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Edited version of private ruling

Authorisation Number: 1011595213967

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Ruling

Subject: GST and imported goods

Question

Are you entitled to claim Input Tax Credits on taxable importations?

Advice/Answers

No, you are not entitled to input tax credits for the importations as you do not complete the customs formalities or hold the entry for home consumption document.

Relevant facts

You are registered for GST.

You are a retailer.

You import goods from a non-resident supplier.

Your supplier issues you with a pro-forma document when the purchaser order is generated. This discloses the costs of the product in Australian dollars and gives standard purchase details.

The supplier is responsible for shipment of the goods to Australia, they appoint a customs broker to facilitate the transport of the goods to you.

The broker is responsible for completing the customs formalities. The GST and duties are then paid by the supplier. The supplier then charges these costs to you, by adding the charges to the initial pro-forma document.

The import declaration lists you as the owner. The terms of the contract are 'free on board' (FOB).

You do not have the 'entry for home consumption' document.

You do not have any contract with the supplier, except for what is listed on the invoice.

The Australian Business Register (ABR) does not show the supplier as registered.

You contend that you reimburse the supplier for the costs of the GST and other charges.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 15-15

A New Tax System (Goods and Services Tax) Act 1999 Section 15-5

Reasons for decision

Section 15-15 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you are entitled to an input tax credit for any creditable importation that you make.

Section 15-5 of the GST Act provides that you make a creditable importation if:

Goods and Services Tax Ruling GSTR 2003/15 (GSTR 2003/15) provides guidance on taxable importations and who is liable to pay GST on taxable importations of goods into Australia. Paragraph 149 explains that for the purposes of section 15-5 of the GST Act, an entity imports goods if it:

Both of these factors have to be present to identify the entity that imports.

Generally, there is only one entity which causes goods to be brought to Australia for application to its own purpose after importation. However, paragraph 135 of GSTR 2003/15 provides that where goods are imported in the course of being supplied, there may be cases where both the supplier and the acquirer can be said to have caused the goods to be brought to Australia for their own purpose. For example, the supplier may cause the goods to be brought into Australia for the purpose of supplying them, and the acquirer may cause goods to be brought into Australia to apply them to its own purpose after importation.

In your case, both you and your supplier have caused the goods to be brought into Australia. Your supplier has caused the goods to be brought into Australia for the purpose of supplying them to you. You have caused the goods to be brought into Australia to use in your business after importation.

The customs formalities were completed by your supplier in conjunction with the customs broker.

Therefore, your supplier is the sole entity which satisfies both factors contained in paragraph 149 of GSTR 2003/15 and consequently is the entity that imported the goods for the purposes of section 15-5 of the GST Act.

Accordingly, because you did not import the goods for the purposes of section 15-5 of the GST Act, you have not made a creditable importation. This is regardless of whether or not you satisfy the remaining requirements of section 15-5 of the GST Act.

Therefore, as your purchase of the goods from your supplier is not a creditable importation, you are not entitled to an input tax credit under section 15-15 of the GST Act.

For further information on importations please refer to GSTR 2003/15 - importation of goods into Australia. Additionally, two fact sheets 'GST and imported goods' and 'GST and international freight transport' are enclosed.

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