ATO Interpretative Decision

ATO ID 2001/590 (Withdrawn)

Goods and Services Tax

• This decision is withdrawn from 29 August 2002 because it is not indicative of the ATO view.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, a supplier of goods, making a GST-free supply under subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells goods to a purchaser who then exports the goods from Australia within 60 days of making payment to the entity?

Decision

Yes, the entity is making a GST-free supply under subsection 38-185(1) of the GST Act when it sells good to a purchaser who then exports the goods from Australia within 60 days of making payment to the entity.

Facts

The entity is a supplier of goods. The entity sells its goods to a purchaser. The entity obtains a signed declaration from the purchaser affirming the following facts.

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The purchaser exports the goods from Australia within 60 days of making payment to the entity;

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The goods are not reimported into Australia;

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The purchaser is not registered or required to be registered for goods and services tax (GST);

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The purchaser has entered the goods for export within the meaning of section 113 of the Customs Act 1901; and

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Since the supply to the purchaser, the goods have not been altered or used in any way, except to the extent (if any) necessary to prepare them for export.

The entity also has documentary evidence, in the form of a bill of lading, to show that the goods are being exported.

The entity is registered for GST.

Reasons for Decision

Under Subdivision 38-E of the GST Act, certain exports and supplies for consumption outside Australia are GST-free. Item 1 in the table in subsection 38-185(1) of the GST Act (Item 1) provides that a supply of goods is GST-free if the supplier exports the goods before, or within 60 days after the earlier of consideration being received or an invoice being issued.

In this case, the supplier (the entity) is not exporting goods from Australia. The purchaser is the party that is exporting the goods from Australia.

However, subsection 38-185(3) of the GST Act states that a supplier of goods is treated as having exported those goods from Australia for the purposes of Item 1 if:

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before the goods are exported, the supplier supplies them to an entity (the purchaser) that is not registered or required to be registered;

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the purchaser exports the goods from Australia;

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the goods have been entered for export within the meaning of section 113 of the Customs Act 1901;

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since their supply to the purchaser, the goods have not been altered or used in any way except to the extent (if any) necessary to prepare them for export; and

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the supplier has sufficient documentary evidence to show that the goods were exported.

Subsection 38-185(3) of the GST Act also provides that if goods are reimported into Australia, the supply is not GST-free unless the reimportation is a taxable importation.

Whilst there is no legal requirement for a supplier to obtain a declaration from the purchaser affirming that the requirements in paragraphs (a) to (e) of subsection 38-185(3) of the GST Act are satisfied; a supplier may choose to obtain such a declaration. It is considered that the purchaser's declaration is evidence that the requirements in paragraphs (a) to (d) in subsection 38-185(3) of the GST Act are satisfied; but only if the supplier does not become aware of anything that contradicts the purchaser's declaration.

In relation to paragraph (e) of subsection 38-185(3) of the GST Act, a purchaser's declaration is not considered to be sufficient documentary evidence that the goods were exported. However, documentation such as a bill of lading is considered to be sufficient documentary evidence for the purposes of paragraph (e) of subsection 38-185(3) of the GST Act.

From the facts in this situation, all of the requirements of subsection 38-185(3) of the GST Act are satisfied. The entity possesses documentary evidence, in the form of a purchaser's declaration, that the requirements in paragraphs (a) to (d) of subsection 38-185(3) of the GST Act are satisfied. The entity also possesses a bill of lading that shows that the purchaser exported the goods as per the requirement in paragraph (e) of subsection 38-185(3) of the GST Act. As such, for the purposes of Item 1, the entity is treated as having exported the goods from Australia.

As the purchaser exports the goods from Australia within 60 days of payment, the requirements in Item 1 are also satisfied. Therefore, the entity is making a GST-free supply under Item 1 when it sells goods to a purchaser who then exports those goods from Australia within 60 days of making payment to the entity.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   Subdivision 38-E
   subsection 38-185(1) table item 1
   subsection 38-185(3)

Keywords
Goods and services tax
Exports
Consumption outside Australia
Export of goods

Business Line:  GST

Date of publication:  15 November 2001

ISSN: 1445-2782