Edited version of your private ruling

Authorisation Number: 1012462318449

Ruling

Subject: GST and supply of goods

Question 1

Is the supply of part of the goods which you imported into Australia and made available to your customer in Australia a taxable supply?

Answer

Yes.

Question 2

Is the supply of part of the goods to your Australian customer a taxable supply where the goods were not imported into Australia but shipped directly from an overseas country to another overseas country?

Answer

No.

Relevant facts and circumstances

You are an Australian company and registered for GST.

You are in the business of selling specified goods.

An Australian customer of yours has ordered goods. The goods were produced overseas.

You bought the goods in an overseas country. You brought part of the goods into Australia and supplied them to your customer in Australia.

The rest of the goods were shipped directly from an overseas country to your Australian customer's related entity in another overseas country.

Your Australian customer will pay for all the goods in Australia.

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 9-5.

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

Reasons for decision

Questions 1 & 2

Summary

The supply of part of the goods which you imported into Australia and made available to your customer in Australia is a taxable supply. You are liable to pay GST on this part of the supply.

The supply of part of the goods to your Australian customer which were not imported into Australia but shipped directly from an overseas country to another overseas country is not a taxable supply. You are not liable to pay GST on this part of the supply.

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 9-5 of the GST Act provides that you make a taxable supply if all the following requirements are met:

(a) you make the supply for consideration

(b) the supply is made in the course or furtherance of an enterprise that you carry on

(c) the supply is connected with Australia, and

(d) you are registered, or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

In your case, the supply of the goods to your Australian customer satisfies the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act as:

· you made the supply for consideration

· the supply is in the course or furtherance of an enterprise that you carry on, and

· you are registered for GST.

Further, the supply of the goods is not an input taxed or a GST-free supply. Therefore, what remains to be determined is whether paragraph 9-5(c) of the GST Act is satisfied. That is, whether the supply of the goods to your Australian customer is connected with Australia.

Subsection 9-25(1) of the GST Act provides that a supply of goods is connected with Australia if the goods are delivered, or made available, in Australia to the recipient of the supply.

In your case, you have imported part of the goods into Australia and made them available to your customer in Australia. Hence that part of the supply of the goods is connected with Australia and therefore meets the requirement of paragraph 9-5(c) of the GST Act. Consequently, that part of the supply of the goods is a taxable supply as it meets all the requirements of section 9-5 of the GST Act.

You are liable to pay 1/11 of the consideration that you receive for the supply of the goods which were made available to your customer in Australia as GST.

You advised that the rest of the goods were not imported into Australia but were directly shipped from an overseas country to the customer's related entity in another overseas country.

That part of the supply of the goods is not connected with Australia as the goods are not made available to your customer in Australia. The supply of the goods which were not delivered or made available to your customer in Australia does not meet all the requirements of section 9-5 of the GST Act and therefore is not a taxable supply.

You are not liable to pay GST on the supply of the goods that were delivered or made available to your Australian customer outside of Australia.

When invoicing your Australian customer you should treat the supply of the goods that you made available to your customer in Australia as a taxable supply and subject to GST. The supply of the goods which were shipped directly from an overseas country to another overseas country is not a taxable supply and is not subject to GST.

If you have not calculated the price of each part of the supply separately, that is you have supplied all the goods for a single price, then you need to apportion the price between the taxable and non-taxable component of the supply.

Goods and Services Tax Ruling GSTR 2001/8, deals with apportioning the consideration for a supply that includes taxable and non-taxable parts. It discusses how you can work out the value of the taxable part of a mixed supply and provides methods and examples to help you to work out how to apportion the consideration for a supply that contains separately identifiable taxable and non-taxable parts.

For further information on when a supply is connected with Australia refer to Goods and Services Tax Ruling GSTR 2000/31.

GSTR 2001/8 and GSTR 2000/31 are available on our website at www.ato.gov.au