Edited version of private advice

Authorisation Number: 1052258011591

Date of advice: 24 July 2024

Ruling

Subject: GST - supply of goods

Question 1

Is an entity making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 when it sells goods to a customer and makes the goods physically available overseas?

Answer 1

No, the sale of goods is not a taxable supply, as it is not connected with the indirect tax zone.

Question 2

Is an entity making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 when it sells goods to a customer and makes them physically available in Australia?

Answer 2

Yes, the sale of goods made available in Australia is a taxable supply, as it is connected with the indirect tax zone.

Question 3

Is an entity making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 when provides services (including installation of goods) to a customer in Australia?

Answer 3

Yes, the supply of services in Australia is a taxable supply, as it is connected with the indirect tax zone.

This ruling applies for the following periods:

All tax periods ending on or after 1 April 20YY

Relevant facts and circumstances

The entity is an Australian registered company.

The entity is registered for GST with effect 1 July 20YY.

The entity has been contracted by a customer to complete work including supplying and installing goods.

To meet the requirements of the contract some of the electrical equipment used must be sourced overseas.

Goods and materials procured from overseas were made available the customer overseas and the entity was not responsible for any of the importation of the goods into Australia.

The entity occasionally purchases electrical equipment from suppliers overseas and brings this into Australia. This equipment is made available in Australia to the customer.

The entity also purchases goods and materials in Australia for installation and use in Australia.

The entity also supplies services to the customer associated with the installation of the goods and other work in 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

Subsection 9-25(6) of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) states if the actual supply of goods involves the goods being brought to the indirect tax zone (Australia) and the installation or assembly of the goods in Australia, then the actual supply is to be treated as if it were 2 separate supplies in the following way:

(a) the part of the actual supply that involves the installation or assembly of the goods in the indirect tax zone is to be treated as if it were a separate supply of a thing done in the indirect tax zone (Australia);

(b) the remainder of the actual supply is to be treated as if it were a separate supply of goods involving the goods being brought to the indirect tax zone (Australia) but not involving the installation or assembly of the goods.

Therefore, the supply of goods that is brought into Australia by another party is a separate supply for GST purposes to the installation of the goods in Australia even though you may include both supplies on a single invoice.

Section 9-5 of the GST Act defines a taxable supply as follows:

You make a taxable supply 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 (Australia);

(d) and you are *registered, or *required to be registered.

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

(* denotes a term defined under section 195-1 of the GST Act)

You carry on an enterprise of supplying both goods and services. You provide these services and sells this equipment to your customer for consideration. You are registered for GST.

A supply of goods will not be a taxable supply unless the supply is connected with Australia. Subsection 9-25(1) of the GST Act states a supply of goods is connected with Australia if the goods are delivered, or made available, in Australia to the recipient of the supply.

The Goods and Services Tax Ruling GSTR 2018/2, Goods and services tax: supplies of goods connected with the indirect tax zone (Australia) (explains the Commissioner's view and at paragraphs 12 and 13, states:

12. 'Made available' refers to the situation where goods are not actually delivered to the recipient but rather the supplier makes the goods physically available to the recipient in Australia....:

13. Where the recipient imports the goods into Australia, the supply of goods is not connected with Australia under subsection 9-25(1) because the goods are not delivered, or made available, wholly within Australia to the recipient of the supply.

As ownership of the goods passes to your customer when the goods are made available overseas, and you aren't responsible for the importation of the goods into Australia (e.g. shipping/freight, customs clearance, and GST on importation), nor are you responsible for any equipment lost or damaged in transit, the supply of those goods are not connected with Australia. Therefore, the requirements of subsection 9-5(c) of the GST Act are not met and consequently, the supply of goods is not a taxable supply under section 9-5 of the GST Act and GST is not payable.

Conversely, when you supply goods to your customer in Australia, the supply is connected with Australia and is a taxable supply under section 9-5 of the GST Act.

As discussed above, the installation of these goods is a separate supply for GST purposes. As the installation and other related services are performed by you in Australia, those supplies are connected with Australia and are taxable supplies.