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Edited version of private ruling
Authorisation Number: 1011606554015
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Ruling
Subject: GST and importation of goods
Question
Is GST payable on the importation of equipment that you hire from the overseas company?
Advice/Answers
Yes, GST is payable on the importation of equipment that you hire from the overseas company.
Relevant facts
You have entered into dealings with the overseas company.
The overseas company is the developer and distributor of a particular equipment.
The distributor agreement grants you the right to resell in Australia and New Zealand equipment purchased from the overseas company
The overseas company provides its products and services to you on the following bases:
I. sale where ownership of the equipment transfers to you
II. rental where ownership of the equipment remains with the overseas company and
III. services where the overseas company provides a service to the end user through you.
The overseas company is hiring equipment to you for which a monthly rental fee is paid. You in turn hire the same equipment to your clients for a fee which includes GST.
You import the equipment that you hire from overseas company. You complete the customs formalities and appear on the customs documents as the owner of the equipment.
The overseas company does not carry on a business in Australia, is not a resident of Australia for tax purposes and is not registered for GST.
You are registered for GST.
Reasons for decision
Summary
The importation of the computer hardware is a taxable importation unless it is covered by an item in Schedule 4 of the Customs Tariff Act 1995 (Schedule 4).
Detailed reasoning
Section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that 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 (Customs Act)).
Goods and Service Tax Ruling GSTR 2003/15 explain what taxable importations are.
The first requirement for a taxable importation is that 'goods are imported'. Paragraph 92 of GSTR 2003/15 provides that it is the Commissioner's view that goods are importation into Australia where they are brought to Australia with the intention of being unloaded in Australia.
The second requirement for a taxable importation is that goods are entered for home consumption. This is achieved by the lodgement of an entry of imported goods for home consumption with Australian Customs and Border Protection Service (Customs). Paragraph 97 of GSTR 2003/15 provides that the entity that enters goods for home consumption is the entity that makes the taxable importation. Under the Customs Act an entry for home consumption must be made by or on behalf of the 'owner' of the goods. Paragraph 98 further states:
The 'owner' of the goods for Customs purposes is not restricted to the legal owner. Section 4 of the Customs Act provides that the 'owner' can be:
… any person (other than an officer of Customs) being or holding himself out to be the owner, importer, exporter, consignee, agent or person possessed of, or beneficially interested in, or having any control of, or power of disposition over the goods.
You advised that you import the equipment that you hire from overseas company. You complete the customs formalities and appear on the customs documents as the owner of the equipment. Hence, you satisfy the requirements of section 13-5 of the GST Act.
However, the importation is not a taxable importation to the extent that it is a non-taxable importation.
An importation is a non-taxable importation if:
a) it is a non-taxable importation under Part 3-2 of the GST Act; or
b) it would have been a supply that was GST-free or input taxed if it had been a supply.
The sale of the equipment is neither GST-free nor input taxed under any provisions of the GST Act. Accordingly, the importation of the equipment is a taxable importation unless it is a non-taxable importation under Part 3-2 of the GST Act.
Section 42-5 of the GST Act, contained in Part 3-2 of the GST Act, provides that an importation of goods is a non-taxable importation if the goods are covered by an item in Schedule 4.
As the Customs Tariff Act 1995 is administered by Customs, it is a matter for Customs to determine if an importation is covered by items in Schedule 4. For further advice contact Customs on 1300 363 263 or email information@customs.gov.au.
Therefore, your importation of the equipment is a taxable importation unless it is covered by an item in Schedule 4.
The fact sheet GST and imported goods and Goods and Services Tax Ruling GSTR 2003/15 provide further information on importation and they are available from the ATO website www.ato.gov.au.