Edited version of private advice

Authorisation Number: 1012678077797

Ruling

Subject: Goods and services tax and international supplies

Question 1

Are you entitled to an input tax credit on your purchase of goods where they are delivered from an overseas country to an overseas country?

Answer

No.

Question 2

Is GST payable on your sales of goods where they are delivered from an overseas country to an overseas country?

Answer

No.

Question 3

Are you entitled to an input tax credit on your acquisition of delivery services relating to the sale of goods which are delivered from an overseas country to an overseas country?

Answer

No.

Question 4

Is GST payable on your supply of delivery services relating to the sale of goods which are delivered from an overseas country to an overseas country?

Answer

No.

Question 5

Are you entitled to an input tax credit on your purchase of freight and Australian Customs clearance services where you import goods into Australia and you contract the supplier of these services to transport the goods to Australia?

Answer

No.

Question 6

Are you entitled to an input tax credit on your purchase of freight and Australian Customs clearance services where you import goods into Australia and you do not contract the supplier of these services to transport the goods to Australia?

Answer

Yes.

Question 7

Are you liable to pay GST to Australian Customs and Border Protection Service (ACBPS) where you import goods into Australia; the goods are delivered to you by post and the value of the goods is over $1,000?

Answer

Yes.

Relevant facts and circumstances

You are registered for GST.

You are a resident entity that is based in Australian only.

You trade in certain sorts of goods.

You purchase goods sourced from overseas. You on-sell these goods to a company (X), which is based in Australia. The goods are delivered from an overseas county to an overseas country. The overseas supplier charges you for freight and you on-charge the cost of freight to X.

You also purchase goods that you import into Australia. You pay a GST-registered freight company to transport these goods to an address in Australia and clear the goods through Australian Customs. In some cases, you contract the freight company to transport these goods to Australia, but in some cases you do not contract the freight company to transport the goods to Australia and the entity that supplies the goods to you instead is responsible for this leg of the journey.

The value of goods you import into Australia can exceed $1,000.

Some of the goods you import into Australia are sent to you by post.

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 9-25

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 section 11-15

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

A New Tax System (Goods and Services Tax) Act 1999 subsection 13-5(1)

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 15-5

A New Tax System (Goods and Services Tax) Act 1999 section 15-15

A New Tax System (Goods and Services Tax) Act 1999 section 38-355

Reasons for decisions

Question 1

Summary

You are not entitled to an input tax credit on your purchase of goods where they are delivered from an overseas country to an overseas country because the supply of the goods to you is not connected with Australia.

Detailed reasoning

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

Section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states:

You make a creditable acquisition if:

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

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

(c) you provide, or are liable to provide, *consideration for the

supply; and

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

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

You meet the requirements of paragraphs 11-5(c) and 11-5(d) of the GST Act. This is because:

• you provide consideration for the supplies of the goods, and

• you are registered for GST.

Therefore, what remains to be determined is whether you acquire the goods for a creditable purposes and whether the supply made to you is a taxable supply.

Creditable purpose

Subsection 11-15(1) of the GST Act states:

You acquire a thing for a creditable purpose to the extent that you

acquire it in *carrying on your *enterprise.

Subsection 11-15(2) of the GST Act states:

However, 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.

You acquire the goods for a creditable purpose because you acquire them in carrying on your enterprise; and these acquisitions do not relate to making supplies that would be input taxed and are not of a private or domestic nature. Therefore, you meet the requirement of paragraph 11-5(a) of the GST Act.

Acquisition of a taxable supply

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

You make a taxable supply if:

(a) you make the supply for *consideration; and

(b) the supply is made in the course or furtherance of an *enterprise that

you *carry on; and

(c) the supply is *connected with Australia; and

(d) you are *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.

Connected with Australia

Subsection 9-25(1) of the GST Act states:

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(2) of the GST Act states:

A supply of goods that involves the goods being removed from

Australia is connected with Australia.

Subsection 9-25(3) of the GST Act states:

A supply of goods that involves the goods being brought to Australia

is connected with Australia if the supplier either:

(a) imports the goods into Australia; or

(b) installs or assembles the goods in Australia.

As none of the circumstances in subsection 9-25(1), 9-25(2) or 9-25(3) of the GST Act are present the sale of goods to you is not connected with Australia where the goods are delivered from an overseas country to another overseas country.

Hence, the requirement of paragraph 9-5(c) of the GST Act is not met. As not all of the requirements of section 9-5 of the GST Act are met, the sale of the goods to you is not a taxable supply. Hence, you do not meet the requirement of paragraph 11-5(b) of the GST Act. Therefore, as you do not meet all of the requirements of section 11-5 of the GST Act, you are not entitled to an input tax credit where you purchase goods and they are delivered from an overseas country to an overseas country.

