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Ruling

Subject: GST on the importation of a yacht

Question

Are you liable to pay GST on a yacht imported into Australia following its purchase in Australia from Australian residents?

Answer

Yes, you are liable to pay GST on the importation of the yacht into Australia as it is taxable importation.

Relevant facts and circumstances

You are an Australian resident who is not registered for GST.

You purchased a sailing yacht from Australian owners (previous owners) in 2010 for a specified amount. The yacht was overseas when you purchased it.

The yacht is Australian built, Australian owned and Australian registered. The yacht was launched in 19XX. The previous owners purchased the yacht from the manufacturer in 20XX.

The previous owners sailed the yacht from Australia in 20XX but could not sail the yacht back to Australia.

After purchasing the yacht, you travelled overseas and sailed the yacht back to Australia for X months.

You engaged a customs broker in Australia to clear the yacht into Australia. The customs broker completed the customs formalities on your behalf. You are the entity stated as the importer of the yacht.

The ownership of the yacht changed while it was overseas. You purchased the yacht for your own use and caused the yacht to be brought to Australia.

You have been advised by Customs that your importation of yacht in Australia is subject to GST.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 13-5

A New Tax System (Goods and Services Tax) Act 1999 section 13-10

A New Tax System (Goods and Services Tax) Act 1999 section 13-15

A New Tax System (Goods and Services Tax) Act 1999 section 42-5

A New Tax System (Goods and Services Tax) Act 1999 section 42-10

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision

GST is payable on taxable importation you make.

Taxable importation

Under section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (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, the importation is not a taxable importation to the extent that it is a non-taxable importation.

Goods and Services Tax Ruling GSTR 2003/15 provides guidance on the operation of the provisions in the GST Act which apply to the importation of goods into Australia. (GSTR 2003/15 is available at the Australian Taxation Office website at www.ato.gov.au).

Goods are typically imported into Australia when they are brought to Australia to be unloaded or landed here. 'Imported' in this context has its ordinary meaning.

If you lodge an import entry in your name as the 'owner' of the goods, you enter the goods for home consumption within the meaning of the Customs Act; and you are liable to pay GST on that importation if the importation is taxable importation.

Based on the facts provided, that yacht was imported as it was brought into Australia for your own use. Furthermore, you (through your customs broker/agent) entered the yacht for home consumption when completing the customs formalities. The conditions in section 13-5 of the GST Act are satisfied; therefore, your importation of the yacht is a taxable importation unless the circumstances surrounding the importation make it a non-taxable importation.

Non-taxable importation

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

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

(b) it would have been a supply that was GST-free or input taxed if it had been a supply.

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.

There are no provisions in the GST Act that provide for the supply of the yacht to be GST-free or input taxed.  Therefore, the importation of the yacht is not a non-taxable importation under paragraph 13-10(b) of the GST Act as the importation would not have been a GST-free or input taxed supply if it had been a supply.

We need to consider section 42-10 of the GST Act in order to establish whether the importation will be a non-taxable importation.  Section 42-10 of the GST Act provides for goods originally exported from Australia to be re-imported into Australia as non-taxable importations, where the goods are returned to Australia in an unaltered condition and the ownership of the goods has not changed.

Under subsection 42-10(1) of the GST Act, an importation of goods is a non-taxable importation if:

(a)  the goods were exported from Australia and are returned to Australia, without having been subject to any treatment, industrial processing, repair, renovation, alteration or any other process since their export; and

(b)  the importer was not entitled to, and did not claim, a payment under Division 168 (about the tourist refund scheme) related to the export of the goods; and

(c)  the importer:

(i) is the manufacturer of the goods

(ii) has previously acquired the goods, and the supply by means of which the importer acquired the goods was a *taxable supply (or would have been a taxable supply but for section 66-45), or

(iii) has previously imported the goods, and the previous importation was a *taxable importation in respect of which the GST was paid.

Based on the facts provided, you are the owner and importer of the yacht. However, you did not manufacture the yacht, and you have not:

§ previously acquired the yacht, and the supply by means of which you acquired the goods was a taxable supply; or

§ previously imported the yacht. 

Accordingly, you do not satisfy the requirements of paragraph 42-10(1)(c) of the GST Act; and therefore, the importation of the yacht is not a non-taxable importation under subsection 42-10(1) of the GST Act.

However, subsection 42-10(2) of the GST Act further states that an importation of goods is a non-taxable importation if:

(a)  the importer had manufactured, acquired or imported the goods before 1 July 2000

(b)  the goods were exported from Australia before, on or after 1 July 2000

(c)  the goods are returned to Australia on or after 1 July 2000, without having been subject to any treatment, industrial processing, repair, renovation, alteration or any other process since their export

(d)  the importer was not entitled to, and did not claim, a payment under Division 168 (about the tourist refund scheme) related to the export of the goods, and

(e)  the ownership of the goods when they are returned to Australia is the same as their ownership on 1 July 2000.

This provision does not apply to your circumstances as you, the importer, had not manufactured, acquired or imported the goods before 1 July 2000, as required in subsection 42-10(2) of the GST Act. Furthermore, the ownership of the yacht when it is returned to Australia is not the same as its ownership on 1 July 2000.

Conclusion

As you have not met the requirements for the importation to be non-taxable under section 13-10, subsection 42-10(1) and subsection 42-10(2) of the GST Act, your importation of the yacht, is a taxable importation under section 13-5 of the GST Act. Consequently, you are liable for GST on the importation of the yacht.