ATO Interpretative Decision

ATO ID 2003/14

Goods and Services Tax

GST and the delivery of mineral ore to a common stockpile
FOI status: may be released

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 The scope of the new term, however, remains the same as the repealed definition of 'Australia' used in those Acts.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.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 entity A, an ore supplier, making a taxable supply to entity B, another ore supplier, under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when entity A delivers ore to a common stockpile for blending with entity B's ore?

Decision

No, entity A is not making a taxable supply to entity B under section 9-5 of the GST Act when it delivers ore to a common stockpile for blending with entity B's ore. In this situation, there is no supply being made by entity A to entity B.

Facts

Entity A is an ore supplier. Entity B is another ore supplier. Both entity A and entity B enter into separate contracts to supply ore to a single purchaser. Entity A has not entered into any agreement to supply any goods or services to entity B. Conversely, entity B has not agreed to supply any goods or services to entity A. Under the terms of the contract of sale, entity A is required to deliver the ore to a common stockpile where it is blended with other similar ore (including the ore belonging to entity B) and then loaded on board a vessel for transport. Once the various ores are blended in the common stockpile, a new and specific blend of ore is created. The ore is blended due to the delivery requirements of the purchaser and not as a result of any agreement between entities A and B. Entity B does not obtain any rights in relation to entity A's ore. Entity A is registered for goods and services tax (GST).

Reasons for Decision:

Under section 9-5 of the GST Act, an entity makes a taxable supply if:

•: it makes a supply for consideration; and
•: the supply is made in the course or furtherance of an enterprise that it carries on; and
•: the supply is connected with Australia; and
•: the entity is registered or required to be registered for GST.

The first element in section 9-5 of the GST Act requires that an entity make a supply for consideration. In this case, entity A has entered into a contract with the purchaser for the supply and delivery of a specific type of ore to a common stockpile. Entity A has not entered into any agreement to supply any goods or services to entity B. Conversely, entity B has not agreed to supply any goods or services to entity A.

Although the ore of entity A is blended in the common stockpile with the ore of entity B, entity B does not obtain any rights in relation to entity A's ore. The ore is blended due to the delivery requirements of the purchaser and not as a result of any agreement between entities A and B. Therefore, there is no supply of ore from entity A to entity B, and the first requirement in section 9-5 of the GST Act is not met.

As such, entity A is not making a taxable supply to entity B under section 9-5 of the GST Act when it delivers ore to a common stockpile for blending with entity B's ore.

Date of decision: 11 April 2002

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5

Keywords
Goods and services tax
GST supplies & acquisitions
Taxable supply
Supply

Siebel/TDMS Reference Number: CW270081-1

Business Line: Indirect Tax

Date of publication: 14 February 2003

ISSN: 1445-2782

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