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Edited version of your written advice
Authorisation Number: 1012709452117
Ruling
Subject: GST and supply of goods
Question 1
Will the supply of the specified goods to X, in the manner described in this application, constitute the making of a taxable supply by you?
Answer
No.
Relevant facts and circumstances
You are registered for GST.
You are a supplier of specified goods (the goods).
The goods are manufactured overseas by a non-resident entity, Y.
X is an entity based overseas.
You intend to enter into an arrangement with X and Y under which, you will acquire the goods from Y in the overseas country and supply the goods to X in the overseas country.
You will not import the goods into Australia.
You will not install or assemble the goods in Australia.
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 Subsections 9-25(1).
A New Tax System (Goods and Services Tax) Act 1999 Subsections 9-25(3).
Summary
The supply of the goods to X will not constitute the making of a taxable supply by you as the supply will not be connected with Australia.
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.
A supply of goods is a taxable supply if the requirements of section 9-5 of the GST Act are met. Section 9-5 of the GST Act 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.
(* Denotes a term defined in section 195-1 of the GST Act.)
One of the requirements of a taxable supply is that the supply is connected with Australia.
Section 9-25 of the GST Act defines, among other things, when a supply of goods is connected with Australia.
In your case, subsections 9-25(1) and 9-25(3) of the GST Act are relevant for consideration. These subsections state:
Supplies of goods wholly within Australia
(1) A supply of goods is connected with Australia if the goods are delivered, or made available, in Australia to the *recipient of the supply.
…
Supplies of goods to Australia
(3) 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.
Subsection 9-25(1) - Supplies of goods wholly within Australia
Goods and Services Tax Ruling GSTR 2000/31 explains when a supply is connected with Australia under section 9-25 of the GST Act.
Paragraphs 45 to 49 and 116 to 132 of GSTR 2000/31 explain when a supply of goods is made wholly within Australia under subsection 9-25(1) of the GST Act.
The ruling provides that in the context of subsection 9-25(1) of the GST Act, goods are delivered in Australia if the goods are physically delivered in Australia to the recipient of the supply. Goods are made available in Australia if the goods are physically made available in Australia to the recipient of the supply. The terms 'delivered' and 'made available' consider the place where the physical goods are at the relevant time. Goods which are delivered or made available in Australia to the recipient of the supply may be goods that the supplier has acquired domestically or imported.
Paragraph 116 of GSTR 2000/31 gives context to how broadly subsection 9-25(1) of the GST Act is to be applied due to the role of the heading:
116. The heading to this subsection, 'Supplies of goods wholly within Australia', forms part of the GST Act pursuant to subsection 182-1(1) and points to the operation of subsection 9-25(1) being limited to the supply of goods wholly within Australia. This limitation is also supported by the Explanatory Memorandum accompanying the GST Act which shows, diagrammatically, the supply and receipt of goods wholly within Australia.
Further, paragraph 122 of GSTR 2000/31 gives additional context to subsection 9-25(1) of the GST Act due to the role of subsections 9-25(2) and 9-25(3). It states:
122. Subsection 9-25(1) does not apply to goods where the supply is a supply of goods from Australia or to Australia. Supplies of this kind are covered by subsections 9-25(2) and (3) respectively (refer paragraphs 126 and 131 respectively).
Paragraphs 49 and 141 of GSTR 2000/31 clarify that where a supply of goods involves the goods being delivered, or made available, to the recipient outside of Australia and the recipient subsequently imports the goods into Australia, the supply is not connected with Australia.
In your case, based on the information provided, the recipient of your supply is X. Y will supply the goods to you in the overseas country. You will supply the goods to X. You will deliver or make the goods available to the recipient of the supply, X, in the overseas country. You will not import the goods into Australia. Therefore, the supply of the goods to X will not be connected with Australia under subsection 9-25(1) of the GST Act because you will not deliver or make the goods available to X in Australia.
Subsection 9-25(3) - Supplies of goods to Australia
Paragraphs 52 to 56 and 139 to 162 of GSTR 2000/31 explain when goods are considered to have been brought to Australia for the purposes of subsection 9-25(3) of the GST Act.
Paragraph 52 of GSTR 2000/31 provides that a supply of goods is connected with Australia if the supply involves those goods being brought to Australia and the supplier either imports the goods into Australia or installs or assembles the goods in Australia. The importation of the goods into Australia or the installation or assembly of the goods in Australia is a supply of goods to Australia.
Paragraph 54 of GSTR 2000/31 provides that paragraph 9-25(3)(a) of the GST Act does not apply to a supply of goods that involves goods being brought to Australia where the recipient imports the goods into Australia.
However, a supply of goods is connected with Australia under paragraph 9-25(3)(b) of the GST Act if the supply involves goods being brought to Australia and the supplier installs or assembles the goods in Australia. This is the case regardless of who imports the goods into Australia.
You advised that you will not import the goods into Australia and you will not install or assemble the goods in Australia. Accordingly, the supply of the goods by you to X will not be connected with Australia under subsection 9-25(3) of the GST Act as neither paragraph 9-25(3)(a) nor paragraph 9-25(3)(b) of the GST Act will be met.
Conclusion
In this case, based on the information provided, the supply of the goods by you to X under the proposed arrangement will not be connected with Australia under section 9-25 of the GST Act. Further, the supply will not be connected with Australia under any other provision of the GST Act. Therefore, the supply will not be a taxable supply as it does not meet all the requirements of section 9-5 of the GST Act.