A sales tax expert has told ARN that time is running out for the recovery of excess sales tax paid on computer equipment. In general, many computer items sold between 1993 and 1996 were taxed at 21 or 22 per cent on the wholesale price, while a determination by the sales tax office last year allows 10 per cent of the value of these goods to be exempted from tax. This is deemed to be the content that is TACP (tax advantaged computer programs), or software, which is not taxed.
While this determination was specifically designed to cover bundles and products like modems which have a high software content, it also applies to products like PC systems. According to the tax expert (who did not wish to be named), many distributors paid the full tax (and in turn, collected it from resellers) but under the ruling, they are able to recover the excess paid from the tax office. In most cases this is 10 per cent of the 22 per cent tax. Some vendors told ARN this is a drawn-out, messy business, and can sometimes take a long time to resolve. The expert explained "Most vendors who undertake to recover the excess tax keep 30 or 35 per cent of the money to cover their expenses and risk."
While it may be of marginal value for a small reseller to pursue the refund, ARN has learned that large retailers have actively pursued this and have been rewarded with substantial refunds. If you believe you may be entitled to a refund for computer goods purchased in the 1993 to 1996 period, you should initially contact your supplier(s).