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Edited version of your written advice
Authorisation Number: 1013046805344
Date of advice: 6 July 2016
Ruling
Subject: GST, taxable importations, creditable importations and resident agent
Question
Does Entity A make a taxable importation and a creditable importation when it imports a non-resident artists work to be entered in to an exhibition?
Answer
Yes.
Relevant facts and circumstances
Entity A is a not-for-profit organisation that is listed on the relevant Register and is registered with the Australian Charities and Not-for profits Commission (ACNC) with deductible gift recipient status.
Entity A is registered for GST.
Entity As primary activity is the exhibition of artwork by internationally recognised artists at an exhibition held for the enjoyment of the general public.
Entity A invites artists to exhibit their work at the exhibitions run by Entity A. Artists who agree sign a contract with Entity A, under which the artist agrees to exhibit the work, advises whether the work can be sold at the exhibition and appoints Entity A as their agent.
Entity A works with the overseas artists to arrange for their works to be freighted and consigned to Entity A. The freight cost is usually paid by the artist.
Entity A engages the Customs broker to prepare and lodge the Import Declaration with the Department of Immigration and Border Protection, nominating Entity A as the owner.
The work is installed and maintained by the artist and Entity A site crew.
Entity A employs staff to assist in the sale of the works.
Entity A invoices a buyer as agent on behalf of the artist. The sale price includes GST, if applicable, and a sales commission of X% for Entity A.
If a work does not sell at the exhibition, work is under contract with Entity A for twelve months post exhibition. However, the work is the property of the artist and will normally be exported back to the artist within 12 months. Some works may stay in Australia and be leased or gifted to an institution.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) 1999 section 13-5 of the GST Act,
A New Tax System (Goods and Services Tax) 1999 section 15-5 of the GST Act, and
A New Tax System (Goods and Services Tax) 1999 Division 57-1 of the GST Act.
Reasons for decision
GST is payable on taxable importations and you must pay the GST payable on any taxable importation that you make.
You make a taxable importation if goods are imported and you enter the goods for home consumption under subsection 13-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). However, the importation is not a taxable importation to the extent that it is a non-taxable importation.
In this circumstance, the importation of the works will not be non-taxable importations.
You are entitled to input tax credits for your creditable importations. You make a creditable importation under section 15-5 of the GST Act, if you import goods solely or partly for a creditable purpose, the importation is a taxable importation, and you are registered for GST. You import goods for a creditable purpose pursuant to subsection 15-10(1) of the GST Act, to the extent that you import the goods in carrying on your enterprise.
According to paragraph 149 of GSTR 2003/15
In the context of a taxable importation under section 13-5, the entity that imports goods within the meaning of paragraph 15-5(a) cannot be identified by one factor alone. For the purposes of section 15-5, the entity that imports goods is the entity that:
(i) causes the goods to be brought to Australia for application to its own purposes after importation; and
(ii) completes the customs formalities (whether directly or through a customs broker or an agent).
Example 19 in paragraph 322 of GSTR 2003/15 - Goods sent to Australia to be displayed provides;
To attract more visitors, a Melbourne museum organises a Renaissance Art exhibition featuring a famous Italian painting. With the permission of the painting's owner, the painting is removed from a gallery in Rome and transported to the museum. The Melbourne museum enters the painting for home consumption and pays GST. The museum is the entity that causes the goods to be sent to Australia for its purposes of applying the painting to the use for which it is intended (that is, display). The museum is the entity that imports the goods for the purposes of Division 15 and is therefore entitled to an input tax credit, assuming the requirements for a creditable importation are satisfied.
In this case, Entity A is the entity that imports the works for the purposes of Division 13 and 15 of the GST Act. As Entity A both causes the goods to be brought to Australia and enters the goods for home consumption they make taxable importations. This is due to you importing the works to be exhibited in the exhibition as part of Entity As enterprise activities. This is the case regardless of the fact Entity A does not hold title to the works. The importations are therefore for a creditable purpose. Furthermore, Entity A is registered for GST.
Therefore, Entity A will make both taxable importation pursuant to subsection 13-5(1) of the GST Act and creditable importation pursuant to subsection 15-5(1) of the GST Act. Hence, Entity A will have a GST liability on the taxable importation and the entitlement to input tax credits on the creditable importation.
Where Entity A makes the sale of a work on behalf of a non-resident artist and the non-resident makes a taxable supply, Division 57-1 of the GST Act will apply to Entity A. Entity A will be a resident agent acting for a non-resident. In this situation Entity A will be responsible for the GST consequences of what the non-residents do through their resident agent. Hence, where the non-resident makes a taxable supply Entity A will need to report the taxable supply in their BAS. Conversely, where Entity A sells a non-resident's work and the non-resident is not registered or required to be registered for GST, there will not be a taxable supply and Entity A will not be required to report the sale.
The agency services supplied by Entity A to the non-resident are considered to be a separate supply to the transactions being undertaken as resident agent on behalf of the non-resident. The basic rules for GST apply to determine the amount of GST on these supplies.
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