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Edited version of private advice
Authorisation Number: 1051913545022
Date of advice: 26 October 2021
Ruling
Subject: GST and sale of goods from overseas
Question
Is your sale of goods to the Australian customer a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where the Australian customer will take delivery of the goods overseas and import the goods into Australia?
Answer
No, your sale of goods to the Australian customer is not a taxable supply under section 9-5 of the GST Act where the Australian customer will take delivery of the goods overseas and import the goods into Australia. The sale is not connected with Australia and therefore outside the scope of GST.
You will not collect GST on the sale, report the sale in your business activity statement and include the sale when calculating your GST annual turnover.
This ruling applies for the following period:
Not applicable
The scheme commences on:
Not applicable
Relevant facts and circumstances
You carry on an enterprise in Australia and are registered for GST.
The goods you sell to your Australian customer are through a supplier who is based overseas.
Under the sale arrangement, the purchaser organises pickup from the supplier's warehouse and handles the import via their freight company.
The handover of the ownership of the goods occurs overseas.
The Australian customer pays for all freight, duties, customs and taxes on the goods as they enter Australia.
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
GST is payable on a taxable supply.
A taxable supply is determined under the requirements set in section 9-5 of the A New Tax System (Goods and Services) Act 1999 (GST Act). One of these requirements of a taxable supply is that the supply should be connected with Australia.
The connection of a sale of goods to Australia is outlined in section 9-25 of the GST Act. A sale of goods is connected with Australia if one of the following applies:
- The goods are delivered or made available in Australia to the recipient of the supply; or
- The sale involves the goods being removed from Australia; or
- The sale involves the goods being brought to Australia and the supplier imports the goods into Australia; or
- The sale is an offshore supply of low value goods (goods with customs of A$1,000 or less) and imported into Australia by the consumer (purchaser not registered for GST or registered and the purchase is not for the purpose of the Australian business carried on by the purchaser).
Based on the facts provided, none of the above requirements applies to your sales made to the Australian customer. The handover of the ownership of the goods takes place overseas. The recipient is also responsible for the importation of the goods. For these reasons the goods are not 'made available' to the recipient in Australia, nor do you have any role in the goods being imported into Australia.
Goods and Services Tax Ruling GSTR 2018/2 Goods and services tax: supplies of goods connected with the indirect tax zone (Australia) discusses when supplies of goods are connected with Australia.
Paragraph 18 of GSTR 2018/2 provides the following example:
Example 3 - goods supplied outside Australia and imported by recipient
Joe decides to fit his car with specialised seat covers valued at $1,500. He approaches Seat Pty Ltd in Sydney to supply the seat covers. However, the seat covers have to be imported from Italy. Under the arrangements with Seat Pty Ltd, Joe takes delivery of the seat covers in Italy and imports the seat covers into Australia. The supply of goods, by Seat Pty Ltd to Joe, is not connected with Australia because the goods are not delivered, or made available to Joe, in Australia.
In this instance your sale of goods is not connected with Australia and therefore not a taxable supply. The sale is outside the scope of GST.
You will not collect GST on the sale, report the sale in your business activity statement and include the sale when calculating your GST annual turnover.