Edited version of your private ruling

Authorisation Number: 1012554964046

Ruling

Subject: Goods and services tax (GST) and safaris and trophies

Question 1

Is GST payable on your supply of:

· safaris

· the service of skinning the carcass

· carcass treatment services

· taxidermy services

· trophies

· trophy transport services, and

· certain goods?

Answer

GST is payable on your supply of a safari.

GST is not payable on the reimbursement you receive for the cost of a gun permit or licence.

GST is payable on your supply of skinning, carcass treatment and taxidermy services.

GST is not payable on your supply of a trophy provided that you export it within certain time-frames. Otherwise, GST is payable on your supply of a trophy.

GST is not payable on your supply of the service of transporting the trophy to and from the place of export.

GST is payable on your sale of the certain goods unless the sealed bag scheme rules are met.

Question 2

Are you entitled to input tax credits where you incur expenses?

Answer

You are entitled to input tax credits on your purchases where the supply of the thing you acquired, to you, is subject to GST and the purchase is a business expense.

Relevant facts and circumstances

You are registered for GST.

You carry on an outfitting business in Australia.

You supply Australian safaris to visitors from overseas.

The package includes:

· gun permit and licences

· arranging the gun permit and licences

· picking up the customer from the airport

· a guided hunt

· accommodation

· food and drinks

· skinning carcasses, treatment of carcasses and taxidermy services.

The package may also include hire of guns and supply of ammunition (if the customer does not bring their own).

The price of the package also includes a trophy fee, which allows the hunter to kill and take possession of a single animal. A trophy fee is not charged for certain sorts of animals.

The customer pays a deposit for a package upon booking and the remainder is to be paid prior to the commencement of the safari.

If a hunter wants to kill more than one of certain sorts of animals, you charge them an additional trophy fee for each additional such animal they kill.

You own some of the animals that are hunted and these animals are on your property. Some of the animals that are hunted are on other peoples' property and are owned by these other people. Where the animals killed are on some other person's property, you pay, and are liable to pay, a trophy fee to the land owner if the animal is one of certain sorts of animals.

Your customer is staying at your hunting lodge when you are treating/skinning the animal they have killed and doing taxidermy work.

You sometimes sell certain goods to your customers.

You organise the transport of a trophy to an Australian port. You organise a shipping company to transport the trophies to your customers' overseas addresses. Your customer pays the shipping company directly.

You organise a company to professionally pack the trophy to prepare it for export.

Activity statements have been processed for the tax periods ending before a certain date.

The Australian Taxation Office (ATO) audited your activity statements for a certain period.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(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 9-40

A New Tax System (Goods and Services Tax) Act 1999 section 11-5

A New Tax System (Goods and Services Tax) Act 1999 subsection 11-15(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 11-15(2)

A New Tax System (Goods and Services Tax) Act 1999 section 11-20

A New Tax System (Goods and Services Tax) Act 1999 Division 19

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-185(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(1)

A New Tax System (Goods and Services Tax) Act 1999 Division 81

A New Tax System (Goods and Services Tax) Act 1999 section 93-5

A New Tax System (Goods and Services Tax) Act 1999 section 93-10

Taxation Administration Act 1953 Schedule 1 section 105-50

Taxation Administration Act 1953 Schedule 1 section 105-55

Reasons for decision

Question 1

Summary

Your supplies of the safaris, skinning, carcass treatment and taxidermy services are not GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) because your customer is in Australia in relation to these supplies when you make these supplies. GST is payable on these supplies because all of the requirements of section 9-5 of the GST Act are met.

GST is not payable on the reimbursement of the cost of gun permits and licences because these reimbursements are not consideration for any supply you make to your customer.

GST may not be payable on the trophy fees you receive because of certain export exemptions. If these export exemptions do not apply, GST will be payable on these trophy fees because the requirements of section 9-5 of the GST Act would be met.

You make a GST-free supply of the service of transporting the trophy to and from the place of export.

GST is payable on your sale of certain goods unless the sealed bag scheme rules are met, because all of the requirements of section 9-5 of the GST Act would be met under such circumstances.

Detailed reasoning

GST is payable by you on your taxable supplies.

