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  • Common GST errors – importing or exporting goods and services

    For GST luxury car tax and wine equalisation tax purposes, from 1 July 2015, where the term ‘Australia’ is used in this document, it is referring to the ‘indirect tax zone’ as defined in subsection 195-1 of the A New Tax System (Goods and Services Tax) Act 1999 External Link(GST Act).

    If you run an enterprise that imports or exports goods or services in Australia then there are a few things you should know about your GST obligations. Our compliance activities tell us that most errors are made by small to medium businesses.

    Find out about:

    Find out how to avoid the following common errors:

    On-sale of imported goods

    GST is payable on most goods imported into Australia. If the goods are subject to GST on importation, you are required to pay GST to the Department of Home Affairs before the goods are released. This is unless you are part of the deferred GST scheme.

    We have identified GST-registered taxpayers that have not accounted for the on-sale of imported goods on their business activity statement (BAS).

    When imported goods are on-sold, you are required to report the sale and account for the GST even if you have paid GST on the importation. The on-sale is to be reported on your BAS and GST is payable, unless the supply is GST-free or input taxed.

    If you are registered for GST and import the goods for a creditable business purpose, you can claim an input tax credit for the creditable importation. The full amount of the creditable importation is required to be reported at either label G10 (capital acquisitions) or G11 (non-capital acquisitions) on your BAS.

    Installing and assembling imported goods

    There may be instances where an overseas business will incorrectly charge GST on importations where they install or assemble goods.

    A supply of goods to an Australian business where the supplier installs or assembles the goods in Australia, but does not import the goods into Australia, is not connected with Australia for non-resident suppliers. Therefore, the non-resident supplier will not be subject to GST on these transactions.

    See also:

    Incorrectly classifying exports

    It is important to understand how goods are exported out of Australia and the International Commercial (Inco) delivery terms that apply. Taxpayers may believe themselves to be the exporter. However, when the terms of delivery are analysed, this is not the case. A change to your Inco delivery terms (for example, delivered duty paid to ex-works) in an agreement can alter your circumstances. This could potentially lead to you no longer being considered the exporter and GST becoming payable on the supply.

    See also:

    • GSTR 2002/6 Goods and Services Tax: Exports of goods, items 1 to 4A of the table in subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999. This ruling will assist suppliers in analysing if they are an exporter and if their supply is a GST-free export.

    Non-residents and non-deductible expenses

    If you are a non-resident business registered for GST in Australia under the full GST registration system, you should be aware that registered businesses are not entitled to claim GST credits on certain purchases. Under the GST law you cannot claim a GST credit for expenses that are non-deductible for income tax purposes. Examples of non-deductible expenses include purchases of a private nature, entertainment provided to employees, and entertainment expenses.

    If you are a registered for fringe benefits tax your position may be different.

    See also:

    • GSTR 2001/3 Goods and Services Tax: GST and how it applies to supplies of fringe benefits

    Voluntary disclosure

    After reviewing your international cross border transactions you may discover mistakes in your reported GST amounts. If this occurs, we encourage you to make a voluntary disclosure. Reduced penalties will apply if you voluntarily disclose errors before we conduct any compliance activity.

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      Last modified: 02 Dec 2016QC 40401