Question 2

Summary

GST is not payable on your sale of goods where they are delivered from an overseas country to an overseas country because your supply of the goods is not connected with Australia.

Detailed reasoning

You meet the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act. This is because:

• you make a supply for consideration;

• you make the supply in the course or furtherance of an enterprise that you carry on; and

• you are registered for GST.

There are no provisions of the GST Act under which your sale of the goods is GST-free or input taxed.

Therefore, what remains to be determined is whether your sale of the goods is connected with Australia.

As none of the circumstances in subsection 9-25(1), 9-25(2) or 9-25(3) of the GST Act are present your sale of the goods is not connected with Australia where the goods are delivered from an overseas country to an overseas country. Hence, the requirement of paragraph 9-5(c) of the GST Act is not met.

As not all of the requirements of section 9-5 of the GST Act are met, you do not make a taxable supply. Therefore, GST is not payable by you on your sale of goods where they are delivered from an overseas country to an overseas country.

Question 3

Summary

You are not entitled to an input tax credit on your acquisition of delivery services relating to the sale of goods which are delivered from an overseas country to an overseas country because the supply of the delivery services is a GST-free supply of international transport.

Detailed reasoning

You meet the requirements of paragraphs 11-5(a), 11-5(c) and 11-5(d) of the GST Act. This is because:

• you acquire the services for a creditable purpose;

• you provide consideration for the supply of the services; and

• you are registered for GST.

Therefore, what remains to be determined is whether the supply made to you is a taxable supply.

Item 5 in the table in subsection 38-355(1) of the GST Act provides that subject to subsection 38-355(2) of the GST Act, a supply of international transport of goods from:

(a) their place of export in Australia to a destination outside Australia; or

(b) from a place outside Australia to their place of consignment in Australia; or

(c) from a place outside Australia to the same of another place outside Australia,

is GST-free.

Item 5A in the table in subsection 38-355(1) of the GST Act provides that subject to subsection 38-355(2) of the GST Act:

(a) loading or handling of goods, the international transport of which is covered by item 5, during the course of the international transport; or

(b) the supply of a service, during the course of the international transport of goods covered by item 5, that facilitates the international transport,

is GST-free.

Subsection 38-355(2) of the GST Act states:

Paragraphs (a) and (b) of item 5, and item 5A, in the table in

subsection (1) do not apply to a supply to the extent that the thing

supplied is done in Australia, unless:

(a) the *recipient of the supply:

(i) is a *non-resident; and

(ii) is not in Australia when the thing supplied is done in

Australia; or

(b) the supply is done by the supplier of the transport of the goods

from or to Australia (whichever is relevant).

The supply of the service of delivering goods from an overseas country to an overseas country is GST-free under item 5 in the table in subsection 38-155(1) of the GST Act because it is a supply of international transport from a place outside Australia to a place outside Australia. Therefore, the supply of this service to you is not a taxable supply. Hence, you do not meet the requirement of paragraph 11-5(b) of the GST Act. Therefore, as you do not meet all of the requirements of section 11-5 of the GST Act, you are not entitled to an input tax credit under such circumstances.

Question 4

Summary

GST is not payable on your supply of the service of delivering goods from an overseas country to an overseas country because the supply of the delivery services is a GST-free supply of international transport.

Detailed reasoning

You meet the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act. This is because:

• you supply the delivery services for consideration;

• you supply the delivery services in the course or furtherance of an enterprise that you carry on; and

• you are registered for GST.

Therefore, what remains to be determined is whether your supply is connected with Australia; and whether the supply is GST-free or input taxed.

Connected with Australia

In accordance with subsection 9-25(5) of the GST Act, a supply of services is connected with Australia if:

• the service is performed in Australia; or

• the supplier makes the supply through an enterprise that the supplier carries on in Australia.

You supply delivery services through an enterprise that you carry on in Australia. Hence, you meet the requirement of paragraph 9-5(c) of the GST Act.

There are no provisions in the GST Act under which your supplies of the service of delivering the goods from an overseas country to an overseas country are input taxed.

Therefore, what remains to be determined is whether your supply of the delivery services is GST-free.

Your supply of the service of delivering goods from an overseas country to an overseas country is GST-free under item 5 in the table in subsection 38-355(1) of the GST Act. Hence, you do not make a taxable supply. Therefore, GST is not payable on your supply of this service.

Question 5

Summary

You are not entitled to an input tax credit on your purchase of freight and Australian Customs clearance services where you import the goods into Australia and you contract the supplier of these services to transport the goods to Australia. This is because the supplies made to you are GST-free supplies of international transport and services, during the course of that international transport, that facilitate that international transport.

