Edited version of your written advice

Authorisation Number: 1012746465121

Ruling

Subject: GST -creditable importations

Question 1

Is an Australian company (AusCo) entitled to claim the input tax credits (ITC) for the goods imported during the Import Period?

Answer 1

Yes. On the basis of the facts provided and the actions that will be taken by the parties to correct the mistake on the importation declarations, AusCo will be entitled to claim the ITC for the goods imported during the Import Period.

Question 2

Is AusCo entitled to claim an ITC on the new (additional) GST liability that will arise as a result of the amendments to the import declarations for the goods imported during the Import Period?

Answer 2

Yes, AusCo will be entitled to claim an ITC on the new (additional) GST liability that will arise as a result of the amended importation declarations for the previous taxable importations.

Relevant facts and circumstances

A non-resident company (NRCo) operated an Australian branch. NRCo was registered for GST and the GST deferral scheme during the relevant period. NRCo later deregistered for GST and cancelled its ABN.

An Australian company (AusCo) is wholly owned by NRCo (through another subsidiary entity). AusCo was established to carry on the enterprise of NRCo. AusCo is registered for GST with an effective date of X, and is registered for the GST deferral scheme.

During the period Y [date] to Z [date] ('Import Period'), AusCo imported goods into Australia with the assistance of a customs broker. Prior to the Import Period, the customs broker had assisted NRCo with the importation of goods.

Both NRCo and AusCo were registered for GST during the Import Period.

At the time of importation, the customs broker incorrectly continued to record NRCo as the owner for customs purposes. All customs paperwork mistakenly showed the ABN of NRCo as the owner of the goods, rather than AusCo.

AusCo advises that it was the 'owner' of the goods at the time of importation during the Import Period.

As NRCo was registered for the GST deferral scheme during the Import Period, the GST was paid on the lodgement of the next Business activity statement (BAS). However, as the enterprise was being carried on by AusCo at that time and it was the actual importer of the goods, the payment was made by AusCo.

AusCo claimed input tax credits ("ITCs") on the importation of the goods during the Import Period on the understanding that it had made creditable importations, as AusCo considered that it imported the goods and the goods were imported for use in its enterprise. The ITCs have been reported and claimed in AusCo's BAS for the Import Period.

NRCo did not claim ITCs in respect of the taxable importations of the goods that were entered for home consumption in its name.

AusCo also paid the customs duty payable on the importation of the goods during the Import Period to the Australian Customs and Border Protection Service ("ACBPS") in the belief that it had been stated as the 'owner' on the import declarations.

Following its own recent review, AusCo discovered that the customs broker had mistakenly lodged the import declarations for the importation of the goods during the Import Period in the name and ABN of NRCo, and the incorrect amount of customs duty was paid on the importations.

The inadvertent error of the customs broker in relation to the use of NRCo's ABN is isolated to the Import Period. AusCo is correctly stated as the 'owner' on the import declarations for periods after the Import Period.

AusCo will amend the details on the import declarations for the goods imported during the Import Period so that details are correctly included, rather than those of NRCo.

As a result of the amendment to the import declarations, the customs broker has advised that a second GST liability will arise in respect of the importation of the goods that occurred during the Import Period.

AusCo confirmed that it arranged for the goods to be sent to Australia. AusCo also engaged the customs broker, and it was intended by the parties that the 'owner' stated on the import declarations be AusCo. AusCo advises that it acted on its understanding that it had been stated as the 'owner' on the declarations, by paying the GST and claiming the ITCs on the importations. AusCo advises that it is the true 'owner' and 'importer' and the mistaken inclusion of NRCo as the 'owner' is not an accurate reflection of the circumstances surrounding the importation of the goods during the Import Period.

NRCo and AusCo have provided assurance that NRCo will not seek to recover the GST, which AusCo had paid and claimed ITCs for the taxable importations made during the Import Period.

Amended importation declarations

AusCo advises that there may be an entitlement to a refund of customs duty relating to the importation of the goods during the Import Period, but can only seek a refund if the import declarations are amended to correctly include the name and ABN of AusCo.

