Edited version of private advice

Authorisation Number: 1051906643908

Date of advice: 6 October 2021

Ruling

Subject: GST and supply of goods outside Australia

Question

Was the sale of the goods made by you to X a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when X imported the goods into Australia?

Answer

No. The sale of the goods made by you to X was not a taxable supply under section 9-5 of the GST Act because the sale was not connected with Australia when X imported the goods into Australia. The sale is outside the scope of the GST law thus there is no GST payable on the sale of the goods.

Relevant facts and circumstances

You are registered for GST and your trading name is (trading name).

You made a sale of goods with customs value above AU$1,000 to X, a GST-registered, Australian based company.

In order to fulfil the order, you sought out an overseas based manufacturer to produce the goods. Once the goods were manufactured, they were delivered to X's freight forwarder's warehouse located outside Australia and you were responsible for co-ordinating this delivery.

At the point of delivering the full order of the goods to the overseas warehouse of X's freight forwarder, your contractual obligations were met, and you had no further involvement in the movement of the goods.

X then proceeded to import the goods into Australia with the use of their freight forwarder. X was the sole importer of the goods

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 section 9-25

Reasons for decision

Summary

The sale of the goods you made to X was not a taxable supply under section 9-5 of the GST Act because the sale was not connected with Australia when X imported the goods into Australia. The sale is outside the scope of the GST law thus there is no GST is payable on the sale.

Detailed reasoning

GST is payable on taxable supplies.

You make a taxable supply if you meet the requirements of section 9-5 of the (GST Act, which states

You make a taxable supply if:

(a)           you make a supply for *consideration; and

(b)           you make the supply in the course or furtherance of an *enterprise that you *carry on; and

(c)           the supply is *connected with the indirect tax zone (Australia); and

(d)           you are *registered or *required to be registered for GST

However, the supply will not be a *taxable supply to the extent that the supply is *GST-free or *input taxed.

(*Denotes a term defined in section 195-1 of the GST Act)

From the facts given, you made the supply of goods through an enterprise that you carry on for consideration and you are registered for GST. In this instance the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act are satisfied.

We shall now determine whether your supply of goods is connected with Australia for the purpose of paragraph 9-5(c) of the GST Act.

A supply of goods is connected with Australia if one of the following requirements are satisfied:

•                    the goods are delivered or made available to the recipient in Australia (subsection 9-25(1) of the GST Act);

•                    the supply involves the goods being removed from Australia (subsection 9-25(2) of the GST Act);

•                    the supply involves the goods being brought to Australia and the supplier imports the goods into Australia (subsection 9-25(3) of the GST Act);

•                    the supply is an offshore supply of low value goods which is connected with Australia under subdivision 84-C of the GST Act (subsection 9-25(3A) of the GST Act).

Goods and Services Tax Ruling GSTR 2018/2 provides guidance on when a supply of goods is connected with Australia.

Based on the facts given your sale of goods did not satisfy any of the above requirements as:

•                    the goods were not delivered or made available to X in Australia since the goods were located outside Australia at the time of sale and delivered to an overseas warehouse at the request of X.

•                    the sale did not involve the goods being removed from Australia.

•                    the sale involved the goods being brought to Australia, but you did not import them when they arrived in Australia. X was the importer of the goods.

•                    The goods sold were low value goods that had a total customs value above AU$1,000 and were imported into Australia by X after the low value goods were delivered to the overseas warehouse of X's freight forwarder.

Since your sale of goods to X was not connected with Australia, paragraph 9-5(c) of the GST Act is not satisfied.

Accordingly, your sale was not a taxable sale under section 9-5 of the GST as all the requirements in that section were not satisfied. Your sale is outside the scope of the GST law and therefore no GST was payable on the sale.