You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.
Edited version of your written advice
Date of advice: 22 August 2018
Subject: GST and export goods
Is the supply of goods by an Australian entity (you) to Australian customers subject to GST, where you export the goods from Australia to overseas?
No, your supply of goods to Australian customers will be GST-free under Item 1 in the table in subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are an Australian company who is registered for GST in Australia.
You operate a retail and export business in Australia and specialises in selling Australian products to Australian customers at a premium price.
Australian customers are individual personal shoppers (customers) who purchase the goods on behalf of a non-resident to export to overseas. Normally Australian customers buy the goods to be shipped to their families and friends. They purchase the goods which are manufactured in Australia, because they trust the quality of the Australian brands.
Australian customers walk into your shop and buy the goods from you to export to overseas. Then they pay you and request you to pack and arrange the freight forwarder to transport the goods to destinations overseas.
After receiving the payment for the goods, you pack the goods and arrange a courier and send the goods to the freight forwarding company within 20 working days. The courier company then exports the good from Australia within 4 or 5 days.
You are responsible for contracting a freight company to transport and export the goods from Australia to China. You have a contract with the international courier company to export the goods to overseas. You pay to the international courier at your own expense for the transportation of goods to overseas destinations. The international courier company invoices you directly on a monthly basis for the supply of its transportation services.
You have provided a copy of tax invoices issued by the international company.
Reasons for decision
GST is payable on a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
GST is payable on a taxable supply. Section 9-5 of the GST Act states:
You make a taxable supply if:
(a) you make the supply for consideration; and
(b) the supply is made in the course or furtherance of an enterprise that you carry on; and
(c) the supply is connected with the indirect tax zone (Australia); and
(d) you are registered or required to be registered.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
Your supply of the goods will be taxable if all the requirements in section 9-5 of the GST Act are satisfied.
From the facts given, you have satisfied all the conditions of paragraphs 9-5(a) to (d) of the GST Act, as follows:
(a) you make the supply of the goods to the Australian customers and in return you receive consideration for the supply by way of payment(s);
(b) you make the supply in the course or furtherance of your business;
(c) the supply involves goods being removed from Australia (and therefore the supply is connected with Australia); and
(d) you are registered for GST in Australia.
Hence, your supply of goods to the Australian customers is taxable to the extent that it is not GST-free or input taxed.
From the facts given, your supply of goods does not satisfy the input taxed provisions under the GST Act. The GST-free provisions must also be taken into consideration.
Section 38-185 and GST-free supply
Section 38-185 of the GST Act covers the GST-free export of goods. A supply is GST-free under Item 1 in the table in subsection 38-185(1) of the GST Act (Item 1) if the supply is:
a supply of goods, but only if the supplier exports them from Australia before, or within 60 days (or such further period as the Commissioner allows) after:
(a) the day on which the supplier receives any of the consideration for the supply; or
(b) if, on an earlier day, the supplier gives an invoice for the supply - the day on which the supplier gives the invoice.
Goods and Services Tax Ruling GSTR 2002/6 covers the export of goods.
Goods and Services Tax Ruling GSTR 2002/6 at paragraphs 32 to 35 describes the requirements of Items 1. Under Item 1, a supply of goods is GST-free where the supplier exports them from Australia and the export occurs within a specified time period.
For a supply of the goods to be GST-free under Items 1, the supplier must export the goods before, or within a 60 day period (or such further period as the Commissioner allows).
Supplier is the entity that exports
The requirement that the supplier is the entity that exports the goods is satisfied where:
● the supplier contracts at their own expense with an international carrier for the transportation of the goods to a destination outside Australia; or
● the supplier is responsible for delivering the goods to the operator of a ship or aircraft that has been engaged by another party to transport those goods to a destination outside Australia; or
● the requirements of subsection 38-185(3) of the GST Act are met.
From the facts given, you organise at your own expense the international courier for transport the goods to export from Australia to overseas. Hence, we consider that you as the supplier export the goods to a destination outside Australia.
The next step is to determine whether the good will be exported from Australia within the 60-day period.
60-day period for export of goods
The supply of goods is GST-free under Item 1 if the goods are exported by the supplier from Australia before or within 60 days (or such further period as the Commissioner allows) after:
(a) the day on which the supplier receives any consideration for the goods; or
(b) the day on which the supplier issues an invoice for the goods.
The supply of the goods by you will be GST-free if you export the goods before, or within the 60-day period.
You advised us that after receiving the payment for the goods, you pack the goods and send the goods to the courier company within 20 working days. The international courier company then exports the goods from Australia within 4 to 5 days. Therefore the goods will be exported from Australia before, or within the 60-day period.
Accordingly, the supply of the goods by you satisfies all the requirements in Item 1 and the supply will be GST-free under subsection 38-185(1) of the GST Act.
You must obtain and hold sufficient documentary evidence to show that the goods are exported by that date.