You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which are:

(a) you make the supply for consideration

(b) the supply is made in the course of 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.

You meet the requirements of paragraph 9-5(a) to 9-5(d) of the GST Act. This is because:

· you are supplying safaris, trophies, skinning, carcass treatment, taxidermy services; transport services and the certain goods for consideration,

· you make these supplies in the course or furtherance of an enterprise that you carry on,

· these supplies are connected with Australia, and

· you are registered for GST.

There are no provisions of the GST Act under which you make input taxed supplies.

Therefore, what remains to be determined is whether you are making GST-free supplies.

Supply of safari

Item 1 in the table in subsection 38-190(1) of the GST Act provides that a supply of something other than goods or real property to a non-resident who is not in Australia when the thing supplied is done, and:

(a) the supply is neither a supply of work physically performed on goods situated in Australia when the work is done nor a supply directly connected with real property situated in Australia, or

(b) the non-resident acquires the thing in carrying on the non-resident's enterprise, but is not registered or required to be registered.

Paragraph 31 of Goods and Services Tax Ruling GSTR 2004/7 states:

31. The requirement that the non-resident in item 2, or the recipient in item 3, is not in Australia when the thing supplied is done is a requirement, in our view, that the non-resident or recipient is not in Australia in relation to the supply when the thing supplied is done.

Paragraph 61 of GSTR 2004/7 states:

61. A non-resident individual who is physically in Australia when the thing supplied is done is in Australia in relation to the supply to the extent that the non-resident is in contact (other than contact which is only of a minor nature) with the supplier while in Australia.

You supply safaris to non-residents. This supply is a supply of services. Therefore, item 2 in the table in subsection 38-190(1) of the GST Act is relevant to your case because services are not goods or real property. Your supply of the service of arranging the permits and licences, the guided hunt, guns, ammunition, accommodation, food and drinks and the service of picking up the customer from the airport are part of the safari service.

Your customers are physically in Australia when you supply the safari and they are in contact with you at that time and that contact is more than of a minor nature. Therefore, your customers are in Australia in relation to the supply when the thing supplied is done. Hence, you do not make a GST-free supply of a safari under item 2 in the table in subsection 38-190(1) of the GST Act. Therefore, you make a taxable supply of a safari as all of the requirements of section 9-5 of the GST Act are met. Hence, GST is payable on your supply of a safari.

Recovery of cost of gun permits and licences

Your recovery of the cost of a gun permit or licence is not consideration for any supply you make to your customer. Therefore, GST is not payable on the reimbursement you receive for this cost.

Skinning, carcass treatment and taxidermy services

Your supplies of skinning, carcass treatment and taxidermy services are not GST-free under item 2 of the table in subsection 38-190(1) for the same reasons that your supply of a safari is not GST-free. Furthermore, your supply of these services is a supply of work physically performed on goods situated in Australia when the work is done.

There are no provisions of the GST Act under which your supplies of these services are GST-free. Therefore, you are making taxable supplies of these services as all of the requirements of section 9-5 of the GST Act are met. Hence, GST is payable on your supply of these services.

Exports

Item 1 in the table in subsection 38-185(1) of the GST Act provides that a supply of goods is GST-free if the supplier exports the goods 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.

Item 2 in the table in subsection 38-190(1) of the GST Act provides that a supply of goods for which the consideration is provided in instalments under a contract that requires the goods to be exported is GST-free, 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 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 supplier gives the invoice.

The trophy fees you receive are consideration for your sales of goods - trophies. Therefore, the export exemptions are relevant to your case.

We consider that you are the exporter of the trophies because you organise an international carrier to transport the trophies to destinations outside Australia.

Where you export a trophy before or within 60 days after the date you receive consideration for the supply of the trophy or if, on an earlier day, you give an invoice for the supply - the day on which you give the invoice, you will make a GST-free supply under item 1 of the table in subsection 38-185(1) of the GST Act.

Where your customer pays you in instalments, you will make a GST-free supply under item 2 in the table in subsection 38-185(1) of the GST Act if you export the trophy before or within 60 days after:

· the day on which you receive the final instalment of the consideration for the supply; or

· if on an earlier day, you give an invoice for the final instalment - the day on which you give the invoice.

