Edited version of private advice

Authorisation Number: 1012655817444

Ruling

Subject: GST and supply of goods in Australia

Questions

1. Can you and the Australian company have an agreement to treat the supplies of goods that are delivered to Australian entities in Australia as GST-free supplies?

2. Is your supply of goods to a non-resident subject to GST where the goods are delivered to entities in Australia?

Advice

1. No, you and the Australian company cannot have an agreement to treat the supplies of goods that are delivered to Australian entities in Australia as GST-free supplies because the Australian company's supplies of goods wholly in Australia are taxable supplies under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

2. Yes, your supply of goods to the non-resident is subject to GST where the goods are delivered to entities in Australia because your supply of goods that are delivered to entities in Australia is a taxable supply under section 9-5 of the GST Act.

Relevant fact

You are a company incorporated outside Australia and currently you are not registered for the Australian GST. Your business activity is to supply goods to companies worldwide.

You have sold goods to a non-resident of Australia and the goods are to be delivered to entities in and outside of Australia. The current turnover for your supply of goods within Australia is above the GST registration threshold of $A75,000.

You advised that the goods sold to the non-resident are supplied by an Australian company The Australian company imports the goods that are shipped from overseas and delivers them to entities located in Australia and outside Australia.

For the goods to be sent outside Australia the Australian company will export them at the time they issue the invoice. The Australian company invoices the costs for exporting the computers to you. The Australian company is registered for GST.

Relevant legislative provisions

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

Reasons for decisions

Question 1

GST is payable on a taxable supply. An entity (resident or non-resident) makes a taxable supply of goods under section 9-5 of the GST Act 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 of goods is connected with Australia; and

d) the entity is 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.

All of the above requirements must be satisfied for a supply of goods to be a taxable supply under section 9-5 of the GST Act.

From the information received, the Australian company satisfies paragraphs 9-5(a) and 9-5(d) of the GST Act when it supplies you with goods as:

a) the Australian company makes the supply for consideration; and

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

c) the supply of goods is connected with Australia as the goods are delivered to entities in Australia; and

d) the Australian company is registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. There is no provision under the GST Act that will make a supply of goods that are purchased and delivered in Australia GST-free or input taxed.

In this instance you and the Australian company cannot have an agreement to treat the supply of goods that are delivered in Australia as a GST-free supply as the Australian company's supply of goods that are delivered in Australia is a taxable supply under section 9-5 of the GST Act.

Other information

From the information received, the Australian company also exports the goods to entities located outside Australia at your request. Relevant to the exportation of the goods is item 1 in the table in subsection 38-185 of the GST Act (item 1).

Item 1 states:

A supply of goods, 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 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.

All the requirements in item 1 must be satisfied for a supplier to treat their supply of goods that are exported from Australia as GST-free.

From the information received the Australian supplier exports the goods from Australia within 60 days of issuing an invoice. In this instance all the requirements in item 1 are satisfied and the supply of goods that are delivered outside Australia is GST-free.

For more information on exportation of goods, refer to Goods and Services Tax ruling GSTR 2002/6 which is available from the legal database of www.ato.gov.au

Question 2

The Australian GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. In regard to goods supplied in Australia, GST is payable where the supply meets the requirements of section 9-5 of the GST Act.

Based on the information received, when you supply the computers to the non-resident and have them delivered in Australia, you will satisfy all the requirements in section 9-5 of the GST Act as:

• you make the supply for consideration;

• the supply is made in the course of a business that you carry on;

• the supply of the goods is connected with Australia as they are delivered in Australia;

• you are required to be registered for GST as the annual turnover of the sale of the computers is above the GST registration threshold of $A75,000;

• there is no provision in the GST Act that makes a supply of goods that is delivered in Australia GST-free or input taxed.

Accordingly, when the goods sold to the non-resident are delivered in Australia, you make a taxable supply under section 9-5 of the GST and you are liable to pay GST to the Australian Taxation Office on this supply.

Other information

When the goods sold to the non-resident are exported from Australia through the Australian company and delivered to entities located outside Australia, your supply of goods to the non-resident will be GST-free under Item 1 in the table in subsection 38-185(1) of the GST Act.