Edited version of private ruling

Authorisation Number: 1011672364727

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Ruling

Subject: GST and resident agent acting for non-resident

Questions

1. Are you liable to remit the goods and services tax (GST) paid for the supply of the goods as shown in the recipient created tax invoice (RCTI) issued by Company A?

2. Are you entitled to claim the GST paid to Company B for customs clearance on the importation of the goods?

3. Are you entitled to claim the GST paid to Company C for storing the goods?

Answers

1. No, you are not liable to remit the GST paid for the supply of the goods as shown in the RCTI issued by Company A.

2. No, you are not entitled to claim the GST paid to Company B for customs clearance on the importation of the goods.

3. No, you are not entitled to claim the GST paid to Company C for storing the goods?

Relevant facts and circumstances

You are registered for GST.

You act as an agent for a non-resident entity (the non-resident).

The non-resident is not registered for GST in Australia. It is also not registered as a foreign company in Australia.

The non-resident exports goods to Australia.

The non-resident entered into a contract to supply goods to Company A.

The non-resident sends the goods to Australia. Company B, a customs agent, clears the goods through Customs and pays the GST and duties on behalf of the non-resident. The goods are sent to Company C for storage. Ownership of the goods remains with the non-resident until they are sold to Company A.

Company A contacts Company C to release a certain amount of goods at a time as they need them. Every time the goods are released, Company A issues an RCTI.

You receive payments from Company A which are deposited directly to your account. You transmit these payments to the non-resident periodically net of administration costs and your commission which is based on the volume of sales.

The sales of the goods in Australia would be more than $75,000.

You also pay for the acquisitions made from Company B and Company C.

As regards the importation of the goods, the non-resident addresses any problems that arise.

You do not have a written agency agreement with the non-resident.

You provided a copy of the following documents:

Tax invoice issued by Company B to the non-resident in relation to the importation of the goods indicating the non-resident as the supplier of the goods and Company C as the importer.

Tax invoice issued by Company C to the non-resident for container detention

RCTI issued by Company A indicating the non-resident as the supplier with your ABN.

Reasons for decisions

Question 1

According to section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), an entity must pay the GST payable on any taxable supply that it makes.

An entity makes a taxable supply, in accordance with section 9-5 of the GST Act, if:

· the supply is made for consideration; and

· the supply is made in the course or furtherance of an enterprise that the entity carries on; and

· the supply is connected with Australia; and

· the entity is registered or required to be registered for GST.

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

Under subsection 57-5(1) of the GST Act, however, the GST payable on a taxable supply or taxable importation made by a non-resident through a resident agent is payable by the agent and is not payable by the non-resident.

Goods and Services Tax Ruling GSTR 2000/37 Goods and services tax: agency relationships and the application of the law describes what is meant by principal/agent relationships and explains the operation of Division 57 of the GST Act.

An agent is a person who is authorised, either expressly or impliedly, by a principal to act for that principal so as to create or affect legal relations between the principal and third parties. Agents can be classified according to the extent of the authority conferred by the principal. For instance, general agents are authorised to act on behalf of a principal, generally in transactions of a particular kind or incidental to a particular business.

Factors that indicate an agency relationship include:

· any description of the entity as an agent, having authority to act for another party, in an agreement (expressed or implied) between the entity and the other party

· any exercise of the authority that the entity is given to enter into legal relations with a third party

· whether the entity bears any significant commercial risk

· whether the entity acts in its own name

· whether the entity is remunerated for its services by way of commissions and whether it is entitled to keep any part of its remuneration secret from another party

· whether the entity decides the price of things that it might sell to third parties.

For the purpose of Division 57 of the GST Act, a taxable supply is made by a non-resident through a resident agent where the agent has the authority to make the taxable supply on its behalf, thereby binding the non-resident to the legal effects of the transaction.

You advised that you are the agent for the non-resident; however you do not have a written agreement with the non-resident indicating the extent of authority given to you by the non-resident. Based on the information provided, your role is limited to providing administrative services of receiving and remitting payments for the supplies to Company A and making payments for acquisitions. As such, the non-resident does not make a taxable supply through you and Division 57 of the GST Act does not apply. Accordingly, you are not liable to remit the GST paid for the supply of the goods as shown on the RCTI issued by Company A.

You advised that the sales of the goods in Australia by the non-resident would be more than $75,000; therefore the non-resident is required to be registered for GST and would be liable to remit the GST paid on any taxable supply it makes.

Question 2

Section 15-15 of the GST Act provides that an entity is entitled to the input tax credit for any creditable importation that it makes.

An entity makes a creditable importation, in accordance with section 15-5 of the GST Act, if:

· the goods are imported solely or partly for a creditable purpose; and

· the importation is a taxable importation; and

· the entity is registered or required to be registered for GST

However, if a non-resident makes a creditable acquisition or creditable importation through a resident agent, subsection 57-10(1) of the GST Act provides that the agent, and not the non-resident, is entitled to the input tax credit on the acquisition or importation.

For the purpose of Division 57 of the GST Act, a creditable importation is made by a non-resident through a resident agent where the agent has the authority of the principal to make the importation on its behalf, thereby binding the non-resident to the legal effects of the transaction.

In your case, the non-resident brings the goods into Australia. Company C receives the goods after Company B clears the goods through Customs. In the tax invoice issued by Company B in relation to the importation, the non-resident is the supplier of the goods and Company C is the importer. You further advised that it is the non-resident that addresses any problems with importation that may arise. This information does not indicate that you have involvement in the importation of the goods or that you have authority to make the importation on behalf of the non-resident. Therefore, the non-resident does not make a creditable importation through you and Division 57 of the GST Act does not apply. Accordingly, you are not entitled to claim the GST paid to Company B for customs clearance on the importation of the goods.

Question 3

Under section 11-30 of the GST Act, an entity is entitled to the input tax credit for any creditable acquisition that it makes.

An entity makes a creditable acquisition, in accordance with section 11-5 of the GST Act, if:

· the entity acquires anything solely or partly for a creditable purpose; and

· the supply of the thing to the entity is a taxable supply; and

· the entity provides, or is liable to provide consideration for the supply; and

· the entity is registered or required to be registered for GST.

However, as stated above, the resident agent is entitled to the input tax credit on a creditable acquisition that the non-resident makes through its resident agent. For the purpose of Division 57 of the GST Act, a creditable acquisition is made by a non-resident through a resident agent if the agent has authority of the non-resident to make the acquisition on its behalf, thereby binding the non-resident.

As stated above in response to Question 2, the information provided indicate that you role is limited to providing administrative services to the non-resident. Therefore, the non-resident does not make a creditable acquisition through you and Division 57 of the GST Act does not apply. Accordingly, you are not entitled to claim the GST paid to Company C for storing the goods.