Edited version of private ruling

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Ruling

Subject: GST and supply of goods in bond

Question

Is GST payable on the supply of goods in bond?

Answer: Yes, GST is payable on the supply of goods in bond.

Facts

You are importing goods for the purpose of sale in Australia. Normally, the goods are delivered to your bonded warehouse.

You have cleared some goods to the bonded warehouse under a Nature 20 entry to warehouse. You sold the goods to a customer in another State so instead of delivering them to your bonded warehouse, the goods are delivered to a bonded facility in that State.

Up to this point the goods have not been entered for home consumption and no GST or duty is paid.

You invoice the customer while the goods are still in bond. You provide the customer with all the necessary documents so that the customer can then complete the Nature 30 entry for home consumption from warehouse. The customer will complete the necessary documents to enter the goods for home consumption.

You are registered for GST.

Reasons for decision

GST is payable on taxable supplies.

Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) you make a taxable supply if:

a) you make the supply for consideration

b) the supply is made in the course or furtherance of an enterprise that you carry on

c) the supply is connected with Australia, and

d) you are registered or required to be registered.

However, the supply is not a taxable supply to the extent it is GST-free or input taxed.

For the supply of the goods to be a taxable supply, all of the requirements listed in section 9-5 of the GST Act must be met.

Based on the information that you have provided, the supply of the goods to your customer in Australia is for consideration, the supply is made in the course or furtherance of your enterprise and you are registered for GST. Hence, the supply of the goods meets the requirements in paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act.

As such, what remains to be considered is whether the supply of the goods is connected with Australia (paragraph 9-5(c) of the GST Act) and whether the supply of the goods is GST-free or input taxed.

In determining whether a supply of goods is connected with Australia, a distinction is made in section 9-25 of the GST Act between supplies of goods wholly within Australia, supplies of goods from Australia and supplies of goods in Australia.

In your case, of particular importance is subsection 9-25(1) of the GST Act, dealing with supplies of goods wholly within Australia.

Goods and Services Tax Ruling GSTR 2000/31 explains when a supply is connected with Australia under section 9-25 of the GST Act.

Paragraph 45 of GSTR 2000/31 provides that if goods are delivered or made available in Australia to the recipient of the supply, the supply of goods is wholly within Australia. Hence, the supply is connected with Australia.

Paragraph 118 of GSTR 2000/31 provides that the phrase 'delivered or made available' takes the meaning that the goods are either physically delivered, or if not physically delivered, physically made available in Australia.

Paragraphs 119 of GSTR 2000/31 provides that 'made available' refers to the situation where goods are not actually delivered to the recipient but rather the supplier makes the goods physically available to the recipient in Australia. For example, a supplier may make goods available for collection by the recipient.

In your case, the goods are physically made available to the customer in Australia as the goods are physically in Australia. Hence, the supply of the goods to your customer is connected with Australia and the requirements of paragraph 9-5(c) of the GST Act are satisfied.

The supply of the goods to your customer, in the circumstances described, is neither GST-free nor input taxed. Therefore, as all the requirements of section 9-5 of the GST Act are satisfied, you are making a taxable supply when you sell goods in bond. Hence, GST is payable on the supply.

Valuation of taxable supplies of goods in bond

Division 108 of the GST Act provides special valuation rules to ensure that the correct amount of GST is paid when taxable supplies of goods in bond is made.

Subsection 108-5(1) of the GST Act provides that the value of the taxable supply of excisable goods that are in bond is the sum of:

a) the value of the supply and

b) the amount of excise duty to which the goods would have been subject to if the goods had been entered for home consumption.

However subsection 108-5(2) of the GST Act provides that the special valuation rules provided in subsection 108-5(1) will have no application if the entity acquiring the thing is registered (or required to be registered) and acquires the thing solely for a creditable purpose.