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Edited version of private advice
Authorisation Number: 1051676316283
Date of advice: 14 May 2020
Ruling
Subject: Goods and services tax (GST) and calculation of GST turnover
Question
When calculating your GST turnover for the purposes of sections 188-15 and 188-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), do you include amounts received from customers that are for the reimbursement of import GST and duty paid on their behalf?
Answer
No. Amounts you receive from customers for reimbursement of import GST and duty paid on their behalf are not included in the calculation of your GST turnover for the purposes of sections 118-15 and 188-20 of the GST Act.
Relevant facts and circumstances
You are registered for GST.
You are a licensed customs broker. Your activities include clearing imports through Australian customs on behalf of your customers.
Most of your customers are not registered for GST. Further, your customers do not have the software facility to pay any import GST or duty relating to their importations.
The import declaration forms, and payment receipts issued by the Australian Border Force (ABF), are in the names of the importers rather than in your name.
You pay the import GST and duty on the importations on behalf of your customers. Your customers reimburse you for this cost.
When you raise an invoice for your services, you do not add a "mark-up" to any paid import duties or GST. You treat these charges as a "look through".
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 188-15
A New Tax System (Goods and Services Tax) Act 1999 section 188-20
Reasons for decision
Summary
No. Amounts you receive from customers for reimbursement of import GST and duty paid on their behalf are not included in the calculation of your GST turnover for the purposes of sections 118-15 and 188-20 of the GST Act.
Detailed reasoning
Section 188-20 provides that your projected GST turnover at a time during a particular month is the sum of the values of all the supplies that you have made, or are likely to make, during that month and the next 11 months.
For the purpose of calculating your GST turnover in accordance with sections 188-15 and 188-20, it must be determined whether amounts you receive from your customers are consideration for supplies that you have made.
Our view regarding 'reimbursement' is in paragraphs 48 and 49 in Goods and Services Tax Ruling GSTR 2000/37: agency relationships and the application of the law, which states the following:
Agency relationship and disbursements
48. Agents may incur expenses on a client matter both as an agent of the client and as a principal in the ordinary course of providing their services to the client. For example, in most cases, even though agreements between solicitors and clients may not use the term agent or agency, it is clear that the clients have authorised the solicitors to act on their behalf in the particular matter. When the solicitor acts as an agent for the client, the general law of agency applies so that the solicitor is 'standing in the shoes' of the client.
49. If a disbursement is made by a solicitor and incurred in the solicitor's capacity as a paying agent for a particular client, then no GST is payable by the solicitor on the subsequent reimbursement by the client. This is because the goods or services to which the disbursement relates are supplied to the client, not to the solicitor, by a third party. Also, the reimbursement forms no part of the consideration payable by the client for the supply of services by the solicitor. However, if goods or services are supplied to the solicitor to enable the solicitor to perform services supplied to the client, GST is payable by the solicitor on any reimbursement by the client of expenses incurred on those goods or services, whether the reimbursement is separately itemised or included as part of the solicitor's overall fee. This is because the reimbursement is part of the consideration payable by the client for services supplied by the solicitor.
You have advised that you pay the import GST and duty on importations on behalf of your customers, as your customers do not have the software facility to pay any import GST or duty relating to their importations. The import declaration forms, and payment receipts, are in your customers' names, rather than your name.
Based on the above information, amounts you receive from your customers are not consideration for supplies that you have made. When you invoice your customers for the import GST and duty paid on their importations, you are merely seeking a reimbursement for the payments that you have made on their behalf for supplies made to your customers.
Accordingly, the amounts that you receive from your customers for import GST and duty is not included in your GST turnover calculation for the purposes of sections 118-15 and 188-20.