Edited version of private advice

Authorisation Number: 1052004983840

Date of advice: 11 July 2022

Ruling

Subject: GST and exporting of second-hand clothing

Question

Is the supply/export of the second-hand clothing to an overseas purchaser a GST-free supply under subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999?

Answer

A supply of goods, where those goods are exported from Australia, is GST-free if the requirements of one of the items in the table in subsection 38-185(1) of the GST Act are met.

The relevant item in the table in subsection 38-185(1) of the GST Act applicable in this case is item 1 which states:

These supplies are GST-free

A supply of goods, but only if the supplier exports them from Australia before, or within 60 days (or such further period as the Commissioner allows) after:

(a)  the day on which the supplier receives any of the consideration for the supply; or

(b)  if, on an earlier day, the supplier gives an invoice for the supply - the day on which the supplier gives the invoice.

Given theexport you make of the second-hand clothing meets the requirements of item 1 in the table in subsection 38-185(1) of the GST, that export is GST-free and as suchno GST is payable.

Relevant facts and circumstances

•         You have entered into a contract with an overseas entity who wishes to buy second-hand clothing from you.

•         You acquire second-hand clothing from charity shops in Australia.

•         You do not pay anything to acquire these clothing (as such there are no input tax credits/GST to be claimed) on the acquisition of the second-hand clothing.

•         You place the second-hand clothing you have collected from charity stores in bags and then load them on to a shipping container.

•         You issue an invoice to the overseas purchaser who pays for the goods within a few days of the invoice being issued.

•         The goods are then sent off to the relevant country.

•         You do not re-import the second-hand clothing.

•         Due to the current situation around the world, the goods might take more than 60 days to reach the destination once they leave Australia. However, you send the goods from Australia in less than 60 days (generally within about 7 days)) of either the invoice being issued to the overseas purchaser or payment being received from the overseas purchaser.

Relevant legislative provisions

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999

Subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999