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Edited version of your private ruling
Authorisation Number: 1012557727530
Ruling
Subject: goods and services tax (GST) and sales of topsoil
Question
Is GST payable on your sales of the topsoil?
Answer
Yes.
Relevant facts and circumstances
You are registered for GST.
You sell topsoil.
You remove the topsoil from a flood plain on farmland located in Australia.
The topsoil is dug with an excavator and loaded directly onto a customer's truck.
No screening or enhancing of the material takes place. It is simply directly dug from the paddock.
You do not supply cartage. Your customers provide their own transport.
You charge your customers on a per cubic metre basis for the topsoil removed.
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 section 9-40
Reasons for decision
Summary
GST is payable on your sales of the topsoil because the requirements of section 9-5 of the GST Act are met.
Detailed reasoning
GST is payable by you on your taxable supplies.
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
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.
(*Denotes a term defined in section 195-1 of the GST Act)
There is no requirement in the GST Act that where an entity sells a thing it must have added value to the thing in order for the sale to be a taxable supply.
You meet the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because:
· you supply topsoil for consideration
· these supplies are made in the course or furtherance of an enterprise that you carry on
· these supplies are connected with Australia, and
· you are registered for GST
There are no provisions in the GST Act under which your sales of the topsoil are GST-free or input taxed.
As all of the requirements of section 9-5 of the GST Act are met, your sales of the topsoil are taxable supplies. Therefore, GST is payable on your sales of the topsoil.
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