Edited version of your written advice

Authorisation Number: 1012755108988

Ruling

Subject: GST and supply of goods that are imported and delivered in Australia

Questions

1. Are you required to be registered for the Australian goods and services tax (GST)?

2. Are you liable for GST on the supply of goods that are listed in the annexure of the private ruling application form and delivered in Australia?

3. Should the Australian Taxation Office (ATO) determine you are liable for GST, will the Commissioner allow/permit/exempt you from GST liability?

Advice

1. Yes, based on the information received you are required to be registered for the Australian GST under section 23-5 of the A New Tax system (Goods and Services Tax) Act 1999 (GST Act).

2. Yes, you are liable for GST on the supply of goods that are listed in the annexure of the private ruling application form and delivered in Australia because based on the information received the supply of goods is a taxable supply under section 9-5 of the GST Act.

3. There is no provision in the GST Act that can exempt you from not paying GST when you are making taxable supplies under section 9-5 of the GST Act.

Relevant fact

You are a private company incorporated outside Australia and are not registered for the Australian GST. You advised you trade as a wholesale supplier of goods to various international group trading websites with established clients in various countries including Australia.

You have an agreement with an Australian logistic provider where the Australian logistic provider agrees to act as your agent when importing your goods into Australia under their name and delivering them to your clients' customers in Australia. You have provided us with a copy of the agreement. You have attached a list of goods that are imported and delivered in Australia in the private application ruling form.

You estimate the annual turnover of your supply of goods in Australia to be above $75,000.

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 Section 9-25

A New Tax System (Goods and Services Tax) Act 1999 Section 23-5

A New Tax System (Goods and Services Tax) Act 1999 Division 188

Reasons for decisions

Questions 1 and 2

GST is payable on a taxable supply. You make a taxable supply under section 9-5 of the GST Act 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 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.

We will now consider whether your supply of goods that you imported and delivered in Australia satisfies all the requirements in section 9-5 of the GST Act.

Paragraph 9-5(a) of the GST Act

You satisfy the requirement in paragraph 9-5(a) of the GST Act as you make the supply of goods for consideration.

Paragraph 9-5(b) of the GST Act

You satisfy this paragraph as you supply the goods in the course of a business that you carry on.

Paragraph 9-5 (c) of the GST Act

Section 9-25 of the GST Act outlines when a supply is connected with Australia. In determining whether a supply of goods is connected with Australia, a distinction is made between supplies of goods wholly within Australia and supplies of goods to Australia.

Supplies of goods to Australia

Under Subsection 9-25(3) of the GST Act, a supply of goods is connected with Australia if that supply involves the goods being brought to Australia and the supplier either:

a) imports the goods into Australia; or

b) installs or assembles the goods in Australia.

You do not install or assemble the goods in Australia. Accordingly for the purposes of paragraph 9-25(3)(a) of the GST Act, we need to determine the entity who imports the goods in Australia since you advised that the logistic provider is named as the importer of the goods in Australia.

Goods and Services Tax Ruling GSTR 2000/15 explains the ATO view on subsection 9-25(3) of the GST Act.

Paragraphs 30 to 41 of GSTR 2003/15 state:

30. Imported goods are entered for home consumption, within the meaning of the Customs Act, by an 'owner', as defined in that Act, entering imported goods for home consumption. The imported goods are entered by lodging an import declaration in the name of the 'owner'.

31. If you, as 'owner', lodge an import declaration in your name, you enter imported goods for home consumption within the meaning of the Customs Act and you are liable to pay GST on that importation if the importation is a taxable importation.

32. Typically, the 'owner' that enters imported goods is the legal owner of the goods, or the importer, exporter, consignee, or other person with an interest in, or control of, the goods. While the 'owner' can lodge the import declaration itself, it is more likely that a licensed customs broker is engaged to prepare the import declaration on behalf of the 'owner'. In either case, the import declaration is made in the name of the 'owner' and, if it is a taxable importation, it is the owner that makes the taxable importation and is liable for GST. The customs broker does not make the taxable importation and is not liable for the GST on the taxable importation.

33. The definition of 'owner' in the Customs Act also includes an agent. If an agent enters goods for home consumption under an authority granted by the principal, it is the principal, not the agent that makes the taxable importation. The principal is liable to pay the GST on a taxable importation made through an agent.

34. This is consistent with the general law of agency. The acts of an agent are the acts of the principal, and the principal is bound to the legal effects of the transaction.

35. Where an agent enters goods on behalf of a principal, the name of the agent appears on the import declaration (unless the agent engages a customs broker and the goods are entered in the name of the principal). As the entity that appears as 'owner' on the import declaration is ordinarily the entity that makes the taxable importation and is liable to pay the GST, it is important to be able to demonstrate the existence of an agency relationship where goods are entered in the name of an agent. Verifying the existence of an agency relationship is important for both liability and input tax credit purposes. (Entitlements to input tax credits are discussed at paragraphs 46 to 70 below).

