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Ruling
Subject: GST and export of goods
Question
Is the sale of the goods to you a GST-free supply when you export the goods?
Answer
Yes, the sale of the goods to you is a GST-free supply when your export the goods.
Relevant facts and circumstances
You are carrying on a business outside Australia.
You are not registered or required to be registered for GST.
Your only business activity within Australia is the purchase of goods directly from Australian suppliers.
You purchase and take control of the goods after a particular process has been completed. It is not feasible to pack and transport the goods without undergoing such process. No further process is done on the goods after you purchased them
Once paid, the goods are immediately freighted to port and shipped to a destination outside Australia.
You export the goods within 60 days of the earlier of the invoice date or the payment. It is imperative that the goods are sent overseas immediately.
The goods are entered for export within the meaning of section 113 of the Customs Act 1901 (Customs Act). The export documents always show you as the owner of the goods.
You provide the suppliers sufficient records to show that the goods are actually exported within the 60-day period.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-5 and
A New Tax System (Goods and Services Tax) Act 1999 section 38-185.
Reasons for decision
GST is payable on a taxable supply. Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that an entity makes a taxable supply if:
· it makes the supply for consideration;
· the supply is made in the course or furtherance of its enterprise;
· the supply is connected with Australia; and
· it is registered or required to be registered.
A supply is not a taxable supply to the extent that it is GST-free or input taxed.
GST-free supply
A supply of goods, where those goods are exported from Australia, is GST-free if the requirements of one of the items in the table in subsection 38-185(1) of the GST Act are met.
Items 1 and 2 in the table are set out below:
GST-free exports | ||
Item |
Topic |
These supplies are GST-free |
1 |
Export of goods - general |
A supply of goods, but only if the supplier exports them from Australia before, or within 60 days (or such further period as the Commissioner allows) after: (a) the day on which the supplier receives any of the *consideration for the supply; or (b) if, on an earlier day, the supplier gives an *invoice for the supply - the day on which the supplier gives the invoice |
2 |
Export of goods - supplies paid for by instalments |
A supply of goods for which the *consideration is provided in instalments under a contract that requires the goods to be exported, but only if the supplier exports them from Australia before, or within 60 days (or such other period as the Commissioner allows) after: (a) the day on which the supplier receives any of the final instalment of the consideration for the supply; or (b) if, on an earlier day, the supplier gives an *invoice for that final instalment - the day on which the suppliers gives the invoice. |
Unless you provide the consideration in instalments, the only item in the table to consider is item 1.
Supplier exports the goods
For a supply of goods to be covered by item 1, the goods must be exported by the supplier. In this case, you, as the recipient, export the goods.
Subsection 38-185(3) of the GST Act, however, provides that a supplier of goods is treated as having exported the goods for the purposes of item 1 and 2 if all of the following requirements are satisfied:
Before the goods are exported, the supplier supplies them to an entity that is not registered or required to be registered.
That entity exports the goods from Australia.
The goods have been entered for export within the meaning of section 113 of the Customs Act.
Since their supply to that entity, the goods have not been altered or used in any way except to the extent (if any) necessary to prepare them for export.
The supplier has sufficient documentary evidence to show that the goods were exported.
If the Tourist Refund Scheme (TRS) applies, a payment has not been sought under that scheme.
As the TRS does not apply to your circumstances, only the requirements in paragraphs (a) to (e) above must be satisfied.
You advised that you are not registered or required to be registered for GST. After paying for the goods, the goods are freighted to port and shipped to a destination outside Australia. As it is imperative to send the goods overseas immediately, this is always done within the 60-day period, either from the day the payment is made or the invoice for the goods is issued. You enter the goods for export within the meaning of section 113 of the Customs Act, with the documents showing you as the owner of the goods. You purchase the goods after a particular process is done; and there is no further process done on the goods after their supply to you. You give the suppliers sufficient records to show that the goods are actually exported within the 60-day period.
Based on the information provided, the supplier of the goods is taken to have exported the goods for the purpose of item 1.
Supplier exports the goods within 60-days
A supply of goods is GST-free if the supplier exports the goods before, or within a 60- day period (or such further period as the Commissioner allows). The law requires the goods to be actually exported before or within the time period.
The point at which goods are exported for the purposes of items 1 and 2 is when the goods physically leave Australia with the intention of being landed at a place outside Australia.
Goods can leave Australia on board a ship or aircraft. Thus the time at which goods are exported is the time at which the ship or aircraft with the goods on board departs its final Australian port or airport.
The Commissioner accepts that the timing aspect of the requirement is met if, before the end of the 60-day period, the supplier hands over possession of the goods to an international transport provider contracted to deliver the goods to an overseas destination. However, this is provided all of the other actions necessary to export the goods are completed.
You advised that it is imperative to send the goods overseas immediately which is always done within the 60-day period, either from the day the payment is made or the invoice for the goods is issued. Furthermore, you provide sufficient records to the suppliers showing the goods are actually exported within the 60-day period. As such, we consider that the timing requirement is met.
The requirements in item 1 are satisfied; therefore the supply of the goods to you is a GST-free supply under subsection 38-185(1) of the GST Act.