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This edited version has been archived due to the length of time since original publication.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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Edited version of your private ruling

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Ruling

Subject: GST and supply of goods

Issue

Is your supply of goods to an Australian company subject to the goods and services tax (GST) where the goods have never entered into Australia?

Advice

No, your supply of goods to an Australian company is not subject to GST where the goods have never entered into Australia.

Relevant facts

You are an Australian company and are registered for GST.

You supply goods to an Australian company. These goods are manufactured overseas.

At the request of the Australian company, the goods are delivered from the overseas manufacturing company to a place located overseas.

The goods never entered into Australia and the Australian company makes the payment to you for the supply of these goods.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5;

A New Tax System (Goods and Services Tax) Act 1999 Section 9-25

Reasons for decision

GST is payable on a taxable supply. Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), an entity makes a taxable supply if:

    a) the entity makes the supply for consideration; and

    b) the supply is made in the course or furtherance of an enterprise that the entity carries on; and

    c) the supply is connected with Australia; and

    d) the entity is 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.

Accordingly, for your supply of goods to the Australian company to be a taxable supply, all the requirements in section 9-5 of the GST Act need to be satisfied.

From the facts received, you supply the goods for consideration to the Australian company and supply the goods in the course of an enterprise (business) that you carry on. Further you are registered for GST. In this instance, your supply of goods to the Australian company satisfies paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act.

What remains to be considered is whether your supply of the goods is connected with Australia (paragraph 9-5(c) of the GST Act) and is GST-free or input taxed under the GST Act.

Connected with Australia

The connection with Australia is one of the elements required to be satisfied before a supply is a taxable supply.

Goods and Services Tax Ruling GSTR 2000/31 (available at www.ato.gov.au) provides guidance on when a supply is connected with Australia.

In determining whether a supply of goods is connected with Australia a distinction is made in section 9-25 of the GST Act between supplies of goods wholly within Australia, supplies of goods from Australia, and supplies of goods to Australia.

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(1) of the GST Act);

    · the supply involves the goods being removed from Australia (subsection 9-25(2) of the GST Act);

    · the supply involves the goods being brought to Australia and the supplier either imports the goods into Australia or installs or assembles the goods in Australia (subsection 9-25(3) of the GST Act).

You advised that the goods were never entered into Australia and were delivered directly from the overseas manufacturing company to a place located overseas. In this instance your supply of goods to the Australian company is not connected with Australia for GST purposes as:

    · the goods are not delivered or made available in Australia to the Australian company;

    · your supply of goods to the Australian company does not involve the goods being removed from Australia; and

    · your supply of goods to the Australian company does not involve the goods being brought to Australia or the goods being installed or assembled in Australia.

As your supply of goods is not connected with Australia paragraph 9-5(c) of the GST Act is not satisfied. Your supply of goods to the Australian company is therefore not subject to GST as all the requirements in section 9-5 of the GST Act are not satisfied.


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