Edited version of private ruling

Authorisation Number: 1011861441071

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Ruling

Subject: GST and supply of imported goods

Question

Is the supply of imported goods to Australian customers subject to goods and services tax (GST)?

Answer

No, the supply of imported goods to Australian customers is not subject to GST.

Relevant facts and circumstances

You are registered for GST.

You are commencing a business of making purchases for people in Australia of goods available on the internet from overseas.

You are conducting this business through your website.

According to your website:

· you provide your customers with a buying service that will purchase goods on their behalf and ship the goods directly from overseas to their homes;

· customers browse through the shops suggested in your website or through other shops that they find;

· customers complete an order/inquiry form giving you the details of the goods they wish to buy including the link to the goods (URL) , the price in foreign currency and any special offers or coupons for discount;

· you check out the goods they wish to buy, calculate the shipping cost, and send the full cost details of the goods in Australian dollars;

· you issue a PayPal (payment facility) request for the full cost plus your service fee;

· if the customers wish to proceed with the order, they pay the PayPal request either through a bank deposit or by using their credit card;

· when you receive the payments from the customers you send a confirmation email, you purchase the goods;

· your business partner overseas will receive the goods and ship them directly to the customers;

· the customers receive a tracking notice that they can follow until the goods arrive to their door.

You advised that you use your credit card in purchasing the goods from overseas and in paying for the courier services.

The suppliers of the goods are non-residents that do not have a presence in Australia.

The suppliers overseas do not know that you are purchasing the goods on behalf of your customers.

If the goods become defective within the warranty period, the goods are returned to you and you forward them to the supplier. The customers are responsible for shipping costs under this circumstance.

If the goods are damaged in transit, the shipping costs in returning them are covered by insurance.

The value of the goods will be under $1,000. If the value of the goods exceeds $1,000 the customers will be personally liable to pay GST and customs duties.

Customers can also choose to purchase the goods themselves and arrange with you to bring the goods to Australia.

Your have a minimum fee of $15 for the first store regardless of the number of items bought from that store. You charge $5 for each additional store that your customers wish to buy from.

Reasons for decision

GST is payable on taxable supplies.

According to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you make a taxable supply if:

(a) you make the supply for *consideration; and

(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and

(c) the supply is *connected with Australia; and

(d) you are *registered, or *required to be registered.

However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.

You advised that you provide services to your customers in Australia by making purchases on their behalf. You charge a fee for these services. Based on the information provided, you supply the goods to your customers in Australia once you purchased the goods. The customers pay for the goods based on the agreed price in Australian dollars when they confirm their orders. Accordingly, it is the supply of the goods that we will determine on whether it is a taxable supply.

The supply of the goods is for consideration and is made in the course of carrying on your enterprise. Furthermore, you are registered for GST. As such, the requirements in paragraphs

9-5(a), 9-5(b) and 9-5(d) of the GST Act are satisfied. Therefore, we must determine whether the supply of the goods is connected with Australia.

According to subsection 9-25(1) 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. It does not mean that the goods supplied wholly within Australia have to be domestic goods only. The goods being supplied may be domestic or imported goods.

If the supply of goods involves the goods being brought to Australia, subsection

9-25(3) of the GST Act provides that the supply is connected with Australia if the supplier either:

· imports the goods into Australia; or

· installs or assembles the goods in Australia.

In this case, subsection 9-25(3) of the GST Act would be more relevant as the goods are brought into Australia directly to the customers. Accordingly, it must be determined who imports the goods.

Goods and Services Tax Ruling GSTR 2003/15 explains the meaning of 'import' and its derivatives for the purposes of the GST Act.

Paragraphs 223 and 224 of GSTR 2003/15 state:

223. Both a supplier and an acquirer of goods may cause the goods to be brought into Australia. The word 'import' must, therefore, in the context of paragraph 9-25(3)(a) also encompass completing the customs formalities. In that way it can be established which entity imports the goods into Australia, that is, the entity that not only causes the goods to be brought to Australia but also attends to the customs formalities.

224. The supplier, therefore, imports goods into Australia for the purposes of subsection 9-25(3) if it causes the goods to be brought to Australia and it also completes the customs formalities. This is the case where the supplier enters the goods for home consumption or for warehousing or transhipment. However, a supplier does not import goods where the customs formalities for the importation of the goods are completed by the recipient of the supply.

Where the parties intend for the seller to deliver the goods to the buyer's premises but for the buyer to pay the GST to Customs on the entry, the seller may agree to complete the customs formalities on behalf of the buyer and get reimbursed for the cost of completing the formalities as well as any duty. A buyer, by entering into a contract to buy goods that are located outside Australia, where the customs clearance is attended to by the buyer or on the buyer's behalf, is the importer of the goods.

In this case, your customers agree to buy the goods from shops overseas and for you to bring those goods to Australia. As the supplier, you bring the goods into Australia in order to supply them to your customers in Australia. Your customers, as the recipients, cause those goods to be brought to Australia to apply them for their own use.

The value of the goods does not usually exceed $1,000, therefore there is no GST and Customs duty payable and there are no Customs formalities to attend to. However, under the terms agreed to by your customers when they confirm their orders, the customers will be personally liable for the GST and the Customs duty payable on the importation of the goods. This means that, if the importation of the goods is a taxable importation, the customers would complete the Customs formalities. As such, your customers, as the recipients of the goods import the goods into Australia.

Accordingly, the supply of the goods is not connected with Australia under paragraph 9-25(3)(a) of the GST Act because you do not import the goods. The requirement in paragraph 9-5(c) is not satisfied. The supply of the goods is not a taxable supply and is not subject to GST.

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