Edited version of private advice

Authorisation Number: 1052065417783

Date of advice: 2 December 2022

Ruling

Subject: GST - sale of machine

Question 1

Is your sale of a machine (the machine) to X a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where X imported the machine into Australia?

Answer

No.

Question 2

Are you legally allowed to refund the GST part of the invoice you issued to X?

Answer

Yes.

Question 3

Are you required to report GST on the sale in your business activity statement (BAS)?

Answer

No.

This ruling applies for the following period

18/10/20XX to 30/03/20XX

The scheme commences on:

18 October 20XX

Relevant facts and circumstances

You are registered for GST.

On (date), you sold the machine to X (based in Australia) for a $X plus $Y GST. The machine was sourced from overseas.

The machine was made available for pick up by X at your supplier's premises in an overseas country on (date).

X arranged for the machine to be shipped to Australia and imported the machine into Australia.

You did not assist with bringing the machine to Australia. You did not install or assemble the machine in Australia.

You charged GST on the sale of the machine. You have issued a tax invoice for the supply of the machine.

You have not lodged the BAS for the tax period in which you made the sale.

You would like to refund the GST amount included in the price of the machine to X if you are allowed to do so and hence not report the sale in your business activity statement.

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

A New Tax System (Goods and Services Tax) Act 1999 Subdivision 84-C

Reasons for decisions

Question 1

Summary

The sale of the machine to X is not a taxable supply under section 9-5 of the GST Act because the sale is not connected with Australia.

The sale is outside the scope of the GST Act and thus you are not liable to pay GST 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 supplied the machine for consideration through an enterprise that you carry on, 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 the machine 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], or
• 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 the machine does not satisfy any of the above requirements as:

• the machine was not delivered or made available to X in Australiasince the machine was located outside Australia at the time of supply and was made available to CG outside Australia.
• the sale did not involve the machine being removed from Australia.
• the sale involved the machine being brought to Australia, but you did not import it when it arrived in Australia. X was the importer of the machine.
• The machine was not a low value good as its value was over $1,000.

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

Accordingly, your sale of the machine is not a taxable sale under section 9-5 of the GST as all the requirements of section 9-5 of the GST Act are not satisfied. Your sale is outside the scope of the GST Act and therefore you are not liable to pay GST on the sale.

As the sale of the machine is not a taxable supply, you will need to cancel the tax invoice that you have issued for the supply.

Question 2

There is no prohibition under the GST Act for returning the GST incorrectly collected to the purchaser.

Question 3

You are not required to report the sale of the machine in your BAS, as the sale is outside the scope of the GST Act.