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Edited version of your written advice
Authorisation Number: 1013047687360
Date of advice: 12 July 2016
Ruling
Subject: GST and creditable importation by customs agent
Question 1
Can you claim an input tax credit for the GST paid on the importation of goods?
Answer
No. You are not entitled to claim an input tax credit (ITC).The goods were not imported for a creditable purpose. Accordingly, you have not made a creditable importation under section 15-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
Relevant facts and circumstances
The entity acts as custom agents and is registered for GST.
The entity provided custom duty services to their client.
The entity paid for the GST for goods imported. This was invoiced but not paid by their client as they went into liquidation.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 15-5
A New Tax System (Goods and Services Tax) Act 1999 subsection 15-10(1)
A New Tax System (Goods and Services Tax) Act 1999 section 15-15
Reasons for decision
Under section 15-15 of the GST Act an entity is entitled to an ITC for any creditable importation that it makes.
An entity makes a creditable importation under section 15-5 of the GST Act if:
a) the entity imports goods solely or partly for a creditable purposes; and
b) the importation is a taxable importation; and
c) the entity is registered or required to be registered for GST.
Under subsection 15-10(1) of the GST Act, the entity imports goods for a creditable purpose to the extent that it imports the goods in carrying on its enterprise.
This means that a facilitator, such as a customs broker or freight forwarder, will not be entitled to ITCs. Custom brokers are generally not the importer because they have not caused the goods to be brought to Australia for their own purposes. Custom brokers are considered facilitators because they are engaged to handle, store, transport, monitor the goods or process the import declaration on another entity's behalf.
This is further explained in GSTR 2003/15 Goods and services tax: importation of goods into Australia at paragraphs 120 to 123 and 127:
Meaning of 'you import goods'
120. Section 15-15 provides that 'you are entitled to the input tax credit for any creditable importation that you make' (italics added). The first part of paragraph 15-5(a) states that you make a creditable importation if 'you import goods' (italics added). To determine who is entitled to input tax credits for a creditable importation, it is necessary to identify the 'you'. That is, the entity that imports the goods.
121. Consistent with the meaning of import discussed at paragraphs 87 to 94, 'you import goods' requires that you bring goods, or cause them to be brought, into Australia.
122. You bring goods into Australia by physically carrying or transporting the goods yourself. You cause goods to be brought to Australia by engaging, or instructing your agent to engage, another party such as a freight forwarder, international courier, or other transport provider, to bring those goods to Australia on your behalf. Alternatively, you may cause goods to be brought into Australia by simply requesting a foreign supplier to dispatch them to you in Australia.
123. Where you physically bring goods to Australia at the request of, or under an engagement for, another entity, you do not cause those goods to be brought into Australia for your own purposes and therefore are not the importer. For example, where a freight forwarder is engaged to bring goods to Australia on behalf of another, the freight forwarder does not cause those goods to be brought to Australia. It is likely to be the freight forwarder's client, having engaged the freight forwarder to bring the goods to Australia, who causes the goods to be brought to Australia.
…
127. It follows that the 'you', in 'you import goods' in paragraph 15-5(a), refers to the entity that causes the goods to be brought to Australia for its own purposes.
The goods were not imported for the entity's own business purposes. Accordingly, the entity has not made a creditable importation under section 15-5 of the GST Act and is not entitled to claim an ITC for the GST paid on the importation of the goods.
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