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Ruling
Subject: Goods and services tax (GST) and sale of goods
Question
Will GST be payable on your sales of goods to your customer where the goods are manufactured overseas and your customer brings the goods into Australia?
Answer
No.
Relevant facts and circumstances
You are registered for GST.
You will purchase goods that will be manufactured overseas.
You will sell the goods to your customer.
After you have sold the goods to your customer, your customer will pick up the goods in the country of manufacture and bring them to Australia. You will have nothing to do with the goods after you sell them.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
A New Tax System (Goods and Services Tax) Act 1999 subsection 9-25(3)
A New Tax System (Goods and Services Tax) Act 1999 section 9-40
Reasons for decision
Summary
GST will not be payable on your sales of the goods under the circumstances because your sales of the goods will not be connected with Australia.
Detailed reasoning
GST is payable where you make a taxable supply.
You make a taxable supply where you satisfy the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which states:
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
c) you *carry on; and
d) the supply is *connected with Australia; and
e) 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.
(*Denotes a term defined in section 195-1 of the GST Act)
Subsection 9-25(1) of the GST Act states:
A supply of goods is connected with Australia if the goods are delivered, or
made available, in Australia to the *recipient of the supply.
Subsection 9-25(2) of the GST Act states:
a) A supply of goods that involves the goods being removed from Australia is
b) connected with Australia.
Subsection 9-25(3) of the GST Act states:
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.
Paragraph 141 of Goods and Services Tax Ruling GSTR 2000/31 provides guidance in determining whether a supply of goods is connected with Australia. It states:
141. If a supply of goods involves the goods being delivered, or made available, to the recipient outside of Australia and the recipient subsequently imports the goods into Australia, the supply is not connected with Australia. The supply is not a taxable supply under section 9-5. However, the importation is a taxable importation and the recipient is liable to pay GST on the taxable importation.
Your supply of the goods will involve the goods being made available to the recipient outside of Australia and the recipient will subsequently import the goods into Australia.
Therefore, your sale of the goods will not be connected with Australia. Hence, the requirement of paragraph 9-5(c) of the GST Act will not be satisfied. As not all of the requirements of section 9-5 of the GST Act will be satisfied, you will not make taxable supplies of the goods. Therefore, GST will not be payable by you on your sales of the goods to your customer.
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