36. An agency relationship is created by the express or implied intention of the parties. Evidence of the agency relationship would normally exist in the form of written instructions and clear authority granted to the agent. We would also expect that there would be an arrangement for reimbursement of the agent by the principal for GST outlaid by the agent or for the principal to put the agent in funds before the import declaration is lodged (unless a non-resident makes a creditable importation through a resident agent, see paragraphs 65 to 70 below).

37. If an agent engages a customs broker to complete the customs formalities, the customs broker may be able to enter the goods in the name of the principal. If this is the case, it is clear that liability for GST on the taxable importation rests with the principal, not the agent.

38. In summary, the entity that makes the taxable importation, including an entity that makes a taxable importation through an agent, is liable to pay the GST on that taxable importation. An agent may pay the GST on behalf of its principal, but it is not liable to pay the GST.

39. However, general law agency principles are overridden in one special circumstance. If the entity that makes a taxable importation is a non-resident and that non-resident makes taxable importation through a resident agent, the resident agent is liable to pay the GST on the taxable importation, not the non-resident principal.

40. A non-resident entity makes a taxable importation through an Australian resident agent where the non-resident appoints the agent to lodge the import declaration and the resident agent is entered as 'owner' on the import declaration. As noted in paragraph 33, an agent may be the 'owner' for import declaration purposes.

41. In these circumstances, a resident agent may also include a licensed customs broker where the broker is appointed to enter the goods as an 'owner' in the capacity of an agent. This is to be contrasted with the common situation where a customs broker merely facilitates the process on behalf of an 'owner', but the broker is not shown as 'owner' on the import declaration.

From the facts given, you engaged the logistic provider to import the goods on your behalf. In this instance, you are importing the goods in Australia through the logistic provider. Your supply of goods is therefore connected with Australia under subsection 9-25(3) of the GST Act when the goods are brought to Australia.

Supplies of goods wholly within Australia

Subsection 9-25(1) of the GST Act provides that a supply of goods is connected with Australia if the goods are 'delivered or made available' in Australia to the recipient of the supply.

The phrase 'delivered or made available' takes the meaning that the goods are either physically delivered, or if not physically delivered, physically made available in Australia. 'Made available' refers to the situation where goods are not actually delivered to the recipient but rather the supplier makes the goods physically available to the recipient in Australia. Both 'delivered' and 'made available' look at the place where the goods are at the relevant time.

From the facts given, the goods you sold are made available in Australia since you import the goods through your agent the logistic provider and are physically delivered in Australia. In this instance the supply of the goods is connected with Australia since the goods are supplied wholly within Australia.

For more information on when a supply of goods is connected with Australia please refer to Goods and Services Tax Ruling GSTR 2000/31 which is available from the legal database of our website www.ato.gov.au

Accordingly, you satisfy the requirement in paragraph 9-5 (c) of the GST Act as your supply of goods is connected with Australia under subsections 9-25(1) and 9-25(3) of the GST Act.

Paragraph 9-5(d) of the GST Act

Under section 23-5 of the GST Act, you are required to be registered if:

• you are carrying on an enterprise, and

• your GST turnover meets the registration turnover threshold (currently $75,000).

Your GST turnover is your gross business income (not your profit), excluding any:

• GST you included in sales to your customers

• sales that are not for payment and are not taxable

• sales not connected with an enterprise you run

• input-taxed sales you make

• sales not connected with Australia.

Under subsection 188-10(1) of the GST Act, you have a GST turnover that meets a particular turnover threshold when:

a) your current GST turnover is at or above the turnover threshold, and the Commissioner is not satisfied that your projected GST turnover is below the turnover threshold; or

b) your projected GST turnover is at or above the turnover threshold.

Under section 188-15 of the GST Act your current GST turnover is the sum of the values of all the supplies that you made, or are likely to make, during the current month and the preceding 11 months.

Section 188-20 of the GST Act defines projected GST turnover to be the sum of the values of all the supplies that you made, or are likely to make during that month and the next 11 months.

As discussed above your supply of goods is connected with Australia and therefore will be included when calculating your GST annual turnover. From the facts given the annual turnover of your supply of goods in Australia is above $75,000.

In this instance you satisfy paragraph 9-5(d) of the GST Act as you will be required to be registered for GST under section 23-5 of the GST Act.

For more information on GST turnover please refer to Goods and Services Tax Ruling GSTR 2001/7 which is available from the legal database of www.ato.gov.au

GST-free and input taxed supplies

There is no provision in the GST Act that makes the supply of goods listed in the annexure GST-free or input taxed when delivered in Australia.

Summary

As all the requirements in section 9-5 of the GST Act are satisfied, your supply of goods in Australia is a taxable supply and therefore subject to GST.

Question 3

There is no provision under the GST Act that exempt an entity from not paying their GST liability in regard to taxable supplies they make.

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