Edited version of private ruling

Authorisation Number: 1011504461560

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Ruling

Subject: GST and importation

Questions

1. Are you liable for goods and services tax (GST) on the importation of the goods made under your agreement with the supplier?

Answer: Yes.

You are liable for GST on the importation of the goods made under your agreement with the supplier.

2. Are you entitled to the input tax credit on the acquisition of the biodiesel under Division 11 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer: No.

You are not entitled to the input tax credit on the acquisition of the biodiesel.

Relevant facts and circumstances

You are an Australian resident company registered for GST.

You entered into an agreement with another entity (the supplier) to supply goods.

The goods are brought to Australia.

The supplier is responsible for shipping the goods to Australia including payment of all freight costs.

You are responsible for complying with customs and excise entry procedures at the discharge port; and you are liable for all duties and taxes that arise in respect of such customs and excise entry. You are the entity indicated in the Import Declaration N30 as the owner.

You acquire the goods for the purpose of retail sale in Australia.

The supplier is a non-resident company that is registered for GST in Australia.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 9-5

A New Tax System (Goods and Services Tax) Act 1999 9-25

A New Tax System (Goods and Services Tax) Act 1999 11-5

A New Tax System (Goods and Services Tax) Act 1999 13-5

Reasons for decision

Question 1

You are liable for GST on taxable importations that you make. According to section 13-5 of the 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.

In the context of the GST Act, goods are imported into Australia where they are brought into Australia with the intention of being unloaded in Australia.

Goods are entered for home consumption when an entry of imported goods for home consumption is lodged with the Australian Customs Service (Customs).

The entity that enters the goods for home consumption is the entity that makes the taxable importation. Commonly, the entity that enters goods for home consumption by holding itself out on the entry to be 'owner' is the legal owner of the goods.

In your case, the goods are shipped into and unloaded in Australia. As such, the requirement in paragraph 13-5(a) of the GST Act is satisfied.

You advised that you are responsible for complying with customs and excise entry procedures at the discharge port; and you are liable for all duties and taxes that arise in respect of such customs and excise entry. Furthermore, you are the entity indicated in the Import Declaration N30 as the owner. Therefore you enter the goods for home consumption. The requirement in paragraph 13-5(b) of the GST Act is also satisfied.

As the requirements of section 13-5 of the GST Act are satisfied, the importation of the goods is a taxable importation that you make. Accordingly, you are liable for GST on the importation of the goods made under your agreement with the supplier.

The importation is not a non-taxable importation as section 42-5 of the GST Act does not apply (items covered by specified items in Schedule 4 to the Customs Tariff Act 1995), and it would not have been a GST-free or input taxed supply if the importation was a supply.

Question 2

You are entitled to input tax credit for your creditable acquisitions. You make a creditable acquisition if all the requirements in section 11-5 of the GST Act are satisfied. One of the requirements is that the supply of the thing to you is a taxable supply.

A supply is a taxable supply under 9-5 of the GST Act if, amongst other requirements, the supply is connected with Australia.

According to subsection 9-25(1) of the GST Act, a supply of goods is connected with Australia if the goods are delivered, or made available, in Australia to the recipient of the supply. As you are the entity that imported the goods, the supply of the goods is not connected with Australia under subsection 9-25(1) because the goods were not delivered, or made available to you in Australia.

Subsection 9-25(3) of the GST Act provides that a supply of goods that involves the goods being brought to Australia is connected with Australia if the supplier either:

· imports the goods into Australia; or

· installs or assembles the goods in Australia,

In your case, the goods are imported by you and not the supplier. And by its nature, the goods are not installed or assembled in Australia. Therefore, the supply of the goods is not connected with Australia under subsection 9-25(3) of the GST Act. As such, the supply of the goods to you is not a taxable supply.

Accordingly, you do not make a creditable acquisition when you acquire the goods because the supply of the goods to you is not a taxable supply. Therefore, you are not entitled to the input tax credit on the acquisition of the goods.