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  • Coal loans and borrows

    The advice relating to 'Coal loans and borrows' is a public ruling for the purposes of section 105-60 of Schedule 1 to the Taxation Administration Act 1953.

    What are coal loans and borrows?

    It is sometimes the case within the New South Wales and Queensland coal industries that, where a ship is loaded with coal for export for an overseas customer, and it is found (for a number of possible reasons) that there is not quite enough coal to fill the order, coal is 'borrowed' from another entity with similar coal at the port.


    Records are kept of these 'loans and borrows' of coal at the port. Generally, these amounts are small compared to the total amount exported from the port. No payments are made between entities in relation to these 'loans and borrows' and prior to 1 July 2000 no invoices were issued. Each month, the entities in question are provided (generally by the port or their shipping agent) with a statement of their relevant 'loans and borrows' for the month.

    Agreed views

    Coal loans and borrows are taxable supplies, unless they can be classified as GST-free.

    The supply of coal as part of a loan or borrow arrangement at the port will be a GST-free export of goods with no GST payable where the requirements under subsection 38-185(1) of the GST Act are satisfied and documentation is held which substantiates the coal was part of an export sale. In these circumstances, it is accepted that both parties to a loan or borrow are exporters for the purposes of section 38-185 because they are responsible for the delivery of coal to the operator of a ship at port who will carry it to an overseas destination.

    Port administration/authorities maintain records of coal loans and borrows. The records show the name of the lender and borrower, the tonnage of coal, the date of loading and the ship on which the coal was loaded. If the records also identify the destination port, then it is accepted that these records satisfy the documentary requirements of subsection 38-185(1) of the GST Act.

    Where the particular port administration/authority does not keep the above records, then the substantiation documentation could include, but is not limited to:

    • Bills of Lading
    • Certificates of shipment
    • Proof of delivery.

    Valuation of taxable supplies

    For those coal loans and borrows that cannot be classified as GST-free export sales, the value that can be used for the taxable supply between the parties is $27.50 a tonne for the coal supplied. This GST inclusive value is an 'average mine gate value' based on data previously provided to the ATO by the Minerals Council of Australia.

      Last modified: 01 Sep 2015QC 16450