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Ruling
Subject: GST and acquisition of goods from an overseas entity
Question
Is the supply of goods to an Australian company (Ausco) by an overseas company (Ovco) a taxable supply for the purposes of paragraph 11-5(b) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Advice
Yes, the supply of the goods to Ausco by Ovco is a taxable supply for the purposes of paragraph 11-5(b) of the GST Act.
Relevant facts
Ausco is an Australian distributor of goods and is registered for the goods and services tax (GST). They can only buy the goods from Ovco, a non-resident company and can only sell them in Australia. Ovco is not registered for GST.
Ovco purchases the goods they sell to Ausco from an Australian manufacturer in Australia. The goods never leave Australia and are never in Ovco's control when they are purchased by Ovco and sold to Ausco. The GST annual turnover of the goods that Ovco sold to Ausco is over the GST turnover threshold of $75,000.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5; and
A New Tax System (Goods and Services Tax) Act 1999 paragraph 11-5(b).
Reasons for decision
You are entitled to input tax credits for your creditable acquisitions. Section 11-5 of the GST Act provides for the requirements to be satisfied for a creditable acquisition and includes that the supply of the thing to you is a taxable supply (paragraph 11-5(b) of the GST Act).
We will now consider whether paragraph 11-5(b) of the GST Act is satisfied when Ausco acquires the goods from the non-resident supplier Ovco.
Taxable supply
Australian GST is payable on a taxable supply. Section 9-5 of the GST Act provides that you make a taxable supply if:
· you make the supply for consideration; and
· the supply is made in the course or furtherance of an enterprise that you carry on; and
· the supply is connected with Australia; and
· you are registered or required to be registered for GST.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
From the information received, the supply of the goods made by the non-resident supplier Ovco satisfies paragraphs 9-5(a) to 9-5(d) of the GST Act as:
· the non-resident supplier makes the supply for consideration;
· the supply is made in the course of an enterprise that the non-resident supplier carries on overseas;
· under subsection 9-25(1), (2) and (3) of the GST Act a supply of goods is connected with Australia if the goods are:
· delivered or made available in Australia;
· removed from Australia; or
· brought to Australia and the supplier either imports the goods, or installs or assembles the goods in Australia.
The goods supplied by Ovco are not removed from Australia or brought to Australia. They are delivered and made available to Ausco in Australia. The supply of the goods is therefore connected with Australia.
Under section 23-5 of the GST Act, you are required to be registered for GST if you are carrying on an enterprise and your GST annual turnover meets or exceeds the GST registration turnover threshold of A$75,000 (A$150,000 if you are a non-profit body).
From the information received, the GST annual turnover of the non-resident supplier for their supplies that are connected with Australia is above A$75,000. Accordingly, the non-resident supplier is required to be registered for GST.
However, the supply of the goods is not a taxable supply to the extent that it is GST-free or input taxed.
Based on the facts provided, there is no provision in the GST Act that makes the supply of the goods in Australia input taxed or GST-free. All the requirements for a taxable supply in section 9-5 of the GST Act are therefore satisfied.
Accordingly, the supply of goods to Ausco by Ovco is a taxable supply for the purposes of paragraph 11-5(b) of the GST Act.
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