The amendments to the importation declarations will result in there being a new importation ('Revised Importation').

AusCo has been informed that the amendments will result in a revised 'taxable importation' of the goods and therefore give rise to a new (additional) GST liability. The GST liability arises as a result of the amendments to the prior importation declarations. There is no actual importation of goods for the Revised Importation.

AusCo will be the entity that is liable to pay the additional GST on the previous importations during the Import Period as a result of the amendments to the importation declarations. As AusCo is registered for the GST deferral scheme, AusCo advises that it will report and pay the GST liability in the next BAS lodged. AusCo wishes to also claim an ITC to offset the GST payable on the Revised Importations.

Relevant legislative provisions

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

A New Tax System (Goods and Services Tax) Act 1999, Section 38-185

Reasons for decision

Issue 1

An entity is entitled to an input tax credit for any creditable importations that it makes.

Under section 15-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) there are three requirements that must be satisfied for an importation to be a creditable importation. The section states:

You make a creditable importation if:

(a) you import goods solely or partly for a creditable purpose; and

(b) the importation is a taxable importation; and

(c) you are registered, or required to be registered.

Goods and Services Tax Ruling GSTR 2003/15 covers the importation of goods. Creditable importations are addressed in paragraphs 46 to 70 of GSTR 2003/15, and the meaning of 'you import goods' is also discussed in paragraph 120 onwards.

For the purposes of section 15-5 of the GST Act, the entity that imports goods is the entity that:

(a) causes the goods to be brought to Australia for application to its own purposes after importation; and

(b) completes the customs formalities (whether directly or through a customs broker or an agent).

AusCo advises that it is the entity that arranged for the goods to be sent to Australia. AusCo also engaged the customs broker, and it was the intentions of the relevant parties that the 'owner' stated on the import declarations by AusCo. It was due to an inadvertent and honest mistake by the customs broker, that NRCo's name and ABN were incorrectly stated as the 'owner' at that time. AusCo advises that it acted on its understanding that it had been stated as the 'owner' on the importation declarations, by paying the GST and claiming the ITCs on the importations during the Import Period. AusCo states that it is the correct 'owner' and 'importer' for the relevant importations.

Further, NRCo did not claim ITCs in respect of the taxable importations of the goods during the Import Period. NRCo and AusCo have provided assurance that NRCo will not seek to recover the GST, which AusCo had paid and claimed ITCs for the taxable importations made during the Import Period.

AusCo advises that it will amend the details on the import declarations for the goods imported during the Import Period so that AusCo's details are correctly included, rather than those of NRCo. AusCo also advises that the required customs formalities will be completed to ensure that AusCo is reflected as the owner/importer for the imports during the Import Period.

If the amended importation declarations are accepted by ACBPS and amended to reflect AusCo as the 'owner' for the importations made during the Import Period, the entity that imports the goods within the meaning of Division 15 of the GST Act would be AusCo. The facts show that AusCo imports the goods for a creditable purpose, the importations are taxable importations (that is, GST is payable or has been paid), and AusCo is registered for GST. Accordingly, in this circumstance, AusCo will be making the creditable importations and will be entitled to claim the ITCs on the imports of the goods during the Import Period.

Issue 2

AusCo advises that the amendments to the importation declarations will result in a 'revised taxable importation', which will give rise to a new (additional) GST liability for the importation of the goods during the Import Period.

AusCo is registered for the GST deferral scheme, and therefore will report and pay the new GST liability in the next BAS lodged (and will also claim an ITC to offset the GST payable on the revised taxable importations if it is entitled to do so).

As discussed above, if the amended importation declarations are accepted by ACBPS and amended to reflect AusCo as the 'owner' for the importations during the Import Period, AusCo will be making the creditable importations and will be entitled to claim the ITCs in relation to the imports of the goods during the Import Period.

Where AusCo makes amendments to the importation declarations for the goods imported during the Import Period which results in AusCo being liable to pay additional GST on the previous taxable importations, AusCo will also be entitled to claim an ITC on the revised taxable importations.