Edited version of your private ruling

Authorisation Number: 1012602403623

Ruling

Subject: GST and export of goods

Question 1

Is the sale of goods online to overseas customers GST-free?

Answer

Yes

Question 2

What documents are required to support the export sales?

Answer

You must have sufficient documentary evidence to show that the goods supplied were exported and that you exported them within the specified time. These documents will usually consist of:

• the transport documents evidencing the carriage of the goods out of Australia

• commercial documents in relation to the supply that identify the supplier, the recipient, the goods and the payment arrangements (for example, a sales invoice) and

• Customs and other official documents.

Relevant facts and circumstances

You sell various goods online.

You have Australian and overseas customers.

Following is the process map for sales to overseas customers:

• The overseas customer places an order via the website.

• The overseas customer pays the full price (including postage and handling cost) via a payment system.

• Once payment is confirmed, you mail the parcel within 24 working hours in accordance with the overseas customer's order. Parcels are sent via a postal delivery service on a daily basis.

You have the following documentation to support the overseas sale:

• An invoice issued to the overseas customer which outline the customer's name, overseas address and other relevant information.

• A postal delivery service receipt showing international postage paid. These postal receipts are for bulk international postage and there is nothing in the receipt to identify customer's names or addresses.

Once the parcels are posted, you attach a copy of the postal service receipt and the customer's invoices sent under that receipt.

No customs declarations are required for the individual parcels as they are considered low value.

You have provided samples of invoices and a postal service delivery receipt.

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 Subsection 38-185(1).

A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-185(3).

A New Tax System (Goods and Services Tax) Act 1999 Section 195-1.

Taxation Administration Act 1953 Section 382-5 of Schedule 1

Reasons for decision

Question 1

Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states that you must pay the GST payable on any taxable supply that you make.

Section 9-5 of the GST Act provides that you make a taxable supply if:

• you make the supply for consideration

• the supply is made in the course or furtherance of an enterprise that you carry on

• the supply is connected with Australia and

• 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.

There are no provisions of the GST Act that would make the export of your goods input taxed. However, there is a provision of the GST Act that makes the export of your goods GST-free.

Item 1 in the table in subsection 38-185(1) of the GST Act (item 1) provides that a supply of goods is GST-free where the supplier exports the goods from Australia before or within 60 days after:

• the day on which the supplier receives any of the consideration for the supply, or,

• if, on an earlier day, the supplier gives an invoice for the supply the day on which the supplier gives the invoice.

Goods and Services Tax Ruling GSTR 2002/6 explains the requirements for supplies of goods to be GST-free exports.

For the supply of goods to be GST-free under item 1, the supplier must export the goods before, or within a 60 day period (or such further period as the Commissioner allows). The law requires the goods to be actually exported before or within the time period.

Given that goods can only leave Australia on board a ship or aircraft, paragraph 33 of GSTR 2002/6 provides that the time at which goods are exported from Australia is the time at which the ship or aircraft departs its final Australian port or airport and clears the territorial limits of Australia.

Paragraphs 34 and 35 of GSTR 2002/6 provide that the timing requirement is met if the ship or aircraft departs its final Australian port or airport and leaves Australia before or within 60 days (or such further period as the Commissioner allows) after the earlier of:

(a) the day on which the supplier receives any of the consideration for the supply or

(b) the day the supplier gives an invoice for the supply.

You advised that you send the goods to your overseas customers through a postal delivery service within 24 hours of receiving any consideration or issuing an invoice for the goods ordered. You receive a receipt from the postal delivery service indicating the number of parcels with international destinations. Although you engage the services of a postal delivery service to send the goods overseas, you are considered to be exporting the goods. As such, the requirements in item 1 are met and the supply of your goods is GST-free.

As the delivery forms part of a composite supply of the goods, the postage and handling costs on-charged are GST-free.

Please note that to demonstrate that a supply is a GST-free export, you must have sufficient documentary evidence to show that all the requirements of item 1 are met. You must obtain such documentary evidence during the process of exporting the goods, or within a reasonable period of time after the goods have been exported.

Question 2

The keeping of records for GST purposes is governed by section 382-5 of Schedule 1 to the Taxation Administration Act 1953 (TAA), which provides that an entity must:

• keep records that record and explain all transactions and other acts the entity engages in that are relevant to a supply, importation, acquisition, dealing, manufacture or entitlement, and

• retain those records for at least five years after the completion of the transactions or acts to which they relate.

In relation to section 38-185 of the GST Act, the supplier must have documentary evidence to show that the goods supplied were exported and that the supplier exported them within the specified time.

Paragraphs 296 to 299 of Goods and Services Tax Ruling GSTR 2002/6 discuss documentary evidence in relation to the export exemption.

We consider that a supplier has sufficient documentary evidence when the supplier has sufficient documentation for a person independent of the transaction to reasonably conclude that:

• there was a supply of goods;

• the supplier was the entity that exported the goods; and

• the goods were exported from Australia and within the 60 days specified time limits.

The types of records available to a supplier will vary depending on the circumstances of the supply. Table 1 of Appendix B of GSTR 2002/6 lists the types of transport documentation a supplier may have depending on the mode of transport used to export the goods. Table 2 of Appendix B lists the types of commercial documentation and official documents that a supplier may have to explain the transaction. A combination of these documents will connect the supply of the goods with the export of those goods. The lists of documents described in the Appendices are not exhaustive, but merely offer guidance as to the types of documents available.

Paragraphs 302 to 312 provide a guide to the types of documents which will demonstrate that the elements of item 1 are satisfied. These documents will usually consist of:

(a) the transport documents evidencing the carriage of the goods out of Australia;

(b) the commercial documents in relation to the supply that identify the supplier, the recipient, the goods and the payment arrangements. The commercial documents should clearly link to the transport documents; and

(c) Customs and other official documents.

Where goods are despatched through a postal delivery service to an overseas destination, sufficient documentary evidence may include a combination of the following:

• a copy of the customs declaration, suitably endorsed by the postal delivery service, where the goods have been sent by mail;

• evidence from the postal delivery service that postage costs were paid; and

• a commercial document in relation to the supply that identifies you, the recipient, the goods and the payment arrangement, for example, your sales invoice.

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