Edited version of private advice

Authorisation Number: 1051520264436

Date of advice: 21 May 2019

Ruling

Subject: GST and claiming GST credit for importation of yacht into Australia

Question 1

Will the importation of the yacht into Australia made by you be a taxable importation under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Advice

Yes, the importation of the yacht into Australia made by you will be a taxable importation under section 13-5 of the GST Act.

Question 2

If the answer to (1) is yes, will you be able to claim back the GST paid on the taxable importation of the yacht into Australia?

Advice

Yes, you will be able to claim back the GST paid on the taxable importation of the yacht into Australia under section 15-15 of the GST Act as you will make a creditable importation under section 15-5 of the GST Act when importing the yacht into Australia.

Question 3

Will the sale of the yacht made by you be a GST-free supply where the motor yacht will be exported from Australia?

Answer

Yes, the sale of the yacht made by you will be GST-free under either of the following:

·         item 1 in the table in subsection 38-185(1) of the GST Act where you are the entity that exports the yacht from Australia and the export is done within the 60 day period; or

·         item 3 in the table in subsection 38-185(1) of the GST Act where the recipient is the entity that exports the yacht from Australia, the export is done within the 60 day period after the recipient has taken physical possession of the yacht and you hold evidence that the yacht has been exported by the recipient within the 60 day period.

Relevant facts

You are registered for GST and have been providing chartered boating experiences in Australia.

You are considering purchasing a used yacht from a purchaser located outside Australia. You will be the importer of the yacht and will be liable to pay GST and duty to the Department of Home Affairs for the importation.

The purpose of the purchase is for your business purposes. You will offer the yacht for commercial charter in the business. You intend to use the yacht intensively in the charter business on a day to day basis.

You anticipate that after a period of time you will sell the yacht to overseas buyers instead of having it refitted due to wear and tear through usage.

You will be the entity that will export the yacht to the overseas customer and the export will be done within 60 days of sale.

In the event it is the overseas purchaser who exports the yacht from Australia, you advise that they will export it within 60 days after the day on which you receive payment for the sale or if on an earlier day, 60 days after you give an invoice for the sale. You further confirm that the overseas purchaser will satisfy all the requirements in subsection 38-185(3) of the GST Act when exporting the purchased yacht from Australia.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 13-5

A New Tax System (Goods and Services Tax) Act 1999 section 15-15

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

Reasons for decision

Note: Where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in section 195-1 of the GST Act.

Detailed reasoning

Question 1

Under section 13-15 of the GST Act you must pay the GST on any taxable importation that you make.

Under subsection 13-5(1) of the GST Act you make a taxable importation if:

a)    goods are imported; and

b)    you enter the goods for home consumption (within the meaning of the Customs Act 1901).

However the importation is not a taxable importation to the extent that it is a non-taxable importation.

Under section 13-10 of the GST Act an importation is a non-taxable importation if:

a)    it is a non-taxable importation under Part 3-2 (Division 42 of the GST Act); or

b)    it would have been a supply that would was GST-free or input taxed if it had been a supply.

Section 13-10 of the GST Act does not apply to the importation of the yacht into Australia as the requirements in that section are not satisfied. Next is to consider subsection 13-5(1) of the GST Act.

Goods and Services Tax Ruling GSTR 2003/15 provides guidance on importation of goods into Australia. Paragraphs 28 to 31 in GSTR 2003/15 state the following:

28. You make a taxable importation if you enter goods imported into Australia for home consumption (within the meaning of the Customs Act).

29. Goods are typically imported into Australia when they are brought to Australia to be unloaded here. 'Imported' in this context has its ordinary meaning.

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.

You advised that you will be the importer of the yacht and liable to pay GST and duty when the latter is imported into Australia. In this instance you will make a taxable importation of the yacht into Australia under item 1 as all the requirements in that item are satisfied.

Question 2

Under section 15-15 of the GST Act you are entitled to the input tax credit 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 partly for a creditable purpose; and

b)    the importation is a taxable importation; and

c)    you are registered or required to be 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 your enterprise.

From the information given you will satisfy all requirements in section 15-5 of the GST Act as:

a)    you import the yacht for your business purposes;

b)    the importation of the yacht will be a taxable importation; and

c)    you are registered for GST.

You will therefore be entitled to claim the GST paid on the taxable importation under section 15-15 of the GST Act as you will make a creditable importation under section 15-5 of the GST Act when importing the yacht into Australia.

Question 3

Relevant to the sale of your yacht to the overseas customer(purchaser) is items 1 and 3 in the table in subsection 38-185(1) of the GST Act (item 1 and item 3). Item 1 applies where you will be the exporter of the yacht and item 3 where the purchaser is the exporter of the yacht.

Item 1

Under item 1 a supply of goods is GST-free where:

·         the supplier exports them from Australia; and

·         the export occurs within 60 days after the day on which the supplier receives any consideration for the supply or if on an earlier day, the day the supplier gives and invoice for the supply.

You advise that you will be the entity that will export the yacht to Country A and this will be done within the 60 day period. In this instance your sale of the yacht to the Country A customer will be GST-free under item 1.

Item 3

Under item 3 a supply of a ship is GST-free if the recipient of the ship exports it from Australia under its own power within 60 days (or such further period as the Commissioner allows) after taking physical possession of it.

You advised that if the purchaser is to export the yacht they will do it within 60 days. In this instance your sale of the yacht to the Country A will be GST-free under item 3. The purchaser will need to provide you with evidence that they have exported the motor yacht within the 60 day period.