Edited version of private advice

Authorisation Number: 1052027886542

Date of advice: 31 August 2022

Ruling

Subject: Goods and services tax and supply of magazines

Question

Will you make taxable supplies to X under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where it contracts you to print magazines and deliver the magazines to a mailing house in Australia?

Answer

Yes. You will make taxable supplies of magazines. Therefore, GST will be payable on these supplies.

This ruling applies for the following period

01/09/2022 to 31/08/2026

The scheme commences on:

1 September 2022

Relevant facts and circumstances

You are registered for GST.

You are in the business of printing material and delivering the printed materials.

You operate your business in Australia.

You have an overseas based customer - a company named X. X sells magazines. X does not have an Australian presence.

X will contract you to print a number of magazines in Australia and deliver them to a mailing house in Australia. You would charge for the supply you make to X. The associated quote numbers would include A, B and C. The magazines will be delivered from the mailing house to addressees throughout Australia.

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

Reasons for decision

Summary

You will make a taxable supply to X as:

•                    you will supply magazines for consideration (the price); and

•                    you will supply the magazines in the course or furtherance of the enterprise that you carry on; and

•                    the supply of the magazines will be connected with Australia; and

•                    you are registered for GST; and

•                    the supply is not GST-free or input taxed.

Detailed reasoning

GST is payable on taxable supplies.

You make a taxable supply if you meet the requirements of section 9-5 of the GST Act, which states:

You make a taxable supply if:

(a)         you make a supply for *consideration; and

(b)         you make the supply in the course or furtherance of an

*enterprise that you *carry on; and

(c)         the supply is *connected with the indirect tax zone (Australia); and

(d)         you are *registered or *required to be registered for GST

However, the supply will not be a *taxable supply to the extent that the supply is *GST-free or *input taxed.

(*Denotes a term defined in section 195-1 of the GST Act)

We do not consider that you will supply a service to X. From the facts given, you will make a supply of delivered goods (the magazines) through an enterprise that you carry on for consideration and you are registered for GST. In this instance the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act are satisfied. There are no provisions of the GST Act under which your supply of the goods is input taxed.

We shall now determine whether your supply of the goods is connected with Australia for the purposes of paragraph 9-5(c) of the GST Act.

A supply of goods is connected with Australia if one of the following requirements are satisfied:

•                    the goods are delivered, or made available, in Australia to the recipient of the supply (subsection 9-25(1) of the GST Act);

•                    the supply involves the goods being removed from Australia (subsection 9-25(2) of the GST Act);

•                    the supply involves the goods being brought to Australia and the supplier imports the goods into Australia (subsection 9-25(3) of the GST Act);

•                    the supply is an offshore supply of low value goods which is connected with Australia under Subdivision 84-C of the GST Act (subsection 9-25(3A) of the GST Act).

Goods and Services Tax Ruling GSTR 2018/2 provides guidance on when a supply of goods is connected with Australia.

Paragraphs 10, 11, 44 and 45 of GSTR 2018/2 provide guidance on subsection 9-25(1) of the GST Act. They state:

10. In the context of subsection 9-25(1), goods are delivered in Australia if the goods are physically delivered in Australia. Goods are also made available in Australia if the goods are physically made available in Australia. The terms 'delivered' and 'made available' look at the place where the goods are at the relevant time.

11. Circumstances in which goods are delivered or made available by a supplier in Australia to the recipient include:

•                    where the supplier physically delivers the goods from a place in Australia to the recipient's nominated place in Australia, and

•                    where the supplier has the goods imported into Australia, and shipped to themselves, prior to delivering or making the goods available to the recipient of the supply in Australia.

44. Ordinarily, a supply of goods that is delivered or made available in Australia is connected with Australia. This is the case even where the supply is made between two non-residents, neither of which makes the supply or acquisition in the course of an enterprise they carry on in Australia.

45. However, section 9-26 provides two exceptions to the connected with Australia rules in section 9-25(1) for supplies that involve a transfer of ownership of goods that are subject to a lease. If these exceptions apply, the supply will not be connected with Australia.

You will make supplies of delivered goods - the magazines. In accordance with paragraph 44 of GSTR 2018/2, ordinarily, a supply of goods that is delivered in Australia is connected with Australia. When you supply the goods in question, you will deliver the goods from a place in Australia to a place in Australia nominated by your customer. The exceptions referred to in paragraph 45 of GSTR 2018/2 do not apply. Therefore, your supplies of the goods concerned will be connected with Australia under subsection 9-25(1) of the GST Act.

In accordance with paragraph 44 of GSTR 2018/2, the fact that your customer is a non-resident which does not make their acquisition from you in the course of an enterprise they carry on in Australia does not prevent your supply of goods from being connected with Australia under subsection 9-25(1) of the GST Act.

Therefore, you meet the requirement of paragraph 9-5(c) of the GST Act.

There is no provision of the GST Act which you would make your supply of magazines to X GST-free, despite the fact that your customer is a non-resident without a presence in Australia.

As all of the requirements of section 9-5 of the GST Act are met, you will make a taxable supply of magazines. Therefore, GST is payable on the supplies you make to X under the specified circumstances.

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