Edited version of private advice

Authorisation Number: 1052074250121

Date of advice: 9 January 2023

Ruling

Subject: GST - agency and exporting goods

Question 1

Are you entitled to claim input tax credits on purchases where the tax invoices are issued to customers when acting as an agent or a sub-agent for you?

Answer

No. You will not be entitled to claim input tax credits as you will not be making an acquisition, and therefore, cannot make a creditable acquisition.

Question 2

Are you entitled to claim input tax credits on purchases where the tax invoices are issued to customers when acting as an agent or a sub-agent for you?

Answer

No. You will not be making a supply.

This ruling applies for the following period:

XX XXX 20XX to XX XXX 20XX

Relevant facts and circumstances

You are registered for GST.

Relevant legislative provisions

A New Tax System (Goods and Service Tax) Act 1999 section 7-1

A New Tax System (Goods and Service Tax) Act 1999 section 9-5

A New Tax System (Goods and Service Tax) Act 1999 section 9-10

A New Tax System (Goods and Service Tax) Act 1999 section 9-40

A New Tax System (Goods and Service Tax) Act 1999 section 11-5

A New Tax System (Goods and Service Tax) Act 1999 section 11-15

A New Tax System (Goods and Service Tax) Act 1999 section 11-20

A New Tax System (Goods and Service Tax) Act 1999 section 38-185

Reasons for decision

Question 1

You are entitled to input tax credits for any creditable acquisitions you make. Subsection 11-5 of the GST Act provides that you make a creditable acquisition if:

(a) you acquire anything solely or partly for a creditable purpose; and

(b) the supply of the thing to you is a taxable supply; and

(c) you provide, or are liable to provide, consideration for the supply; and

(d) you are registered or required to be registered.

The primary issue in this matter is determining the entity that makes the acquisition. That is, does the user acquire the goods in their own right or in the capacity as your agent.

Goods and Services Tax Ruling, Goods and services tax: agency relationships and the application of the law (GSTR 2000/37) discusses the general law in relation to agency relationships and explains the operation of subdivisions 153-A (General) and 153-B (Principals and intermediaries as separate suppliers or acquirers).

Paragraphs 10 to 12 of GSTR 2000/37 provides:

10. An entity may be authorised by another party to do something on that party's behalf. Generally, the authorised entity is called an agent. The party who authorises the agent to act on their behalf is called the principal. ...

11. For commercial law purposes, an agent is a person who is authorised, either expressly or impliedly, by a principal to act for that principal so as to create or affect legal relations between the principal and third parties.

12. The principal is bound by the acts of an agent as a result of the authority given to the agent. ...

Paragraph 28 of GSTR 2000/37 contains several factors that may indicate whether an entity is acting as an agent under an agency relationship, although no single factor (by itself) is determinative:

•         any description of you as an agent, having authority to act for another party, in an agreement (expressed or implied) between you and the other party

•         any exercise of the authority that you are given to enter into legal relations with a third party

•         whether you bear any significant commercial risk

•         whether you act in your own name

•         whether you are remunerated for your services by way of commissions and whether you are entitled to keep any part of your remuneration secret from another party; and

•         whether you decide the price of things that you might sell to third parties.

Paragraph 29 of GSTR 2000/37 provides:

29. In some situations, these factors may be difficult to establish. For example, situations may arise where:

•         the existence of a principal is disclosed but not named; or

•         the existence of a principal is not disclosed to third parties.

However, documents used by the parties and the conduct of the parties may still indicate the existence of an agency relationship.

Based on the information provided, we do not consider that an agency relationship would exist. Accordingly, the other entity or entities would be acquiring the goods in their own right and not in the capacity as your agent. Consequently, you will not have made an acquisition of the goods in question and therefore will not have made a creditable acquisition under section 11-5 of the GST Act. You are not entitled to claim input tax credits for acquisition under these circumstances.

Question 2

GST is payable on any taxable supply you make. You make a taxable supply under section 9-5 of the GST Act if:

(a)  you make the supply for consideration; and

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

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

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

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

A supply can be in any form whatsoever and includes a supply of goods.

As discussed under question 1, you will not be making an acquisition of the goods. Accordingly, as you have not made an acquisition, you cannot supply these goods to another entity. Therefore, you have not made a supply.