Tax Assessment Act (No. 1) 1930 in its application in accordance with section 12 of this Act; and (b) a reference to identical goods shall be read as a reference to goods identical in all material respects with the goods in relation to which the expression is used. (9) In this section, agreement means any agreement, arrangement or understanding: (a) whether formal or informal; (b) whether express or implied; or (c) whether or not enforceable, or intended to be enforceable, by legal proceedings.