In accordance with paragraph 37 of Goods and Services Tax Ruling GSTR 2002/6, if you deliver a trophy to the operator of a ship before or within the 60 day period, the Commissioner accepts that the timing requirement is met provided that you complete all the other actions necessary to export the goods, for example, obtaining necessary permits and Customs approvals.

In these circumstances, if the ship departs its final Australian port and leaves Australia after the end of the 60 day period, the Commissioner automatically grants an extension of time equal to the additional time required for the export to occur.

Documentary evidence that export exemption applies

Paragraphs 296 to 299 of Goods and Services Tax Ruling GSTR 2002/6 discuss documentary evidence in relation to the export exemption. They state:

296. Records will 'explain' a GST-free transaction made under section 38-185 if they contain enough information for an ATO officer with accounting skills and knowledge of export procedures to understand the essential features of the transaction.

297. For a supply that may be GST-free under section 38-185, the onus is on a supplier to be satisfied, given their specific knowledge of the supply, that goods have been exported. The supplier must have sufficient evidence to show that all of the requirements of the particular item have been met. For items 1 to 4A, this includes records showing that goods were exported.

298. The documents should also provide a reasonable basis for an independent party to be satisfied that the requirements of the item are met.

299. The types of records available to a supplier will vary depending on the circumstances of the supply. Table 1 of Appendix B lists the types of transport documentation a supplier may have depending on the mode of transport used to export the goods. Table 2 of Appendix B lists the types of commercial documentation and official documents that a supplier may have to explain the transaction. A combination of these documents will connect the supply of the goods with the export of those goods. The lists of documents described in the Appendices are not exhaustive, but merely offer guidance as to the types of documents available.

Appendix B of GSTR 2002/6 states:

An exporter must have sufficient documentary evidence to explain the transaction and to show that the goods were exported.

(i) Table 1 lists the types of transport documentation that a supplier may have depending on the mode of transport used to export the goods.

(ii) Table 2 lists the type of commercial documentation and official documents that a supplier may have to explain the transaction.

Table 1 of Appendix B in GSTR 2002/6 lists the following transport documents.

· Bill of lading

· Sea waybill

· Air waybill

· House bill

· Certificate of shipment

· Consignment note

· Proof of delivery

Table 2 of Appendix B in GSTR 2002/6 lists the following documents that explain a transaction (a sale of goods):

· Purchase order from purchaser of goods

· Invoice issue by supplier of goods

· Sales contract

· Evidence of payment

· Packing list

Delivery docket

· Letter of engagement to international transport provide

· Domestic carriage invoice

· International freight and insurance invoices

· Invoices for loading and handling charges

· Export entry

· Export permit

· Customs certificate of clearance

· Overseas Customs import documents

Paragraphs 300 to 306 of GSTR 2002/6 state:

300. With a combination of the documents listed in Appendix B the supplier should be able to evidence the export of goods. Suppliers may have other evidence to support their knowledge that the goods were exported and that the other elements of the particular item were met. For example, for unique goods such as famous works of art, media attention and public information may evidence the export of the goods.

301. The following paragraphs provide a guide to the types of documents listed in the Tables of Appendix B and the information they normally contain which will demonstrate that the elements of the relevant item are satisfied.

Items 1, 2 and 2A

302. Under items 1, 2 and 2A, to demonstrate that a supply of goods is a GST-free export, the supplier must have documentary evidence to show that the goods supplied were exported and that the supplier exported them within the specified time.

303. In most cases, the documents a supplier obtains in the ordinary course of the transaction will be sufficient, provided normal commercial procedures are followed. These documents will usually consist of:

(a) the transport documents evidencing the carriage of the goods out of Australia;

(b) the commercial documents in relation to the supply that identify the supplier, the recipient, the goods and the payment arrangements. The commercial documents should clearly link to the transport documents; and

(c) Customs and other official documents.

304. Where goods are exported by direct engagement of a shipping line or airline, the supplier should retain the following documents depending on the mode of transport:

· · Bill of Lading;

· · Air waybill; or

· · Sea waybill.

