Edited version of private advice

Authorisation Number: 1051755796676

Date of advice: 21 September 2020

Ruling

Subject: GST and the importation of goods

Question

Will you be entitled to claim the GST credits paid on the importation of the goods into Australia as the importer of record?

Answer

No. You will not be entitled to claim the GST paid on the importation of goods into Australia as the importer of record.

Relevant facts and circumstances

You are an overseas company registered for GST.

You will import the goods into Australia and distribute it to an entity that will apply it for its business purposes.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

sections 15-5; 15-10; 15-15

Reasons for decision

Detailed reasoning

Under section 15-15 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) an entity is entitled to the input tax credit (GST credits) for any creditable importation that the entity makes.

Under section 15-5 of the GST Act an entity makes a creditable importation if:

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

b)    the importation is a taxable importation; and

c)    the entity is registered for GST.

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

However, under subsection 15-10(2) of the GST Act, an entity does 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 will not make a creditable importation of the goods under section 15-5 of the GST Act as the purpose for which the goods will be brought to Australia will not be for your own purpose.

According to the information provided we are of the view that you will not cause the goods to be brought to Australia for application to your own purposes after importation. You therefore are not entitled to claim the GST paid on the importation under section 15-15 of the GST Act.