Edited version of your written advice

Authorisation Number: 1012890123501

Date of advice: 7 October 2015

Ruling

Subject: Goods and services tax (GST) and exports

Question

Is GST payable on your sale of farm dressed pulses to GST registered buyers, such as X, under DCT Incoterms?

Answer

Yes.

Relevant facts and circumstances

You are registered for GST.

You are a grain export business.

You sell farm dressed pulses to X, a GST registered company.

You sell the pulses under DCT Incoterms (delivery to container terminal). You are responsible for delivering the pulses to the operator of a container terminal in Australia, who in turn delivers the pulses to the operator of a ship engaged by another party to transport the pulses to a destination outside Australia. You are not responsible for delivering the pulses to the shipping operator. Your responsibility for transporting the pulses ends once they are delivered to the operator of the Australian container terminal.

You do not sell any grain on FOB Incoterms. FOB Incoterms are different to DCT Incoterms.

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 38-2

A New Tax System (Goods and Services Tax) Act 1999 section 38-4

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

Reasons for decision

Summary-

You are not an exporter of the pulses and are not treated as an exporter of the pulses. Therefore, the export GST exemption does not apply.

GST is payable on your sale of the pulses because all of the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are met.

Detailed reasoning

GST is payable on taxable supplies.

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 the indirect tax zone; 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).

The indirect tax zone is Australia.

In your case, you meet the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because;

• you supply the pulses for consideration

• you supply the pulses in the course or furtherance of an enterprise that you carry on

• these supplies are connected with the indirect tax zone (as you make the pulses available to the buyer in Australia), and

• you are registered for GST.

There are no provisions of the GST Act under which your sales of pulses are input taxed.

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

Exports

Subsection 38-185(1) of the GST Act provides that where a supplier of goods exports them from Australia within 60 days, the sale of the goods is GST-free.

Subsection 38-185(3) of the GST Act provides that a supplier of goods is treated as exporting the goods, for the purposes of subsection 38-185(1) of the GST Act where all of the following requirements are met

• their buyer exports the goods from Australia; and

• the buyer is registered or required to be registered for GST; and

• certain other requirements are met.

Paragraph 22 of Goods and Services Tax Ruling GSTR 2002/6 sets out the three ways a supplier of goods could be considered to be an exporter of the goods. It states:

22. The requirement that the supplier is the entity that exports the goods is satisfied where either:

(a) the supplier contracts at the supplier's own expense with an international carrier for the transportation of the goods to a destination outside Australia; or

(b) the supplier is responsible for delivering the goods to the operator of a ship or aircraft who, or that, has been engaged by another party to transport those goods to a destination outside Australia; or

(c) the requirements of subsection 38-185(3) are met (see paragraphs 67 to 81).

Where you sell pulses that are exported from Australia and you sell them under DCT Incoterms, you are not an exporter of the pulses because:

• you do not contract at your own expense with an international carrier for the transportation of the goods to a destination outside Australia; and

• you are not responsible for delivering the goods to the operator of the ship who is engaged by another party to transport the goods to a destination outside Australia.

Under DCT Incoterms, the supplier is only responsible for delivering the goods to the operator of a container terminal and that operator then delivers the goods to the operator of a ship engaged by someone other than the supplier to transport the goods from Australia to overseas. A different entity to the supplier is responsible for delivering the goods to the shipping operator.

Where you sell to a GST registered buyer, subsection 38-185(3) of the GST Act does not apply, so you are not treated as being an exporter under that provision.

Therefore, where you sell pulses or any other product under DCT Incoterms to GST registered buyers, you do not make a GST-free supply under section 38-185 of the GST Act.

Food

We do not consider that your sales of pulses under the circumstances are GST-free under the food exemption (section 38-2 of the GST Act) because they are not ready to be consumed as food for human consumption in the state you sell them in under the circumstances.

There are no provisions of the GST Act under which your sales of the pulses under the circumstances are GST-free.

Therefore, as all of the requirements of section 9-5 of the GST Act are met, your sales of pulses to GST registered buyers on DCT Incoterms under the circumstances are taxable supplies. Therefore, GST is payable on your sales of pulses under the circumstances.