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Edited version of private ruling
Authorisation Number: 1011748968386
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Ruling
Subject: Goods and services tax (GST) and sale of goods on an ex-works (overseas) basis
Question
Will GST be payable on your sales of manufacturing equipment where you sell on an ex-works (overseas) basis and the manufacturing equipment is imported into Australia?
Answer
No.
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are registered for GST.
You are carrying on a business.
You will sell manufacturing equipment on an ex works (overseas) basis.
The manufacturing equipment will be imported into Australia.
Your customers will be responsible for transporting the manufacturing equipment from an overseas factory to an overseas port, clearing the manufacturing equipment for export to Australia, transporting the manufacturing equipment from an overseas port to an Australia port; clearing the manufacturing equipment through Australian Customs and paying GST to Australian Customs on your ex works price. Your customers will be responsible for paying all costs after picking up the manufacturing equipment from the overseas factory.
In some cases, you will install or assemble the manufacturing equipment in Australia. In some cases, you will not install or assemble the manufacturing equipment in Australia.
Reasons for decision
Summary
GST will not be payable on your sales of manufacturing equipment where you sell on an ex-works (overseas) basis and the manufacturing equipment is imported into Australia, as your supplies of the manufacturing equipment in this situation will not be 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 will satisfy the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act. That is, you will supply the manufacturing equipment for consideration and you will make these supplies in the course or furtherance of the enterprise that you carry on. Additionally, you are registered for GST.
There are no provisions in the GST Act under which your sales of the manufacturing equipment will be GST-free or input taxed.
Therefore, what remains to be determined is whether your sales of the manufacturing equipment will be supplies connected with Australia.
In accordance with subsection 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 will supply goods - the manufacturing equipment. You will not deliver, or make available, in Australia the manufacturing equipment to the recipients of the supplies where you sell on an ex-works (overseas) basis and the manufacturing equipment is imported into Australia. Therefore, your sales of the manufacturing equipment in this situation will not be supplies connected with Australia under subsection 9-25(1) of the GST Act.
Where you sell the manufacturing equipment on an ex-works (overseas) basis and the manufacturing equipment is imported into Australia, your supply will not involve goods being removed from Australia. Therefore, your sales of the manufacturing equipment in this situation will not be 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 will not export the manufacturing equipment to Australia when you sell on an ex-works (overseas) basis and the manufacturing equipment is imported into Australia. Your customers will export the manufacturing equipment to Australia in this situation. Furthermore, in some cases, you will not import the manufacturing equipment into Australia or install or assemble the manufacturing equipment in Australia.
Therefore, in accordance with paragraph 53 of GSTR 2000/31, your sales of the manufacturing equipment in this situation will not be supplies connected with Australia under subsection 9-25(3) of the GST Act.
Hence, your sales of the manufacturing equipment will not be supplies connected with Australia where you sell the manufacturing equipment on an ex-works (overseas) basis and the manufacturing equipment is imported into Australia, and therefore, the requirement of paragraph
9-5(c) of the GST Act will not be satisfied.
As not all of the requirements of section 9-5 of the GST Act will be satisfied, you will not make taxable supplies of the manufacturing equipment when you sell on an ex-works (overseas) basis and the manufacturing equipment is imported into Australia, and therefore, GST will not be payable on your sales of the manufacturing equipment in this situation.