ATO Interpretative Decision
ATO ID 2002/294
Goods and Services Tax
GST and supply of goods to Cocos (Keeling) IslandsFOI status: may be released
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With effect from 1 July 2015, the term 'Australia' is replaced in nearly all instances within the GST, Luxury Car Tax and Wine Equalisation Tax legislation with the term 'indirect tax zone' by the Treasury Legislation Amendment (Repeal Day) Act 2015. The scope of the new term, however, remains the same as the repealed definition of 'Australia' used in those Acts. For readability and other reasons, 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 GST Act.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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, a supplier of goods, making a GST-free supply 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), when it sells goods to a customer from the Cocos (Keeling) Islands, and has the goods couriered to that customer's address on those islands, within 60 days of receiving payment for those goods?
Decision
Yes, the entity is making a GST-free supply under item 1 in the table in subsection 38-185(1) of the GST Act when it sells goods to a customer from the Cocos (Keeling) Islands, and has the goods couriered to that customer's address on those islands, within 60 days of receiving payment for those goods.
Facts
The entity is a supplier of goods. The entity sells goods to a customer from the Cocos (Keeling) Islands. The goods are paid for immediately, but rather than taking them from the shop, the customer pays an additional fee for the entity to arrange delivery to their home.
The entity has the goods couriered to the customer's address on the Cocos (Keeling) Islands within 60 days of the transaction.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Subsection 38-185(1) of the GST Act specifies the circumstances where the supply of goods for consumption outside Australia is GST-free. Item 1 in the table in subsection 38-185(1) of the GST Act (Item 1) is most relevant in this case.
Item 1 provides that a supply of goods is GST-free if the supplier exports them from Australia before, or within 60 days after:
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- the day on which the supplier receives any of the consideration for the supply; or
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- if, on an earlier day, the supplier gives an invoice for the supply - the day on which the supplier gives the invoice.
Item 1 requires that the supplier export the goods from Australia. The entity (the supplier) is having the goods couriered to the customer's address on the Cocos (Keeling) Islands. Therefore, the entity is exporting the goods. However, it is necessary to determine whether exporting goods to the Cocos (Keeling) Islands constitutes exporting the goods from 'Australia'.
Paragraph 17(a) of the Acts Interpretation Act 1901 provides that in any Act, unless the contrary intention appears, Australia means the Commonwealth of Australia and, when used in a geographical sense, includes the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands, but does not include any other external Territory. For GST purposes, section 195-1 of the GST Act shows such contrary intention.
Section 195-1 of the GST Act provides that the definition of Australia does not include any external Territory. The term 'external Territory' is not defined in the GST Act. However, 'external Territory' is specifically defined in the Acts Interpretation Act 1901.
Paragraph 17(pd) of the Acts Interpretation Act provides that in any Act, unless the contrary intention appears, 'external Territory' means a Territory, not being an internal Territory, for the government of which as a Territory, provision is made by any Act.
Paragraph 17(pe) of the Acts Interpretation Act provides that only the Australian Capital Territory, the Jervis Bay Territory or the Northern Territory satisfy the definition of internal Territory.
Paragraph 17(p) of the Acts Interpretation Act defines 'Territory' as a Territory referred to in section 122 of the Commonwealth of Australia Constitution Act (Constitution), and includes a Territory administered by the Commonwealth under a Trusteeship Agreement.
Section 122 of the Constitution provides that the Parliament may make laws for the government of any territory surrendered by any State to and accepted by the Commonwealth, or of any territory placed by the Queen under the authority of and accepted by the Commonwealth, or otherwise acquired by the Commonwealth, and may allow the representation of such territory in either House of the Parliament to the extent and on the terms which it thinks fit.
Section 5 of the Cocos (Keeling) Island Act 1955 provides that the Cocos (Keeling) Islands are declared to be accepted by the Commonwealth as a Territory under the authority of the Commonwealth and is known as the Territory of Cocos (Keeling) Islands. As such, the Cocos (Keeling) Islands satisfy the definition of Territory under paragraph 17(p) of the Acts Interpretation Act.
As the Territory of Cocos (Keeling) Islands is a Territory that is not an internal Territory and provision for its government is made by the Cocos Keeling Islands Act, it is an external Territory as defined in paragraph 17(pd) of the Acts Interpretation Act.
As the Territory of Cocos (Keeling) Islands is an external Territory, it is excluded from the definition of Australia under section 195-1 of the GST Act. Therefore, the entity is exporting the goods from Australia when it has the goods couriered to customer's address on the Cocos (Keeling) Islands.
The customer paid for the goods at the time of sale and the entity has the goods couriered to the customer's address on the Cocos (Keeling) Islands within 60 days of the transaction. The requirements of Item 1 are satisfied. Therefore, the entity is making a GST-free supply when it sells goods to a customer from the Cocos (Keeling) Islands, and has the goods couriered to that customer's address on those island, within 60 days of receiving payment for those goods.
Date of decision: 22 March 2002
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
subsection 38-185(1)
subsection 38-185(1) table item 1
section 195-1
paragraph 17(a)
paragraph 17(p)
paragraph 17(pd)
paragraph 17(pe) Commonwealth of Australia Constitution
section 122 Cocos (Keeling) Island Act 1955
section 5
Related Public Rulings (including Determinations)
Goods and Services Tax Ruling GSTR
2002/6
Keywords
Goods & services tax
Exports
Consumption outside Australia
ISSN: 1445-2782