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Edited version of private advice
Authorisation Number: 1012629665783
Ruling
Subject: GST and supply of goods for export
Question
Is your supply of the goods GST-free?
Answer
Yes, your supply of the goods is GST-free as the supply satisfies the requirements in subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
Relevant facts and circumstances
You are registered for goods and services tax (GST).
You sold goods to an entity in Australia (the recipient) on FOB terms under which you delivered the goods to an Australian port.
The recipient engaged the services of a freight forwarder to send the goods overseas. You paid the FOB fees to the freight forwarder while the recipient paid the sea freight.
The consideration for the sale of the goods was payable in instalments.
You issued an invoice for the final instalment on 3 June 2013 and received the payments afterwards.
You received documents, including the Bill of Lading, from the freight forwarder indicating that the goods left Australia on 9 June 2013.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-5 and
A New Tax System (Goods and Services Tax) Act 1999 section 38-185.
Reasons for decision
GST is payable on a taxable supply.
Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) 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.
You supplied the goods for consideration and in the course of carrying on your enterprise. The supplied was connected with Australia and you are registered for GST. The requirements in paragraphs 9-5(a) to 9-5(d) of the GST Act were satisfied. Therefore, your supply of the goods is a taxable supply unless it is GST-free or input taxed.
There is no provision in the GST Act under which your supply of the goods would be input-taxed. Thus, what is left to determine is whether the supply is GST-free.
GST-free supply
A supply of goods, where those goods are exported from Australia, is GST-free if the requirements of one of the items in the table in subsection 38-185(1) of the GST Act are met.
Items 1 and 2 in the table are set out below:
GST-free exports | ||
Item |
Topic |
These supplies are GST-free |
1 |
Export of goods - general |
A supply of goods, but only if the supplier exports them from Australia before, or within 60 days (or such further period as the Commissioner allows) after: (a) the day on which the supplier receives any of the *consideration for the supply; or (b) if, on an earlier day, the supplier gives an *invoice for the supply - the day on which the supplier gives the invoice |
2 |
Export of goods - supplies paid for by instalments |
A supply of goods for which the *consideration is provided in instalments under a contract that requires the goods to be exported, but only if the supplier exports them from Australia before, or within 60 days (or such other period as the Commissioner allows) after: (a) the day on which the supplier receives any of the final instalment of the consideration for the supply; or (b) if, on an earlier day, the supplier gives an *invoice for that final instalment - the day on which the suppliers gives the invoice. |
The consideration for your supply of the goods was provided in instalments; therefore, item 2 above is of relevance in determining whether the supply is GST-free under subsection 38-185(1) of the GST Act.
Goods and Services Tax Ruling GSTR 2002/6 explains the requirements for a supply of goods to be GST-free under the items listed in the table in subsection 38-185(1) of the GST Act.
Under items 1 and 2, a supply of goods is GST-free where the supplier exports them from Australia and the export occurs within a specified time period.
Supplier exports the goods
Paragraph 22 of GSTR 2002/6, the requirement that the supplier is the entity that exports the goods is satisfied where either:
(a) the supplier contracts at the supplier's own expense with an international carrier for the transportation of the goods to a destination outside Australia; or
(b) the supplier is responsible for delivering the goods to the operator of a ship or aircraft who, or that, has been engaged by another party to transport those goods to a destination outside Australia; or
(c) the requirements of subsection 38-185(3) of the GST Act are met.
According to paragraph 24 of GSTR 2002/6, a supplier also exports goods where the goods are sent to another country pursuant to a contract of sale with, for example, FOB terms. This is because under these terms, the supplier is responsible for delivering the goods on board a ship that has been engaged to carry them to an overseas destination.
You sold the goods on FOB terms under which you delivered them to a port from which they were transported to an overseas destination. As such, the requirement that you export the goods for the purpose of item 2 is satisfied.
Export occurs within a specified time period
For the purpose of item 2, 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 other period as the Commissioner allows) after the earlier of:
(a) the day on which the supplier receives any of the final instalment of the consideration for the supply; or
(b) the day the supplier gives an invoice for the final instalment of the consideration for the supply.
You issued the invoice for the final instalment of the consideration for the supply of the goods on
3 June 2013 and received the payments afterwards. As such, the 60-day period within which the goods should be exported commenced after you issued the invoice for the final instalment.
Based on the documents that you received from the freight forwarder, the goods left Australia on
9 June 2013. Therefore, the timing requirement for the purpose of item 2 is satisfied.
As your supply of the goods satisfies the requirements of item 2 in the table in subsection
38-185(1) of the GST Act, the supply is GST-free.
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