Edited version of your written advice

Authorisation Number: 1012847293147

Date of advice: 24 July 2015

Ruling

Subject: Goods and services tax (GST) and importations

Question

Are you entitled to an input tax credit of (amount X) on category 3 and 4 importations?

Answer

Yes.

Relevant facts and circumstances

You are registered for GST.

You specialise in the provision of equipment etc. You sell various goods and services to Australian resident customers.

You import goods into Australia for the purpose of supplying them to your Australian resident customers.

You appointed (X) as your import agent. Accordingly, X arranges the importation of goods to Australia on your behalf. In doing this, X completes all customs formalities on your behalf (including the preparation and submission of the import documentation).

In its capacity as your import agent, X pays the import GST on your imports. X seeks reimbursement of the import GST from you by invoicing you for the import GST amount, along with its logistics charges, and providing a copy of the relevant import documents to you.

Although you pay the relevant import GST (through payments of X's invoices), you recently discovered that you were not recovering the corresponding input tax credits. This was subsequently investigated by your relevant staff who ascertained that the omission was due to incorrect general ledger account coding of X invoices, which prevented the relevant invoices from flowing through to the respective BASs.

Following discovery of the unrecovered input tax credits, a detailed transaction analysis was undertaken. As a result, you established that you have sufficient evidence to support your entitlement to claim a minimum input tax credit amount of Y (import declarations name you as "owner' of the imported goods). These transactions are referred to as Category 1 transactions.

In addition to the above, you also uncovered a series of administrative errors made by X on various import declarations, which listed another entity's ABN/reference number (category 2 transactions) and in some cases, named companies related to you as "owner' of the imported goods (category 3 and 4 importations), despite you being the true importer of the goods. These other companies were Y and Z. The total GST paid on category 3 and 4 importations was (amount X).

The errors made by X were purely administrative and inadvertent, and you did not instruct X to name another entity on the import declarations.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 13-5

A New Tax System (Goods and Services Tax) Act 1999 section 15-5

A New Tax System (Goods and Services Tax) Act 1999 section 15-10

A New Tax System (Goods and Services Tax) Act 1999 section 15-15

Reasons for decision

Summary

You are entitled to an input tax credit of amount X on category 3 and 4 importations because:

• you imported the goods solely for a creditable purpose

• these importations were taxable importations

• you are registered for GST, and

• the GST paid on these importations was amount X.

Detailed reasoning

You are entitled to input tax credits on your creditable importations.

You make a creditable importation where you meet the requirements of section 15-5 of the GST Act, which states:

You make a creditable importation if:

(a) you import goods solely or partly for a *creditable purpose; and

(b) the importation is a *taxable importation; and

(c) you are *registered, or *required to be registered.

You import goods for a creditable purpose where you meet the requirements of section 15-10 of the GST Act.

Subsection 15-10(1) of the GST Act states:

You import goods for a creditable purpose to the extent that you import the goods in *carrying on your *enterprise.

Subsection 15-10(2) of the GST Act states:

However, you do not import the goods for a creditable purpose to the extent that:

(a) the importation relates to making supplies that would be *input taxed; or

(b) the importation is of a private or domestic nature.

Importing goods

Paragraphs 49 to 51 and 54 of Goods and Services Tax Ruling GSTR 2003/15 explain how to determine which entity is the importer for input tax credit purposes. They state:

49. The entity that imports goods within the meaning of Division 15, in the context of a taxable importation under Division 13, is the entity that:

(a) causes the goods to be brought to Australia for application to its own purposes after importation, whether by way of supply, use, or otherwise; and

(b) completes the customs formalities for the entry of the goods for home consumption.

50. The entity that causes goods to be brought to Australia is identified by looking to the purpose for which the goods are brought here. The entity whose purpose it is to apply the goods by way of supply, use or other application to its purposes after importation is the entity that causes the goods to be brought to Australia.

51. An entity causes goods to be brought to Australia to apply them to its own purposes by way of supply, use or other application where, for example, it:

(i) arranges for goods that it owns to be sent to Australia so that it can use them in Australia;

(ii) places an order with a foreign supplier for goods, for use as trading stock, to be sent to Australia;

(iii) sends or arranges for goods to be sent to Australia to sell, lease or hire them in Australia; or

(iv) sends or arranges for goods to be sent to Australia for the entity to retain as a collector's piece or for investment.

54. An entity completes the customs formalities where the entity makes a taxable importation by entering the imported goods for home consumption. An entity either enters goods itself, including through an employee, engages a customs broker, or appoints an agent to enter goods on the entity's behalf (in which case the agent is likely to engage a customs broker).

Other companies related to you were entered as owner on the customs documentation by mistake. You did not instruct X to record these related companies as owner on the customs documentation.

Although the name of the wrong company is showing as the owner on the import declarations relating to category 3 and 4 importations, you have met the requirements of paragraph 49 of GSTR 2003/15 in respect of these importations because.

• you have caused the goods to be brought to Australia for application to your own purposes after importation, as you have arranged for the goods to be sent to Australia so that you can sell them in Australia, and

• you appointed X to enter the goods for home consumption on your behalf.

You imported the goods in carrying on your equipment trading enterprise. The importations do not relate to making supplies that would be input taxed and they are not of a private or domestic nature. Hence, you imported the goods for a solely creditable purpose. Therefore, you meet the requirement of paragraph 15-5(a) of the GST Act.

Taxable importation

Subsection 13-5(1) of the GST Act states:

You make a taxable importation if:

(a) goods are imported; and

(b) you enter the goods for home consumption (within the meaning of the Customs Act 1901).

However, the importation is not a taxable importation to the extent that it is a *non-taxable importation.

Section 13-10 of the GST Act states:

An importation is a non-taxable importation if:

(a) it is a non-taxable importation under Part 3-2; or

(b) it would have been a supply that was *GST-free or *input taxed if it had been a supply.

In your case, goods were imported (the category 3 and 4 importation goods). Therefore, you meet the requirement of paragraph 13-5(1)(a) of the GST Act

The goods were entered for home consumption. Therefore, you meet the requirement of paragraph 13-5(1)(b) of the GST Act.

The importations were not non-taxable importations under Part 3-2 of the GST Act.

If the importations were instead supplies, these supplies would not have been GST-free or input taxed supplies.

Hence, you made taxable importations. Therefore, you meet the requirement of paragraph 15-5(b) of the GST Act.

GST registered

You are registered for GST. Therefore, you meet the requirement of paragraph 15-5(c) of the GST Act.

As you have met all of the requirements of section 15-5 of the GST Act, you are entitled to input tax credits on the category 3 and 4 importations. The total input tax credit amount for these importations is amount X as this is the total GST amount paid on these importations.

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