Edited version of your private ruling

Authorisation Number: 1012438852134

Ruling

Subject: GST and importation of goods into Australia

Question

Are you liable to pay GST on the supply of goods to Australian based customers under circumstances described?

Answer

No.

Relevant facts and circumstances

You are a resident of Australia for income tax purposes. You are carrying on an enterprise of importing and wholesaling specified products in Australia and are registered for GST.

You also supply other specified products (the goods) to Australian based customers. The goods if supplied in Australia would be taxable supplies.

You are the owner of the goods that you sell to customers in Australia. You are not acting as a selling agent for another entity that owns the goods.

The goods are located overseas. You buy the goods from a related party in an overseas country.

Customers place orders via email. The orders are entered into your system and a purchase order is provided to your overseas related party. When the goods are loaded at the port of export in the overseas country, an invoice is provided to you. You then create and supply an invoice to the Australian customer.

Your related party despatches the products from the overseas country and completes customs documentation for export. Customs documentation is completed for each individual order.

The goods are sold in full container loads to one customer. You provide notification of the loading of the container at the port of export with a sales invoice to the customer.

A bill of lading is issued for each shipment. The bill of lading is prepared by your related party and your agents. The bill is prepared for the carriage and is issued to the customer. The bill specifies who the consignee in Australia is. The consignee is the Australian customer. The bill of lading and declarations are couriered to the Australian customer.

The Australian customer is responsible for the transport of the goods from the overseas country to Australia.

Collection of the containers and custom clearance at the Australian port are the responsibility of the customer. Each customer engages their own import agent. The Australian customer, or the customer's agent, receives the goods in Australia at the port of arrival and facilitates the preparation and completion of the customs documentation. All customer orders have their own customs documentation.

The Australian customer is the importer of record as per the documents lodged with Australian Customs and Border Protection Service (Customs). That is, the Australian customer is shown as the 'owner' on the customs entry form and is the entity that enters the goods for home consumption. The goods are released to the Australian customer or their agent after they are entered for home consumption as per Customs law.

Any customs charges are paid by the Australian customer to the Customs via their own agent.

The Australian customer instructs the entity that completes the customs documentation as to the details that are to be included on the customs documentation. They use the information from the bill of lading and the invoice. The Australian customer is responsible to pay for the services carried out by the entity that completes the customs documentation.

As per CIF incoterm (cost, insurance and freight), the risk of loss transfers to the customer when the bill of lading is produced at the port of loading. At the same time an invoice is issued to the customer for the sale of the goods.

Your related overseas party pays for the insurance of the goods and nominates the Australian customer as the beneficiary.

The Australian customer is responsible for the cost of transport and insurance of the goods in Australia.

You do not claim any input tax credit for the GST paid on the taxable importation of the goods into Australia where you supply the goods to customers in Australia on the terms described above.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 7-1

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 195-1

Reasons for decision

Summary

Under the circumstances described, you are not liable to pay GST on the importation of the goods into Australia as you are not the entity that enters the goods for home consumption within the meaning of the Customs Act 1901.

Detailed reasoning

Subsection 7-1(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on taxable supplies and taxable importations.

Section 13-15 of the GST Act provides that an entity must pay the GST payable on any taxable importation that it makes.

Subsection 13-5(1) of the GST Act states:

(1) You make a taxable importation if:

(a) goods are imported; and

(b) 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.

(* denotes a term defined in section 195-1 of the GST Act)

Are the goods imported?

The first requirement for a taxable importation is that 'goods are imported'. The word 'import' is defined in section 195-1 to mean 'import goods into Australia'.

Goods and Services Tax Ruling GSTR 2003/15 Goods and services tax: importation of goods into Australia (GSTR 2003/15) discusses the operation of the provisions in the GST Act which apply to the importation of goods into Australia.

At paragraph 29, GSTR 2003/15 provides that generally, goods are imported into Australia when they are brought to Australia to be unloaded here. 'Imported' in this context has its ordinary meaning.

Paragraph 81 of GSTR 2003/15 provides that the Australian Taxation Office takes the definition of the word 'import' in section 195-1 of the GST Act to apply to the derivative 'imported' in the expression 'goods are imported'.

Section 195-1 of the GST Act states, 'Australia does not include any external territory. However, it includes an installation (within the meaning of the Customs Act 1901) that is deemed by section 5C of the Customs Act 1901 to be part of Australia'.

We consider that the goods sold by you to Australian customers are imported goods. Therefore paragraph 13-5(1)(a) of the GST Act is satisfied.

Do you enter the goods for home consumption?

The second requirement for a taxable importation is that goods are entered for home consumption which is achieved by the lodgement of an entry of imported goods for home consumption with Customs.

As stated in paragraphs 96 and 97 of GSTR 2003/15, the identity of the entity importing goods into Australia is not relevant for the purposes of establishing who makes a taxable importation. The entity that enters the goods for home consumption is the entity that makes the taxable importation.

Accordingly, we need to determine whether you satisfy the second requirement for a taxable importation (paragraph 13-5(1)(b) of the GST Act) and enter the good for home consumption.

Paragraphs 30 to 32 of GSTR 2003/15 state:

30. Imported goods are entered for home consumption, within the meaning of the Customs Act, by an 'owner', as defined in that Act, entering imported goods for home consumption. The imported goods are entered by lodging an import entry in the name of the 'owner'.

31. If you, as 'owner', lodge an import entry in your name, you enter imported 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 a taxable importation.

32. Typically, the 'owner' that enters imported goods is the legal owner of the goods, or the importer, exporter, consignee, or other person with an interest in, or control of, the goods. While the 'owner' can lodge the entry for home consumption itself, it is more likely that a licensed customs broker is engaged to prepare the entry on behalf of the 'owner'. In either case, the entry is made in the name of the 'owner' and, if it is a taxable importation, it is the owner that makes the taxable importation and is liable for GST. The customs broker does not make the taxable importation and is not liable for the GST on the taxable importation.

You advised that:

· A bill of lading is issued for each shipment. The bill is prepared for the carriage and is issued to the customer. The bill specifies that the consignee is the Australian customer.

· The Australian customer is responsible for the transport of the goods from the overseas country to Australia.

· All customer orders have their own customs documentation.

· Collection of the containers and custom clearance at the port are the responsibility of the customer. Each customer engages their own import agent. The Australian customer, or the customer's agent, receives the goods in Australia at the port of arrival and facilitates the preparation and completion of the customs documentation.

· The Australian customer instructs the entity that completes the customs documentation as to the details that are to be included on the customs documentation.

· The Australian customer is responsible to pay for the services carried out by the entity that completes the customs documentation.

· The Australian customer is the importer of record as per the documents lodged with Customs. That is, the Australian customer is shown as the 'owner' on the customs entry form and is the entity that enters the goods for home consumption.

· Any customs charges are paid by the Australian customer to the Customs via their own agent.

Based on the information provided, we consider that you do not meet the requirement of paragraph 13-5(1)(b) of the GST Act as you are not the entity that enters the goods for home consumption. Consequently, you are not making a taxable importation pursuant to section 13-5 of the GST Act and as such are not liable to pay GST on the importation of the goods.

The third aspect of section 13-5 of the GST Act as to whether the import is a non-taxable importation does not need to be considered as you are not the entity entering the goods for home consumption.

Base on the information that you have provided, it is the Australian customer that enters the goods for home consumption into Australia under the arrangement described above.