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Edited version of your private ruling
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Ruling
Subject: GST and goods bought and sold overseas
Question 1
Is GST applicable on goods sold to an Australian client where the goods were offshore?
Answer
No.
Relevant facts and circumstances
You are registered for GST. You plan to buy some goods from an overseas supplier with offshore price term and sell these goods to an Australian client when the goods are still offshore (without entering Australia) with offshore price term.
The client is responsible for sea freight and importation. The client pays for sea freight, customs clearance, and also GST when clearing customs to the client's logistic supplier. The client uses your invoice amount to pay GST when clearing customs.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-5.
A New Tax System (Goods and Services Tax) Act 1999 section 9-25.
Reasons for decision
Summary
The sale of the goods is not connected with Australia and therefore is not drawn into the GST system.
Detailed reasoning
To be a taxable supply for GST purposes, your sale of goods should meet the requirements of 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.
In particular, as per paragraph 9-5(c) above, the sale of the goods is required to be 'connected with Australia'. A supply of goods to Australia is connected with Australia if it meets the requirements of subsection 9-25(3) of the GST Act:
(3) A supply of goods that involves the goods being brought to Australia is connected with Australia if the supplier either:
(a) imports the goods into Australia; or
(b) installs or assembles the goods in Australia.
Your supply of goods overseas does not meet the requirements as you (the supplier) do not import the goods into Australia, nor do you assemble or install the goods in Australia.
As your supply of goods is not connected with Australia, it does not meet the requirements of section 9-5 of the GST Act. Your supply is not subject to GST.
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