Edited version of your written advice

Authorisation Number: 1013071686875

Date of advice: 16 August 2016

Ruling

Subject: GST and entitlement to GST credits for imported goods

Question 1

Are you entitled to claim the GST paid on the importation of goods under section 15-15 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) in regard to the goods that were imported by another entity?

Advice

No. You are not entitled to claim the GST paid on the importation of goods under section 15-15 of the GST Act in regard to the goods that were imported by another entity because you have not made a creditable importation under section 15-5 of the GST Act.

Relevant facts

You are an Australian company and registered for the goods and services tax (GST). Your business activity is customs agents.

You have provided custom duty services to an Australian entity and paid the GST related to the imported goods to the Australian Customs and Border Protection Service (ACBPS).

You had invoiced the entity for repayment of the GST you paid to ACBPS and the entity did not make the payment to you as it went into liquidation. You have contacted the appointed liquidator for payment and were unsuccessful to obtain the payment.

The Australian Custom Entry declaration forms you gave to us show the entity as the owner of the imported goods

Relevant legislative provisions

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

Reasons for decision

Summary

You cannot claim the GST paid on the importation of goods owned by the entity because you have not made a creditable importation under section 15-5 of the GST Act.

Detailed reasoning

Under section 15-15 of the GST Act you are entitled to the input tax credit (GST credits) for any creditable importation that you make.

Under section 15-5 of the GST Act you make a creditable importation if:

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

b) the importation is a taxable importation; and

c) you are registered for GST.

Under subsection 15-10(1) of the GST Act you import goods for a creditable purpose to the extent that you import the goods in carrying on its enterprise.

However, under subsection 15-10(2) of the GST Act, you do not import the goods for a creditable purpose to the extent that:

a) the importation relates to making supplies that would be input taxed; or

b) the importation is of a private or domestic nature.

The first requirement for an entity to make a creditable importation is that the entity imports the goods.

Goods and Services Tax Ruling GSTR 2003/15 provides guidance on the importation of goods in Australia. Paragraphs 30 to 32 and 49 to 50 state:

30. Imported goods are entered for home consumption, within the meaning of the Customs Act, by an 'owner', as defined in that Act, entering imported goods for home consumption. The imported goods are entered by lodging an import declaration in the name of the 'owner'.

31. If you, as 'owner', lodge an import declaration in your name, you enter imported goods for home consumption within the meaning of the Customs Act and you are liable to pay GST on that importation if the importation is a taxable importation.

32. Typically, the 'owner' that enters imported goods is the legal owner of the goods, or the importer, exporter, consignee, or other person with an interest in, or control of, the goods. While the 'owner' can lodge the import declaration itself, it is more likely that a licensed customs broker is engaged to prepare the import declaration on behalf of the 'owner'. In either case, the import declaration is made in the name of the 'owner' and, if it is a taxable importation, it is the owner that makes the taxable importation and is liable for GST. The customs broker does not make the taxable importation and is not liable for the GST on the taxable importation.

49. The entity that imports goods within the meaning of Division 15, in the context of a taxable importation under Division 13, is the entity that:

a) causes the goods to be brought to Australia for application to its own purposes after importation, whether by way of supply, use, or otherwise; and

b) completes the customs formalities for the entry of the goods for home consumption.

50. The entity that causes goods to be brought to Australia is identified by looking to the purpose for which the goods are brought here. The entity whose purpose it is to apply the goods by way of supply, use or other application to its purposes after importation is the entity that causes the goods to be brought to Australia.

The fact sheet 'claiming GST credits for goods you import' provides guidance who can claim GST credits for the GST paid on taxable importation.

The following information is from the fact sheet:

Claiming GST credits for goods you import

If you are seeking to claim a GST credit for the GST you were liable to pay on a taxable importation, you must be the importer of the goods and import the goods solely or partly for a creditable purpose.

Even if your name appears as 'owner' on the import declaration, this may not mean you are the importer for the purpose of claiming a GST credit on the taxable importation.

There are some situations where you are liable to pay the GST on a taxable importation, but you are not entitled to claim the corresponding GST credit:

Importer for the purpose of claiming GST credits

You must be the importer of the goods to claim GST credits. You are the importer of the goods if both of the following apply:

• you have caused the goods to be brought to Australia for your own purposes

• you, or your agent, are named as the 'owner' of the goods on the import declaration.

You have caused goods to be brought to Australia if the goods were brought to Australia for application to your own purposes after importation.

You use goods for your own purposes if you sell, lease or hire the goods, use the goods as trading stock or use the goods in the manner consistent with their design or nature.

Situations where you are not entitled to GST credits

If you are a facilitator, such as a customs broker or freight forwarder, you will not be entitled to a GST credit. You are generally not the importer because you have not caused the goods to be brought to Australia for your own purposes. You are a facilitator because you are engaged to handle, store, transport, monitor the goods or process the import declaration on another entity's behalf.

Where no agency arrangement exists

In circumstances where a third party is named as 'owner' on the import declaration but is not your agent, the third party will be liable to pay the GST on the taxable importation and will not be entitled to claim a GST credit because they are not the importer.

If you reimburse the GST for which a third party was liable to pay on the taxable importation, you will not be able to claim a GST credit because you are not named as 'owner' of the goods on the import declaration.

In these situations, no-one will be entitled to a GST credit.

From the information received you have not made a creditable importation of the goods under section 15-5 of the GST Act as:

• You are not the owner of the goods under the Customs Act 1901 (Customs Act) as the import declarations you gave to us show that the entity was the owner of the imported goods;

• The purpose for which the goods were brought to Australia was not for your own purpose. It was the entity that caused the goods to be brought to Australia since the goods were brought to Australia for the entity's business purposes and the entity completed the customs facilities for the entry of the goods for home consumption. You merely facilitated the importation of the goods on behalf of the entity and therefore did not cause the goods to be brought to Australia.

You therefore are not entitled to claim the GST paid on the importation under section 15-15 of the GST Act.