ATO Interpretative Decision

ATO ID 2004/482 (Withdrawn)

Goods and Services tax

• This ATO ID is withdrawn as it does not accurately reflect the ATO view due to legislative changes contained in Tax Laws Amendment (2010 GST Administration Measures No.3) Act 2010 (91 of 2010).
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, a salvage operator, making a GST-free supply under section 38-355 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies salvage services to a vessel stranded in Australian waters?

Decision

No, the entity is not making a GST-free supply under section 38-355 of the GST Act when it supplies salvage services to a vessel stranded in Australian waters.

The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a salvage operator. The entity has tugs that are fitted with salvage equipment to provide immediate response to emergencies at sea.

A vessel, passing through Australian waters to a destination outside Australia, is stranded in Australian waters and requires emergency salvage services.

The entity provides the salvage services in order to save the vessel. Once the vessel is salvaged, the entity's tug tows the vessel to the nearest Australian port.

An agreement for the salvage services is executed between the entity and the Master of the ship, on behalf of the owners of the property to be salvaged, that is the owner of the vessel as well as the cargo owners.

The entity's supply of salvage services is not GST-free under section 38-190 of the GST Act.

The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.

Reasons for Decision

Section 38-355 of the GST Act provides that certain supplies of transport and related services are GST-free. Item 5 in the table in section 38-355 of the GST Act (Item 5) provides that the supply of international transport of goods:

(a)

from their place of export in Australia to a destination outside Australia

(b)

from a place outside Australia to their place of consignment in Australia, or

(c)

from a place outside Australia to another place outside Australia

is GST-free.

However, (a) and (b) of Item 5 only apply to the transport of goods within Australia if it is supplied by the supplier of the transport of goods to or from Australia.

The entity's salvage services involve transporting the vessel from a place in Australian waters to an Australian port. These services involve the transport of goods wholly within Australia. The entity's supply does not involve the transport of goods to or from Australia or between places outside Australia. As such, the entity's supply is not a supply of international transport of goods and is not covered by Item 5.

The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under any other provision of Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies salvage services to a vessel stranded in Australian waters where the vessel's destination is a place outside Australia.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   section 38-190 table item 2
   section 38-355
   section 38-355 table item 5
   Division 40

Keywords
Goods and services tax
GST transport
Arranging transport
Transport of goods
GST supplies & acquisitions
Taxable supply

Business Line:  GST

Date of publication:  11 June 2004

ISSN: 1445-2782