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ATO Interpretative Decision

ATO ID 2002/556 (Withdrawn)

Goods and Services Tax

GST and the supply of a security and safety assessment of goods to be transported overseas
FOI status: may be released
  • This ATO ID is withdrawn as it does not accurately reflect the ATO view due to legislative changes contained in A New Tax System (Goods and Services Tax) Act 1999. This ATO ID is replaced by ATO ID 2011/10.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the entity, an international freight carrier, making a GST-free supply under item 5 in the table in section 38-355 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it provides a security and safety assessment of goods together with the transport of those goods overseas?

Decision

Yes, the entity is making a GST-free supply under item 5 in the table in section 38-355 of the GST Act when it provides a security and safety assessment of goods together with the transport of those goods overseas.

Facts

The entity is an international freight carrier. The entity provides a security and safety assessment of goods together with the transport of those goods overseas. The entity charges the owner of the goods a fee for the security and safety assessment service and a separate fee for the transport of the goods overseas.

The entity is registered for goods and services tax (GST).

Reasons for Decision

Item 5 in the table in section 38-355 of the GST Act (Item 5) specifies the circumstances where the supply of international transport of goods is GST-free. Paragraph (a) of Item 5 provides that the supply of international transport of goods from their place of export in Australia to a destination outside of Australia is GST-free.

'International transport' in relation to the export of goods, is defined in section 195-1 of the GST Act to mean 'the transport of goods from their place of export in Australia to a destination outside of Australia (including loading and handling within Australia that is part of that transport)'.

The entity is supplying the transport of goods from Australia to a destination overseas. This is a supply of 'international transport' as defined in section 195-1 of the GST Act. The supply of the overseas transport satisfies the requirements in paragraph (a) of Item 5, and is therefore GST-free.

The entity is also supplying a security and safety assessment of the goods to the same client. The word 'handling' (as per the definition of 'international transport in section 195-1 of the GST Act) is defined in The Macquarie Dictionary (1997) as '...3. the process of packing, moving, carrying or transporting something.' It is considered that the security and safety assessment provided by the entity amounts to 'handling' of the goods as per the definition in The Macquarie Dictionary (1997) because it is part of the process of transporting the goods overseas.

However, the 'handling' of goods only amounts to 'international transport' of those goods under section 195-1 of the GST Act, if it is supplied as part of the transport of the goods. As the entity supplies the handling together with the international transport of the goods, the handling is considered to be part of that supply of transport and is also GST-free under paragraph (a) of Item 5.

Accordingly, the entity is making a GST-free supply under Item 5 when it provides a security and safety assessment of goods and then transports those same goods overseas.

[Note: A supply of loading and handling in Australia is only considered to be a supply of 'international transport' as defined in section 195-1 of the GST Act, if it is part of that transport. Therefore, where an entity provides a security and safety assessment of goods in Australia, but does not provide the overseas transport of those goods, the supply of the security and safety assessment is not a GST-free supply under Item 5 because it is not part of the transport.]

Date of decision:  14 January 2002

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 38-355
   section 38-355 table item 5
   section 38-355 table item 5 paragraph (a)
   section 195-1

Other References:
The Macquarie Dictionary, 1997, 3rd Edition, The Macquarie Library Pty Ltd, New South Wales

Keywords
Goods & services tax
Exports
Export of goods
GST free
GST transport
Transport of goods

Business Line:  GST

Date of publication:  31 May 2002

ISSN: 1445-2782

history
  Date: Version:
  14 January 2002 Original statement
You are here 18 February 2011 Archived

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