Edited version of private advice

Authorisation Number: 1052395874796

Date of advice: 02 June 2025

Ruling

Subject: GST - importation of trade goods

Question 1

Is the importation of trade goods that were exported for grading services, considered as a non-taxable importation under section 42-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when they are returned to Australia in an unaltered condition?

Answer 1

Yes, the importation of trade goods into Australia in an unaltered condition after the grading service is a non-taxable importation under section 42-10 of the GST Act.

This ruling applies for the following period

1 April 20XX to 30 June 20XX

The scheme commenced on:

1 April 20XX

Relevant facts and circumstances

1.              You stock and sell trade goods.

2.              You export a number of trade goods to a grading service provider overseas for your customers.

3.              You re-import the trade goods into Australia once the goods are graded to send to your customers.

4.              The ownership of the trade goods being exported never changes until after it is imported back into Australia and sent to the final customer.

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 42-10

Reasons for decision

Taxable importation

Under section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), 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.

Goods and Services Tax Ruling GSTR 2003/15 Goods and services tax: importation of goods into Australia (GSTR 2003/15) provides guidance on the operation of the provisions in the GST Act which apply to the importation of goods into Australia.

Goods are typically imported into Australia when they are brought to Australia to be unloaded or landed here. 'Imported' in this context has its ordinary meaning.

Imported goods are considered for home use under the Customs Act when an 'owner' (as defined by the Act) submits an import declaration in their name. If you, as the 'owner', submit an import declaration in your name, you are responsible for paying GST on the import if it is taxable. If an agent submits the import declaration under the authority of the principal, the principal is responsible for the GST on the taxable import, not the agent.

You will import the trade goods as the 'owner'. Therefore, both paragraphs (a) and (b) of section 13-5 of the GST Act are satisfied and your importation of the trade goods is a taxable importation unless the circumstances surrounding the importation make it a non-taxable importation.

Non-taxable importation

Under section 13-10 of the GST Act, 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.

Part 3-2 of the GST Act, particularly section 42-5 of the GST Act, deals with importation of goods that are non-taxable importations in accordance with the Customs Tariff Act 1995. As the Customs Tariff Act 1995 is administered by Customs, it is a matter for Customs to determine if the importation is covered by items referred to in section 42-5 of the GST Act.

There are no provisions in the GST Act under which the supply of trade goods would be GST-free or input taxed. Therefore, the importation of trade goods is not a non-taxable importation under paragraph 13-10(b)of the GST Act as the importation would not have been a GST-free or input taxed supply if it had been a supply.

Section 42-10 of the GST Act provides that goods exported from Australia and returned to Australia in an unaltered condition, would be considered as non-taxable importation.

Under subsection 42-10(1) of the GST Act, an importation of goods is non-taxable if:

a) the goods were exported from the indirect tax zone and are returned to the indirect tax zone, without having been subject to any treatment, industrial processing, repair, renovation, alteration or any other process since their export; and

b) the importer was not entitled to, and did not claim, a payment under Division 168 (about the tourist refund scheme) related to the export of the goods; and

c) the importer:

i. is the manufacturer of the goods; or

ii. has previously acquired the goods, and the supply by means of which the importer acquired the goods was a taxable supply (or would have been a taxable supply but for section 66-45); or

iii. has previously imported the goods, and the previous importation was a taxable importation in respect of which the GST was paid.

In order for the trade goods to be a non-taxable importation, you must satisfy all the paragraphs in subsection 42-10(1) of the GST Act.

Goods and Services Tax Ruling GSTR 2002/5 Goods and services tax: supplies of goods and services in the repair, renovation, modification or treatment of goods from outside Australia whose destination is outside Australia (GSTR 2002/5) provides guidance on the meaning of repair, renovation, modification or treatment of goods.

Paragraphs 34 to 42 of GSTR 2005/2 explain:

The ordinary meaning of 'repair' is 'to restore to a good or sound condition after decay or damage; mend'. Repairing includes replacing defective or worn parts or re-attaching parts that have become detached.

The ordinary meaning of 'renovate' is 'to make new or as if new again; restore to good condition; repair.' Renovation changes the character or enhances efficiency of function, while a repair merely restores the character or efficiency or function.

The ordinary meaning of 'modify' is 'to change somewhat the form or qualities of; alter somewhat'.

The ordinary meaning of 'treat' is to subject to some agent or action to bring about a particular result, for example, to treat a substance with an acid.' Processes such as cleaning, sterilising, waterproofing or rust proofing goods are examples of treating goods.

The terms 'treating' and 'renovating' are limited to processes of the same kind of nature as repairing and modifying, neither of which contemplates the creation of completely new or different goods.

Repair, renovation, modification or treatment is a process applied to existing goods which may involve some change in the nature, form or condition of the existing goods, the substance of which remains unchanged. That is, the essential or fundamental character of the goods is the same. The other goods retain their own identity.

These terms are taken to have their ordinary meaning as they are not defined in the GST Act. Under the grading service, the trade goods remain unaltered and retain their own identity. Therefore, trade goods which undergo only the grading service (and not any other additional services offered) will satisfy the requirements of subsection 42-10(1) of the GST Act and will be a non-taxable importation.

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