Edited version of private ruling

Authorisation Number: 1011734030471

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Ruling

Subject: goods and services tax (GST) and sale of goods where the customer imports the goods into Australia

Question

Is GST payable on your sales of goods to Australian resident customers where:

· the Australian resident customers take delivery of the goods at the overseas factory gate of your parent company or a foreign company related to your parent company;

· the Australian resident customers organise the importation of the goods into Australia, including payment of the GST on importation and attending to all the Australian Customs entries; and

· you account for the stock as purchases and subsequent disposals in your accounts for accounting and income tax purposes?

Answer: No.

Relevant facts and circumstances

You are registered for GST.

You are the sole distributor in Australia for products manufactured by your foreign parent company and foreign companies related to your parent company.

You sell goods to Australian resident customers.

The Australian resident customers take delivery of the goods at the overseas factory gate of your parent company or foreign companies related to your parent company.

The Australian resident customers organise the importation of the goods into Australia, including payment of the GST on importation and attending to all the Australian Customs entries.

You account for the stock as purchases and subsequent disposals in your accounts for accounting and income tax purposes.

You do not install or assemble the goods in Australia.

Reasons for decision

Summary

GST is not payable on your sales of the goods under the circumstances in question, as your supplies of the goods in this situation are not connected with Australia.

Detailed reasoning

GST is payable by you where you make a taxable supply.

You make a taxable supply where you satisfy the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which states:

You make a taxable supply if:

(a) you make the supply for *consideration; and

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

(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 that it is *GST-free or *input taxed.

(*Denotes a term defined in section 195-1 of the GST Act)

In your case, you satisfy the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act. That is, you supply the goods under the circumstances in question for consideration and you make these supplies in the course or furtherance of the enterprise that you carry on. Additionally, you are registered for GST.

We shall now determine whether your sales of the goods under the circumstances in question are supplies connected with Australia.

In accordance with subsections 9-25(1) to 9-25(3) of the GST Act, a sale of goods is connected with Australia in the situations set out in those provisions.

Subsection 9-25(1) of the GST Act states:

A supply of goods is connected with Australia if the goods are delivered, or made available, in Australia to the *recipient of the supply.

Subsection 9-25(2) of the GST Act states:

A supply of goods that involves the goods being removed from Australia is connected with Australia.

Subsection 9-25(3) of the GST Act states:

A supply of goods that involves the goods being brought to Australia is connected with Australia if the supplier either:

(a) imports the goods into Australia; or

(b) installs or assembles the goods in Australia.

You supply goods under the circumstances in question. You do not deliver, or make available, in Australia the goods to the recipients of the supplies in this situation. Therefore, your sales of the goods in this situation are not supplies connected with Australia under subsection 9-25(1) of the GST Act.

Where you sell the goods under the circumstances in question, your supply of the goods does not involve goods being removed from Australia. Therefore, your sales of the goods in this situation are not supplies connected with Australia under subsection 9-25(2) of the GST Act.

In accordance with paragraph 53 of Goods and Services Tax Ruling GSTR 2000/31, subsection 9-25(3) of the GST Act means that the supplier is either an exporter from outside Australia and importer into Australia, or an exporter from outside Australia and installer or assembler in Australia.

You do not export the goods to Australia under the circumstances in question. Your customers export the goods to Australia in this situation. Furthermore, you do not import the goods into Australia or install or assemble the goods in Australia in this situation. Therefore, in accordance with paragraph 53 of GSTR 2000/31, your sales of the goods in this situation are not supplies connected with Australia under subsection 9-25(3) of the GST Act.

Hence, under the circumstances in question, your supplies of the goods are not connected with Australia, and therefore, the requirement of paragraph 9-5(c) of the GST Act is not satisfied.

As not all of the requirements of section 9-5 of the GST Act are satisfied, you do not make taxable supplies of the goods under the circumstances in question, and therefore, GST is not payable on your sales of the goods in this situation.

The fact that you account for the stock as purchases and subsequent disposals in your accounts for accounting and income tax purposes does not result in GST being payable on your sales of the goods and is not a relevant factor in determining whether GST is payable on your sales of the goods.