Edited version of private ruling

Authorisation Number: 1011805519629

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Ruling

Subject: GST and input tax credit for the importation of goods

Question

Is a government entity (you) entitled to claim an input tax credit (ITC) for the importation of goods from overseas?

Answer: Yes

You are entitled to claim an ITC for the importation of the goods from overseas.

Relevant facts and circumstances

You are a government entity which is registered for goods and services tax (GST).

You commissioned some goods from an overseas supplier, to be used as part of a commemoration.

You imported the goods into Australia and paid GST to the Australian Customs Service (Customs).

You have provided a copy of the customs entry form which shows that your customs broker/agent completed the customs formalities on your behalf (that is, you are stated as the importer) and entered the goods for home consumption when completing the customs formalities.

You will not sell the goods for a profit. If the circumstances changes, a particular goods will be passed on within the government entity or museum, but it would not be disposed of for any form of sale or profit.

You have also provided a copy of the tax invoice issued by the customs broker/agent for the supply of their professional services, and requesting the amount of GST/duties/taxes paid to Customs on your behalf.

Reasons for decision

Creditable importation

An entity is entitled to claim input tax credits (ITC) on a creditable importation.

Under section 15-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you make a creditable importation if:

(a) you import goods solely or partly for a creditable purpose; and

(b) the importation is a taxable importation; and

(c) you are registered or required to be registered.

All the requirements above must be satisfied for an importation to be a creditable importation.

The importer of the goods

The first requirement under paragraph 15-5(a) of GST Act provides that you make a creditable importation if you import goods. To determine who is entitled to input tax credits for a creditable importation, it is necessary to identify the 'you'. That is, the entity that imports the goods. We therefore need to determine whether you or the seller is the importer of the goods.

Goods and Services Tax Ruling GSTR 2003/15 provides guidance on the importation of goods into Australia (available at the Australian Taxation Office website at www.ato.gov.au).

The entity that imports goods within the meaning of Division 15 of the GST Act, in the context of a taxable importation under Division 13 of the GST Act, is the entity that:

· causes the goods to be brought to Australia for application to its own purposes after importation, whether by way of supply, use or otherwise; and

· completes the customs formalities for the entry of the goods.

Based on the facts provided, you purchased the goods from overseas. You arranged for the goods to be sent to Australia. You brought the goods as part of a commemoration. Therefore, you caused the goods to be brought into Australia for your own use. Furthermore, your customs broker/agent completed the customs formalities on your behalf (you are stated as the importer) and entered the goods for home consumption when completing the customs formalities. Therefore, we consider that you are the entity that imported the goods into Australia.

The next requirement for making a creditable importation is that the importing entity imports the goods for a creditable purpose.

Creditable purpose

Under 15-10 of the GST Act provides the meaning of creditable purpose. The meaning of creditable purpose is also discussed in GSTR 2003/15. You import goods for a creditable purpose to the extent that you import the goods in carrying on your enterprise. You do not import the goods for a creditable purpose to the extent that the importation relates to making supplies that would be input taxed (such as, financial supplies and the sale and rental of residential properties), or the acquisition is of a private or domestic nature.

Under paragraph 9-20(1) (g) of the GST Act, an enterprise includes the activity or series of activities, done by the Commonwealth, a State or a Territory, or by a body corporate, or corporation sole, established for a public purpose by or under a law of the Commonwealth, a State or a Territory.

Based on the facts provided, you are a government entity (as per paragraph 9-20(1)(g) of the GST Act). You imported the goods as part of a commemoration. It is considered that the goods are not used for making input taxed supplies or for private purposes. Therefore, you have imported the goods for a creditable purpose.

The next step is to consider whether the importation of the goods into Australia is a taxable importation.

Taxable Importation

Where you make a taxable importation of goods into Australia, you must pay GST on that importation.

Under section 13-5 of the GST Act, you make a taxable importation if:

· goods are imported, and

· you enter the goods for home consumption (within the meaning of the Customs Act 1901).

However, under section 13-10 of the GST Act, an importation is a non-taxable importation if:

· it is a non-taxable importation under Part 3-2 of the GST Act, or

· it would have been a supply that was GST-free or input taxed.

Part 3-2 of the GST Act, particularly section 42-5 of the GST Act, deals with importation of goods that are non-taxable importations in accordance with the Customs Tariff Act 1995. 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 referred to in section 42-5 of the GST Act.

Based on the facts provided, you have imported the goods into Australia for your own use. Furthermore, you (through your customs broker/agent) have entered the goods for home consumption when completing the customs formalities. Customs have treated the importation as a taxable importation and have collected the GST. The supply of the goods to you would not have been input taxed or GST-free. Accordingly, the importation of the goods by you (through your customs broker/agent) is a taxable importation under section 13-5 of the GST Act and paragraph 13-10(b) of the GST Act is satisfied.

GST registration

Based on the facts provided, you are registered for GST, and therefore paragraph 15-5(c) of the GST Act is satisfied.

Accordingly, all the requirements of section 15-5 of the GST Act are satisfied, and you are making a creditable importation. You are entitled to claim an ITC for the GST paid on the taxable importation of the goods into Australia.