Edited version of your written advice

Authorisation Number: 1051324747941

Date of advice: 9 January 2018

Ruling

Subject: GST and supply of goods

Question

Is the supply of goods made by Company A to the Australian company, Company C subject to the goods and services tax (GST)?

Answer

No. The supply of goods made by Company A to the Australian company, Company C is not subject to GST

A supply of goods is a taxable supply and subject to GST if:

● the supply of goods is for consideration; and

● the supplier makes the supply of goods through a business that they carry on; and

● the supply of goods is connected with Australia; and

● the supplier is registered for GST; and

● the supply is neither an input taxed supply nor a GST-free supply.

The connection with Australia is one of the elements required to be satisfied before a supply is a taxable supply.

In regard to supply that involves goods being brought to Australia, the supply is connected with Australia where:

● the supplier imports the goods in Australia; or

● from 1 July 2018:

● the supply is a supply of low value goods (goods that have a customs value of $A1,000 or less) and the recipient of the supply is a consumer of the supply; and

● the supplier (merchant), an electronic distribution platform operator or a re-deliverer assists in bringing the goods to Australia.

A ‘consumer’ is an entity that is not registered for GST or registered for GST and does not acquire the thing supplied solely or partly for the purposes of the enterprise that the entity carries on in Australia.

A supplier imports goods into Australia when they are registered as the ‘owner’ of the goods in the import declaration that needs to be completed and submitted to the Department of Immigration and Border Protection (DIBP) when the goods are entered into Australia. The supplier as owner of the goods is responsible to pay the GST payable on the importation before the goods are released by DIBP.

From the facts given, Company A does not import the goods that are brought to Australia as Company C is the importer of the goods. In this instance the supply of goods made by Company A to Company C is not connected with Australia.

The supply of goods to Company C by Company A is not subject to GST as the supply is outside the scope of GST. Company A will not report the sale in its BAS.

More information on when ‘a supply of goods is connected with Australia’ is available in draft Goods and Services Tax Ruling GSTR 2017/D1 which can be obtained from ato.gov.au

Further from the facts given, the new law for supply of low value goods that starts from 1 July 2018 will not apply to this supply as Company C is registered for GST and the goods are shipped to Australia in one consignment with a total custom value of more than $A1,000. For more information on supply of low value goods refer to the fact sheet ‘GST on low value imported goods’ which is available at ato.gov.au.

Relevant facts and circumstances

Company A is located in Australia and is registered for GST.

Company A receives an order for goods from the Company C, a GST registered company located in Australia. Company A invoices Company C for the sale of the goods it has made to Company C.

Company A purchases the goods from Company B, a company located outside Australia and pays for the purchased goods. Company B ships the goods purchased by Company A directly to Company C.

The goods are shipped in bulk to Company C (that is in one consignment) with a total custom value of more than $A1,000.

When the goods arrived in Australia, Company C is responsible to pay GST and duty to DIBP and is named as the owner of the goods in the Customs Declaration.

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 subsection 9-25(3)