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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Ruling

Subject: GST and taxable supplies

Question:

Am I liable for GST on sales made through an agent where the agent has not treated the sale as a taxable supply?

Answer:

Yes, you are liable for GST on sales made through an agent where the agent has not treated the sale as a taxable supply.

Relevant facts

You are registered for GST.

You carry on an enterprise.

Your sales are made through a local agent.

The sales were connected with Australia.

The sales were neither GST-free nor input taxed.

Your agent did not charge the purchaser of the livestock GST.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 9-5

Section 9-40

Subdivision 9-C

Reasons for decision

You advised that your sales were made through your agent. For commercial law purposes, an agent is a person who is authorised, either expressly or impliedly, by a principal to act for that principal so as to create or affect legal relations between the principal and third parties.

When an agent uses their authority to act for a principal, then any act done on behalf of that principal is an act of the principal. In other words, the agent will stand in the shoes of the principal and in this case, as you are the principal you will be making the supply.

An entity is liable for GST on any 'taxable supplies' they make under section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

For there to be a taxable supply, the supply must meet all of the criteria set out in section 9-5 of GST Act as follows:

    · the supply made for consideration;

    · the supply is connected with Australia;

    · the supply is made in the course of carrying on your business; and

    · you are either registered or required to be registered for GST.

    · the supply is neither GST-free nor input taxed.

In your case:

    · you made the supply for consideration,

    · the supply occurred in Australia,

    · the supply was made in the course of carrying on your enterprise,

    · you are registered for GST,

    · on the facts provided,

    · your supply will not be GST-free, and

    · will not be an input taxed supply.

In this case, given the facts you have made a taxable supply and thus are liable for the GST in regard to those sales.

The amount of GST payable on a taxable supply is calculated in accordance with Subdivision 9-C of the GST Act and is effectively 1/11th of the consideration received (rounded to the nearest cent).


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