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Edited version of private ruling
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Ruling
Subject: GST and supply of Labels
Question
Is your sale of labels to an Australian company GST-free under the A New Tax System (Goods and Services Tax) 1999 Act (GST Act) where the labels are delivered to an overseas address?
Answer: No.
Your sale of labels to an Australian company is not GST-free under the GST Act where the labels are delivered to an overseas address. This is because the GST Act is not applicable to your supply as your supply of labels is not connected with Australia.
Relevant facts and circumstances
You are an Australian company and are registered for the goods and services tax (GST).
Your customer, an Australian based company has placed an order for labels from you and they have requested that you deliver the labels to an overseas address.
You order the requested labels from an overseas company.
The overseas company sources and/or manufactures the labels and delivers them to the nominated overseas address. The overseas company invoices you for this supply.
Detailed reasoning
Characterisation of the supply
Section 9-10 of the GST Act defines 'supply' as any form of supply whatsoever and includes a supply of goods and a supply of services.
Under section 195-1 of the GST Act, a supply of 'goods' means any form of tangible personal property.
The labels are tangible property and therefore are treated as 'goods' for GST purposes.
The next step is to determine the GST status of your supply of goods when they are delivered to an overseas address.
GST status of the supply of goods
GST is payable on a taxable supply. Under section 9-5 of the GST Act you make a taxable supply if:
a) you make the supply for consideration;
b) the supply is made in the course or furtherance of an enterprise that you carry on;
c) the supply is connected with Australia; and
d) you are registered or required to be registered for GST.
However, the supply is not a taxable to the extent that it is GST-free or input taxed.
For a supply to be a taxable supply all the requirements listed in section 9-5 of the GST Act must be satisfied.
From the information received, you satisfy paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act as you make the supply for consideration and in the course of an enterprise(business) that you carry on in Australia; further, you are registered for GST.
What needs to be determined is whether your supply of goods to your customer is connected with Australia.
Connected with Australia
Goods and services Tax Ruling GSTR 2000/31(available at our website) provides guidance on when a supply is connected with Australia.
Under subsections 9-25 (1), 9-25(2) and 9-25(3) of the GST Act, a supply of goods is connected with Australia if:
· the goods are delivered or made available in Australia to the recipient of the supply; or
· the supply of the goods involves the goods being removed from Australia; or
· the supply of the goods involves the goods being brought to Australia and the supplier either imports the goods into Australia or installs or assembles the goods in Australia.
From the information received, the supply of the goods to your customer is manufactured overseas and delivered to an overseas address. Your supply is therefore not connected with Australia as:
· the goods are not delivered or made available to your customer in Australia; and
· the supply of the goods does not involve the goods being removed from Australia; and
· the supply of the goods does not involve the goods being brought to Australia.
Since your supply is not connected with Australia, paragraph 9-5(c) of the GST Act is not satisfied.
Your supply of goods is therefore not a taxable supply under section 9-5 of the GST Act as all the requirements in that section are not satisfied. You will therefore not be liable for GST on that supply.
Summary
Your supply of goods to your customer is not subject to GST because the GST Act is not applicable to the supply since it is not connected with Australia.
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