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Ruling

Subject: GST and temporary import of goods

Question:

Are you entitled to claim input tax credit for the goods and services tax (GST) paid on the importation of goods into Australia?

Answer:

No, you are not entitled to claim input tax credit for goods and services tax (GST) paid on goods that you imported into Australia and was subsequently exported.

Relevant facts and circumstances

You are a non-resident entity based overseas. You are not registered for goods and services tax (GST) in Australia.

An Australian company acts as your sales and marketing agent in Australia. It is not acting as a resident agent for you.

In early 2011 you imported goods into Australia for an exhibition held in early 2011. You arranged with a freight carrier to transport goods from overseas to Australia and prepare and arrange the lodgement of the necessary customs documentation.

On arrival of the goods in Australia, you paid GST on the importation of goods to the Australian Customs and Border Protection Service (Customs).

You were responsible to clear goods through the Customs. However, you authorised the Australian company to complete the customs formalities on your behalf. The Australian company engaged a custom broker and lodged a customs entry form with Customs under its name.

You have provided a copy of the import declaration N10 form which shows your name as the supplier of goods and the Australian company as the importer of goods.

You were the owner of goods and were responsible to pay all the costs and risks involved in transporting goods to Australia.

You did not provide any securities and undertakings to a carnet issuing body or Customs for the temporary importation of goods.

In mid 2011, goods were returned to you unaltered. The Australian company arranged for the export of the goods.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 13-5

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

A New Tax System (Goods and Services Tax) Act 1999 section 171-5

Reasons for decision

An entity is entitled to claim an input tax credit on a creditable importation. 

Under section 15-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you make a creditable importation if: 

(a)      you import goods solely or partly for a creditable purpose; and

(b)      the importation is a taxable importation; and

(c)      you are registered or required to be registered. 

All the requirements above must be satisfied for an importation to be a creditable importation.

The importer of the goods

The first requirement under paragraph 15-5(a) of GST Act provides that you make a creditable importation if you import goods. To determine who is entitled to input tax credits for a creditable importation, it is necessary to identify the entity that imports the goods. We therefore need to determine whether you were the importer of goods. 

Goods and Services Tax Ruling GSTR 2003/15 (available at the Australian Taxation Office website at www.ato.gov.au) provides guidance on how the GST Act applies to the importation of goods into Australia. 

Paragraph 149 of GSTR 2003/15 provides that for the purposes of section 15-5 of the GST Act, the entity that imports goods is the entity that:

· causes the goods to be brought to Australia for application to its own purposes after importation (whether by way of supply, use or otherwise); and

· completes the customs formalities for the entry of the goods (whether directly or through a customs broker or an agent).

You advised that you brought goods to Australia to display in an exhibition. You own goods and have borne all the costs and risks involved in transporting goods to Australia. You were responsible for clearing goods through Customs and did so through the Australian company who completed the customs formalities on your behalf. Based on the information provided, you were the importer of goods.

Creditable importation

One of the requirements for making a creditable importation under paragraph 15-5(c) of GST Act is that you are registered or required to be registered for GST in Australia.

You advised that you are not registered or required to be registered for GST in Australia. Therefore, you do not satisfy the requirement of paragraph 15-5(c) of GST Act.

As one of the requirements of section 15-5 of the GST Act was not satisfied, you did not make a creditable importation. Accordingly, you are not entitled to claim an input tax credit for the GST paid on the taxable importation of goods into Australia.

There is no provision in the GST Act for an unregistered entity to obtain a refund of GST on goods that have been imported, even if they are subsequently re-exported. If you are registered for GST, the GST paid to Customs may be claimed as an input tax credit in your activity statement.

Temporary imports

Under Division 171 of the GST Act, no GST is payable on a taxable importation if a security or undertaking described in section 162 or section 162A of the Customs Act 1901 is given and complied with, and the goods are exported within a specified period, or one of the circumstances specified in the relevant Customs regulations applies.

Securities and undertakings may be taken in respect of temporarily imported goods, as prescribed by Customs regulations. These include goods imported by temporary residents or tourists, goods imported for use at a public exhibition or entertainment event, and goods covered by an inter-governmental agreement such as goods covered by an international carnet.

The conditions include that the goods cannot be lent, sold, pledged, mortgaged, hired, given away, exchanged or otherwise disposed of or altered in any way. If the conditions of the security are contravened, GST becomes payable on the taxable importation, as the importation does not satisfy the requirements of section 171-5 of the GST Act.

The conditions also require that the goods must be exported within 12 months (or such further time as Customs allows) after their importation. GST becomes payable if the goods are not exported, unless they have no value as a result of being accidentally damaged or destroyed, or in the case of an animal, it has died or been destroyed as a result of an accident or illness.

Based on the information provided, you did not inform the Customs that goods was a temporary import. Furthermore, you advised us that you have not provided any security or undertakings with a carnet issuing body overseas or Australian Customs. Therefore, Customs treated the supply of goods as taxable importation and charged GST accordingly.

Further information regarding the temporary importation of goods is available from the Customs website at: www.customs.gov.au

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