305. Where the supplier engages a freight forwarder, consolidator, international express courier or postal agency, at least one of the following documents should be retained by the supplier depending on the mode of transport:

· · House bill;

· · House sea or air waybill;

· · Certificate of shipment;

· · Consignment note;

· · Postal certificate; or

· · Proof of Delivery document.

306. The relevant transport document should contain a description of the goods, details of the sender, the destination and the date of issue.

Commercial documents

307. Transport documents should be supported by commercial records such as:

· · purchase orders;

· · contracts;

· · invoices;

· · receipts;

· · bank statements;

· · packing lists and delivery dockets; and

· · freight and insurance invoices where applicable.

308. These documents should link the details of the supply of goods, with the details of their carriage out of Australia. These documents must clearly identify the:

· · supplier;

· · recipient;

· · goods; and

· · price of the goods.

Vague descriptions of goods, quantities or values are not acceptable. For instance, 'various whitegoods' is not acceptable when the correct description is: '10 washing machines model no. WM 100 and 15 refrigerators model no. R 400'.

Customs and other official evidence

309. A supplier may obtain Customs and other official evidence such as the entry for export, or documentation from the foreign Customs authority evidencing the importation or arrival of the goods.

310. At paragraph 44 of the Ruling section, we illustrate a case where the Commissioner considers that the documentary evidence is sufficient for an independent party to conclude that the goods were exported.

311. In addition to the requirements set out in item 1, under item 2 a supplier requires evidence to show that the supply was made under a contract that requires the goods to be exported, and that the consideration is or was provided in instalments.

312. Documents providing evidence of this include sales contracts, quotations, purchase orders and invoices.

In accordance with paragraph 44 of GSTR 2002/6, one example of a situation where the Commissioner considers it reasonable to conclude that you exported a trophy is where you hold:

(a) a clear Export Declaration Number (EDN) in respect of an export entry for the goods;

and

(b) a valid transport document issued by the shipping line showing:

-that the trophy was received by the shipping operator; and

-that the shipping company has been contracted to carry the goods to a destination outside Australia.

(You must also hold a commercial document in relation to the supply that identifies you, the recipient, the goods and the payment arrangement, for example, your sales invoice.)

In summary, you need to hold the following three types of documents:

(a) the transport documents evidencing the carriage of the goods out of

Australia;

(b) commercial documents in relation to the supply that identify the supplier,

the recipient, the goods and the payment arrangements (for example, a sales invoice). The commercial documents should clearly link to the transport documents; and

(c) Customs and other official documents.

None of the other items in the table in subsection 38-185(1) of the GST Act are relevant.

There are no other provisions of the GST Act under which your sale of a trophy is GST-free.

Where one of the export exemptions referred to above applies, you will make a GST-free supply of a trophy. Therefore, you would not make a taxable supply of a trophy under such circumstances, Hence, would not be payable on your sale of a trophy under such circumstances.

Where the export exemptions referred to above do not apply, you will make a taxable supply of a trophy as all of the requirements of section 9-5 of the GST Act will be met. Hence, GST is payable on your sale of a trophy under such circumstances.

Where you expect at the time you receive payment for a trophy that you will meet the 60 day export rule, you may treat the trophy fee you receive as being consideration for a GST-free supply under the export exemption. However, if the 60 day rule is subsequently not met, and you have already reported the sale as GST-free in a BAS you have lodged you will have an increasing adjustment, which means you will be retrospectively liable for GST on the sale of the trophy. The increasing adjustment will be equal to the GST payable on the sale of the trophy. The increasing adjustment is reported at label 1A of the BAS for the tax period in which you become aware that the 60 day rule was not met.

Transporting the trophy

Where you arrange for the transport of a trophy to an Australian port and from there to overseas, we consider that you acquire the transport services from the transport company and you in turn supply a transport service to your customer.

Your supply of the service of transporting the trophy to the place of export in Australia and from the place of export in Australia to overseas is GST-free under item 2 in the table in subsection 38-190(1) of the GST Act.

This is because the transport service is a supply of something other than goods or real property, to a non-resident who is not physically in Australia when the thing supplied is done or if they are physically in Australia at that time, any contact they may have with you would be of a minor nature. The customer would therefore not be in Australia in relation to the supply.

