Senator Brown asked the Minister representing the Treasurer, upon notice, on 20 August 1997:

(1) Is it a fact that solar hot water storage tanks are subject to sales tax at a rate of 11 per cent.

(2) What is the total value of the sales tax levied on solar hot water storage tanks each year.

(3) Given that the storage tank accounts for about half the cost of a solar hot water system and is an integral and essential part of the system, why is sales tax payable on the tank.

(4) Is it a fact that goods which are used for generation or storing gas or electricity in residential premises in remote area power systems are exempt from sales tax when goods for storing the hot water generated by a solar system are not.

(5) Will the Government remove the sales tax on solar hot water storage tanks, consistent with the exemption applied to other components of the solar system, and thereby boost the market for solar hot water heating and help reduce a significant source of greenhouse gas emissions.

Senator Kemp —The Treasurer has provided the following answer to the honourable senator's question:

(1) Solar hot water tanks of a kind ordinarily installed as fixtures in domestic premises are subject to sales tax at the rate of 12%.

(2) The total value of sales tax levied on solar hot water storage tanks each year is not able to be quantified, in part because sales tax payment forms do not separate out the amount of tax paid on these items.

(3) The sales tax law provides sales tax exemption for goods of a kind ordinarily used for collecting, absorbing or concentrating the sun's rays for the purpose of using them as a source of heat. As solar hot water storage tanks do not satisfy these criteria they do not qualify for sales tax exemption.

(4) The sales tax law provides sales tax exemption for machinery, implements or apparatus for use mainly in the generation or storage, or generation and storage, of electricity or gas. The law also requires that the use must happen while the machinery, implements or apparatus is installed as a fixture in residential premises. Goods used for storing hot water generated by a solar system are subject to sales tax.

(5) The taxation of solar hot water storage tanks is consistent with the taxation of other hot water storage units.