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Edited version of private advice
Authorisation Number: 1051908817466
Date of advice: 12 October 2021
Ruling
Subject: GST-free sale of vessel brought back to Australia
Question
Will subsection 38-185 (2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) apply to the sale of the vessel you made to company A when the vessel is brought back to Australia under a Xxxx agreement after it has been exported from Australia and will be imported into Australia by company A?
Answer
No.
Subsection 38-185(2) of the GST Act provides that a supply covered by any of items 1 to 6 in the table in subsection 38-185(1) of the GST Act is not GST-free if the supplier reimports the goods into Australia.
From the information received, you will sell the vessel as a GST-free export sale under item 3 in the table in subsection 38-185(1) of the GST. After the vessel has been exported, it will be brought back to Australia under a Xxxx agreement and company A will be the importer. In this instance subsection 38-185(2) of the GST Act will not apply to your GST-free sale of the vessel since you will not reimport the vessel into Australia.
Relevant facts and circumstances
You are a company located in Australia and are registered for GST.
You intend to set up a company outside Australia (company A) to operate your chartering business.
You will transfer ownership of your vessel to company A. The consideration for the transfer of the ownership of your vessel to company A will be acquisition of shares in company A.
You will treat the transfer of the vessel as a GST-free export sale of vessel to company A.
Once company A has taken ownership of the vessel you will enter into a Xxxx agreement with company A (draft copy received).
You will lease the vessel from company A under the Xxxx agreement. The price for the hire will be at an arms length basis.
You will be operating the vessel under the Xxxx agreement and as such the vessel will re-enter Australian waters for commercial activities (that is chartering). Company A will be the entity to import the vessel into Australia and will be listed as the owner in the import declaration.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 subsection 38-185(2)