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Edited version of your written advice
Authorisation Number: 1012743248115
Ruling
Subject: GST and supply of goods that are shipped and installed overseas
Question 1
When you manufacture, ship and install goods at a location outside Australia and the goods are purchased by an entity within Australia, does goods and services tax (GST) apply to this supply?
Advice
From the information received, you are making a supply of goods and a supply of installation services when you manufacture, ship and install goods at a location outside Australia and the goods are purchased by an entity within Australia.
GST will not apply to the supply of the goods where the goods are exported within 60 days from the day you either receive consideration for the supply or give an invoice as the supply of the goods will be GST-free under item 1 in the table in subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
The supply of installation services is GST-free under item 1 in the table in subsection 38-190(1) of the GST Act based on the information received.
Question 2
When you manufacture goods and ship them to a recipient located overseas does goods and services tax (GST) apply to this supply?
Advice
Based on the information received, GST will not apply to the supply of the goods that are manufactured and shipped to a recipient located overseas where the goods are exported within 60 days from the day you either receive consideration for the supply or give an invoice as the supply of goods will be GST-free under item 1 in the table in subsection 38-185(1) of the GST Act.
Relevant fact
You are registered for GST and manufactures goods which you supply within Australia and overseas.
On occasion you supply your goods to agencies that have offices located overseas and to recipients located overseas. In the sale contract with these entities you agree to ship the goods to an overseas address. Installation of the goods once they arrive overseas may or not form part of the contract.
You advised the contract will stipulate that the trading terms are 30 days after delivery and therefore you consider the goods have been shipped and installed prior to raising an invoice. You further advised that you would unlikely receive payments in instalments.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 38-185
A New Tax System (Goods and Services Tax) Act 1999 Section 38-190
Reasons for decisions
Questions 1 and 2
Characterisation of supply
Based on the information received you are making a supply of goods and a supply of installation services when shipping the manufactured goods overseas and installing them at that overseas location.
We will now consider the GST status of the supply of goods and supply of installation services.
Taxable supply
GST is payable on a taxable supply. An entity makes a taxable supply under section 9-5 of the GST Act if:
a) the entity makes the supply for consideration; and
b) the supply is made in the course or furtherance of an enterprise that the entity carries on; and
c) the supply is connected with Australia; and
d) the entity is registered or required to be registered for GST.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
All of the above requirements must be satisfied for a supply to be a taxable supply under section 9-5 of the GST Act.
Supply of goods
Your supply of goods satisfies paragraphs 9-5(a) to 9-5(d) of the GST Act as:
a) you make the supply for consideration;
b) the supply is made in the course of a business that you carry on;
c) your supply is connected with Australia under subsection 9-25(2) of the GST Act as your supply involves the goods being removed from Australia; and
d) you are registered for GST.
However, your supply of goods is not a taxable supply to the extent that it is GST-free or input taxed.
There is no provision under the GST Act that makes your supply of goods input taxed. We will now consider the GST-free provisions.
GST-free
Relevant to your supply of goods that is shipped to an overseas location is item 1 in the table in subsection 38-185(1) of the GST Act (Item 1).
Item 1 is about export of goods and provides that the supply is GST-free 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.
From the information received you are responsible to ship the goods overseas and therefore you are the one exporting the goods from Australia. Where you ship the goods within 60 days from the day you either receive payment for the supply or give an invoice, your supply is GST-free under Item 1.
For more information on item refer to Goods and Services Tax Ruling GSTR 2002/6 which is available from the legal database of www.ato.gov.au
Supply of installation services
Your supply of installation services satisfies paragraphs 9-5(a) to 9-5(d) as:
a) you make the supply for consideration;
b) the supply is made in the course of a business that you carry on;
c) the supply is connected with Australia as it is made through a business that your carry on in Australia; and
d) you are registered for GST.
However, your supply of installation services is not a taxable supply to the extent that it is GST-free or input taxed.
There is no provision in the GST Act that makes your supply of installation services input taxed. We will now consider the GST-free provision.
GST-free
The installation services are done outside Australia. Relevant to the supply is item 1 in the table in subsection 38-190(1) of the GST Act (Item 1).
Under Item 1 a supply that is directly connected with goods or real property situated outside Australia is GST-free.
From the information received the installation services are directly connected with goods situated outside Australia as the installation services are for the installation of the goods that were shipped to the overseas location. Your supply of installation services is therefore GST-free under Item 1.
For more information on Item 1 refer to Goods and Services Tax Ruling GSTR 2003/7 which is available from the legal database of www.ato.gov.au
Summary
Your supply of goods is GST-free under item 1 in the table in subsection 38-185(1) of the Act where you ship the goods within 60 days from the day you receive payment for the supply or the day you give an invoice.
Your supply of installation services is GST-free under item 1 in the table in subsection 38-190(1) of the GST Act when you install the furniture after their arrival at the overseas destination.
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