Hence, you do not make a taxable supply of transport services under these circumstances. Therefore, GST is not payable by you on your supply of the service of transporting a trophy to and from the place of export.

Packing the trophy

Where you arrange for the packing to be done, we consider that you acquire the packing service and you in turn supply a packing service to your customer.

Your customer would not acquire the packing service in isolation, and therefore, your packing service does not constitute an aim in itself. The packing service contributes to the proper performance of the contract to supply the transport service.

Therefore, in accordance with Goods and Services Tax Ruling GSTR 2001/8, where you organise the transport of a trophy, you are making a composite supply and the packing service is incidental or ancillary to the dominant part of this supply - the transport service.

Hence, the GST status of the packing service will be the same as the GST status of the transport service. Therefore, your supply of the packing service is GST-free.

Sale of certain goods

Where your customer exports the certain goods as accompanied baggage, you may be able to make the sale GST-free under item 7 in the table in subsection 38-185(1) of the GST Act - this is called the sealed bag scheme. See enclosed information about the requirements of the sealed bag scheme.

Otherwise, GST is payable on your sales of the certain goods as all of the requirements of section 9-5 of the GST Act would be met.

Where GST is payable on your sale of the certain goods, your customer may be able to obtain a GST refund from Australian Customs and Border Protection Service under the Tourist Refund Scheme.

Apportionment

The total package price will need to be apportioned between the taxable and non-taxable components on a fair and reasonable basis. GST will be payable on the part of the total package price that represents the charge for the taxable supplies.

Question 2

Summary

You are entitled to input tax credits on your purchases where the supply of the thing you acquired, to you, is subject to GST and the purchase is a business expense because the requirements of section 11-5 of the GST Act would be met under such circumstances.

Detailed reasoning

You are entitled to input tax credits on your creditable acquisitions.

You make a creditable acquisition where you satisfy the requirements of section 11-5 of the GST Act, which are:

(a) you acquire anything solely or partly for a creditable purpose

(b) the supply of the thing to you is a taxable supply

(c) you provide, or are liable to provide, consideration for the supply; and

(d) you are registered or required to be registered.

Subsection 11-15(1) of the GST Act provides that you acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise.

However, subsection 11-15(2) of the GST Act provides that you do not acquire the thing for a creditable purpose to the extent that:

(a) the acquisition relates to making supplies that would be input taxed;

or

(b) the acquisition is of a private or domestic nature.

The acquisitions of goods and services etc you make for your business will be acquired in carrying on your enterprise. These acquisitions do not relate to making supplies that would be input taxed and are not of a private or domestic nature. Therefore, you acquire things for your business for a creditable purpose. Hence, you meet the requirement of paragraph 11-5(a) of the GST Act under such circumstances.

Where the thing supplied to you is subject to GST, you will meet the requirement of paragraph 11-5(b) of the GST Act.

Where you pay for an acquisition, you will meet the requirement of paragraph 11-5(c) of the GST Act.

You are registered for GST. Therefore, you meet the requirement of paragraph 11-5(d) of the GST Act.

Hence, where you make a purchase and the supply of the thing acquired, to you, is subject to GST and the purchase is a business expense, you are entitled to an input tax credit.

Where you pay a trophy fee to another landowner, the fee will be consideration for a taxable supply of a trophy to you provided that the landowner is registered or required to be registered for GST and charging the trophy fee is part of an enterprise they carry on, as all of the requirements of section 9-5 of the GST Act would be met under such circumstances.

You must hold a tax invoice for a purchase in order to claim the input tax credit on the purchase.

4 year limitation on collecting GST and claiming input tax credits

In accordance with section 105-50 of Schedule 1 to the Taxation Administration Act 1953, any un-notified unpaid net GST amount you owed to the ATO for tax periods ending on or before a certain date would have ceased to be payable after 4 years had passed since the due date for payment to the ATO.

In accordance with section 93-5 of the GST Act, you would have ceased to be entitled to an input tax credit on a given purchase if you did not claim the input tax credit within 4 years after the due date for lodging the BAS in which you were originally entitled to claim the input tax credit and you did not notify the ATO of the entitlement within the 4 years.