Edited version of private ruling

Authorisation Number: 1011726470976

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fac sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: GST and supply of goods to a non-resident

Question

Is the supply of goods to a non-resident entity a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where the goods is shipped directly from the manufacturer overseas to the non-resident entity without any entry into Australia?

Answer

No, the supply of goods to the non-resident entity is not a taxable supply under section 9-5 of the GST Act. GST is therefore not applicable.

Relevant facts

You are carrying on an enterprise of importing and exporting goods and are registered for goods and services tax (GST).

You are the sole agent for an overseas manufacturer for the sale of their goods in Australia and overseas.

You received a purchase order from a non-resident company for the purchase of goods.

You placed the purchase order with your overseas principal indicating the overseas destination for the goods to be delivered on your behalf.

The goods were shipped directly from your overseas principal to the non-resident company. The goods was never imported into, or exported from, Australia.

You invoiced the non-resident company for the cost of the goods plus your profit margin and included GST on the invoice.

The non-resident company paid directly to you.

You do not have any written contract with your overseas principal.

Reasons for decision

A supply of goods is a taxable supply if all the requirements of section 9-5 of the GST Act are met, including the requirement that the supply is connected with Australia. The requirements under section 9-5 of the GST Act are:

you make a supply for consideration;

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

the supply is connected with Australia; and

you are registered, or required to be registered for GST.

However, a supply that is GST-free or input taxed is not a taxable supply.

In your case, you make the supply of goods for consideration, the supply is made in the course of an enterprise you carry on and you are registered for GST. The supply of goods to the non-resident company does not involve exporting the goods and is not a GST-free supply nor is it an input taxed supply. It is only left to consider whether the connection with Australia element is satisfied before concluding whether the supply is a taxable supply.

Supplies connected with Australia

Section 9-25 of the GST Act defines when a supply is connected with Australia. For the purposes of determining whether a supply of goods is connected with Australia, section 9-25 of the GST Act makes a distinction between a supply of goods wholly within Australia (subsection 9-25(1)), goods supplied from Australia (subsection 9-25(2)), and goods supplied to Australia (subsection 9-25(3)).

Supplies of goods wholly within Australia

Goods and Services Tax Ruling GSTR 2000/31 supplies connected with Australia available on our website at www.ato.gov.au explains when a supply is connected with Australia under section 9-25 of the GST Act.

Paragraphs 45 to 49 of GSTR 2000/31 cover the circumstances when a supply of goods is made wholly within Australia under subsection 9-25(1) of the GST Act.

A supply of goods is connected with Australia under subsection 9-25(1) of the GST Act if the goods are delivered, or made available, in Australia to the recipient of the supply.

The ruling provides that in the context of subsection 9-25(1) of the GST Act, goods are delivered in Australia if the goods are physically delivered in Australia. Goods are made available in Australia if the goods are physically made available in Australia.

Goods which are delivered or made available in Australia to the recipient may be goods that the supplier has acquired domestically or imported.

From the facts in your case, the shipment of the goods is delivered directly from your overseas principal to an address overseas. As the goods never enter Australia, subsection 9-25(1) of the GST Act is not satisfied because the goods are not delivered, or made available, in Australia to the recipient of the supply.

Supplies of goods from Australia

Paragraphs 50 to 51 of GSTR 2000/31 cover the situation when a supply of goods is taken out of Australia under subsection 9-25(2) of the GST Act.

A supply of goods is connected with Australia under subsection 9-25(2) of the GST Act if the supply involves those goods being removed from Australia. Removal of goods from Australia is a supply from Australia. Goods removed from Australia means the goods are physically taken out of Australia.

In your case the supply of goods does not involve the goods ever being in Australia therefore subsection 9-25(2) of the GST Act is not applicable in your case.

Supplies of goods to Australia

Paragraphs 52 to 56 of GSTR 2000/31 cover the situation when a supply of goods is brought to Australia under subsection 9-25(3) of the GST Act.

A supply of goods is connected with Australia if the supply involves those goods being brought to Australia and the supplier either imports the goods into Australia or installs or assembles the goods in Australia. The import of the goods into Australia or the installation or assembly of the goods in Australia is a supply of goods to Australia.

While subsection 9-25(3) of the GST Act applies to supplies that involve goods being brought to Australia, a connection with Australia only exists if the supplier either imports the goods into Australia or installs or assembles the goods in Australia.

In your case, you are not the importer of the goods and you do not install or assemble the goods in Australia. Accordingly, subsection 9-25(3) of the GST Act is not satisfied.

Conclusion

As discussed above a supply will not be a taxable supply if it is not connected with Australia as prescribed in section 9-25 of the GST Act.

A supply of goods which does not involve the goods being supplied within, from or to Australia is not a supply connected with Australia under section 9-25 of the GST Act. As such the requirement in paragraph 9-5(c) of the GST Act is not satisfied.

Therefore, the supply of goods to the non-resident company is not a taxable supply and GST is not applicable.

As you do not have a GST obligation on the supply, no GST is required to be remitted in this instance to the Australian Tax Office. Likewise as the acquisition in relation to this supply is not creditable acquisition for GST purposes no input tax credits can be claimed.