Detailed reasoning

You meet the requirements of paragraph 11-5(a), 11-5(c) and 11-5(d) of the GST Act. This is because:

• you acquire the freight services for a creditable purpose;

• you provide consideration for the supplies; and

• you are registered for GST.

The freight company meets the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because:

• it supplies its services for consideration;

• it makes these supplies in the course or furtherance of an enterprise that it carries on;

• these supplies are connected with Australia; and

• it is registered for GST.

Where you contract a freight company to transport goods from overseas to a location in Australia, the supply made by the freight company is a supply of international transport as the goods are being transported from a place outside Australia to a place of consignment in Australia. The place of consignment in Australia is the place to which the goods are required to be delivered under the contract for the transport services.

The entity that is contracted to transport the goods within Australia is the same entity as the entity that is contracted to transport the goods to Australia. Hence, the supply of the entire transport service is GST-free under item 5 in the table in subsection 38-355(1) of the GST Act.

The supply of the service of loading or handling of the goods during the course of the international transport of the goods is GST-free under item 5A in the table in subsection 38-355(1) of the GST Act.

The supply of services during the course of the international transport of the goods that facilitate the international transport (for example, Customs clearance services) is GST-free under item 5A in the table in subsection 38-355(1) of the GST Act.

Hence, the freight company makes GST-free supplies to you. Therefore, the freight company does not make taxable supplies to you. Hence, you do not meet the requirement of paragraph 11-5(b) of the GST Act. Therefore, as you do not meet all of the requirements of section 11-5 of the GST Act, you are not entitled to an input tax credit under such circumstances.

Question 6

Summary

Where you purchase freight and Australian Customs clearance services relating to goods you import into Australia and you do not contract the supplier of these services to transport the goods to Australia, the supplies made to you are not GST-free supplies of international transport.

You are entitled to an input tax credit on your purchase of these services because you make a creditable acquisition.

Detailed reasoning

You meet the requirements of paragraph 11-5(a), 11-5(c) and 11-5(d) of the GST Act. This is because:

• you acquire the freight services for a creditable purpose;

• you provide consideration for the supplies; and

• you are registered for GST.

Therefore, what remains to be determined is whether the supply made to you is a taxable supply.

The freight company meets the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because:

• it supplies its services for consideration;

• it makes these supplies in the course or furtherance of an enterprise that it carries on;

• these supplies are connected with Australia; and

• it is registered for GST.

There are no provisions in the GST Act under which the supplies are input taxed.

Where you contract a freight company to deliver the goods within Australia only, the supply by that freight company is not a supply of international transport, because the local transport in such a situation occurs after the place of consignment, for the purposes of section 38-355 of the GST Act. Therefore, the supplies that the freight company makes to you are not GST-free under item 5 or item 5A in the table in subsection 38-355(1) of the GST Act where you do not contract the freight company to transport the goods to Australia.

There are no provisions of the GST Act under which the supplies made to you are GST-free.

Therefore, as all of the requirements of section 9-5 of the GST Act are met, the freight company makes taxable supplies to you. Hence, the requirement of paragraph 11-5(b) of the GST Act is met.

As you meet all of the requirements of section 11-5 of the GST Act, you are entitled to an input tax credit on your purchase of the freight services under such circumstances.

Question 7

Summary

GST is payable by you on the importations as you make taxable importations. No GST exemptions apply.

Detailed reasoning

Section 13-15 of the GST Act states that you must pay the GST payable on any taxable importation that you make.

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

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.

Section 13-10 of the GST Act states:

An importation is a non-taxable importation if

(a) it is a non-taxable importation under Part 3-2; or

(b) it would have been a supply that was *GST-free or *input

taxed if it had been a supply.

Where goods are sent to you by post, goods are imported and you are required to clear the goods for home consumption if the value of the goods is over $1,000.

There are no GST exemptions for importations of goods delivered to Australia by post.

There are no GST exemptions for the types of goods you listed.

Goods with a value of $1,000 or less generally do not have GST levied upon importation.

Where you import goods of the type you mentioned and the goods are sent to you by post and the value is over $1,000, you will be liable to pay GST to ACBPS on the importation.

For information about GST exemptions on imports, see the website, www.customs.gov.au and type in GST exemptions into the search box.

For information on how to clear goods through ACBPS, see the website www.customs.gov.au and type in Clearing goods through Customs into the search box or contact ACBPS on 1300 363 263.

Where you make a taxable importation, you are entitled to an input tax credit for the GST paid to ACBPS on the importation.