ATO ID 2002/294: GST and supply of goods to Cocos (Keeling) Islands
Date of decision: 22 March 2002
Business line: Indirect Tax

Issue
Is the entity, a supplier of goods, making a GST-free supply under item 1 in the table in subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells goods to a customer from the Cocos (Keeling) Islands, and has the goods couriered to that customer's address on those islands, within 60 days of receiving payment for those goods?

Decision
Yes, the entity is making a GST-free supply under item 1 in the table in subsection 38-185(1) of the GST Act when it sells goods to a customer from the Cocos (Keeling) Islands, and has the goods couriered to that customer's address on those islands, within 60 days of receiving payment for those goods.

Facts
The entity is a supplier of goods. The entity sells goods to a customer from the Cocos (Keeling) Islands. The goods are paid for immediately, but rather than taking them from the shop, the customer pays an additional fee for the entity to arrange delivery to their home. The entity has the goods couriered to the customer's address on the Cocos (Keeling) Islands within 60 days of the transaction. The entity is registered for goods and services tax (GST).

Reasons for decision
Summary: Subsection 38-185(1) of the GST Act specifies the circumstances where the supply of goods for consumption outside Australia is GST-free. Item 1 in the table in subsection 38-185(1) of the GST Act (Item 1) is most relevant in this case. Item 1 provides that a supply of goods is GST-free if the supplier exports them from Australia before, or within 60 days after: Item 1 requires that the supplier export the goods from Australia. The entity (the supplier) is having the goods couriered to the customer's address on the Cocos (Keeling) Islands. Therefore, the entity is exporting the goods. However, it is necessary to determine whether exporting goods to the Cocos (Keeling) Islands constitutes exporting the goods from 'Australia'. Paragraph 17(a) of the Acts Interpretation Act 1901 provides that in any Act, unless the contrary intention appears, Australia means the Commonwealth of Australia and, when used in a geographical sense, includes the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands, but does not include any other external Territory. For GST purposes, section 195-1 of the GST Act shows such contrary intention. Section 195-1 of the GST Act provides that the definition of Australia does not include any external Territory. The term 'external Territory' is not defined in the GST Act. However, 'external Territory' is specifically defined in the Acts Interpretation Act 1901. Paragraph 17(pd) of the Acts Interpretation Act provides that in any Act, unless the contrary intention appears, 'external Territory' means a Territory, not being an internal Territory, for the government of which as a Territory, provision is made by any Act. Paragraph 17(pe) of the Acts Interpretation Act provides that only the Australian Capital Territory, the Jervis Bay Territory or the Northern Territory satisfy the definition of internal Territory. Paragraph 17(p) of the Acts Interpretation Act defines 'Territory' as a Territory referred to in section 122 of the Commonwealth of Australia Constitution Act (Constitution), and includes a Territory administered by the Commonwealth under a Trusteeship Agreement. Section 122 of the Constitution provides that the Parliament may make laws for the government of any territory surrendered by any State to and accepted by the Commonwealth, or of any territory placed by the Queen under the authority of and accepted by the Commonwealth, or otherwise acquired by the Commonwealth, and may allow the representation of such territory in either House of the Parliament to the extent and on the terms which it thinks fit. Section 5 of the Cocos (Keeling) Island Act 1955 provides that the Cocos (Keeling) Islands are declared to be accepted by the Commonwealth as a Territory under the authority of the Commonwealth and is known as the Territory of Cocos (Keeling) Islands. As such, the Cocos (Keeling) Islands satisfy the definition of Territory under paragraph 17(p) of the Acts Interpretation Act. As the Territory of Cocos (Keeling) Islands is a Territory that is not an internal Territory and provision for its government is made by the Cocos Keeling Islands Act, it is an external Territory as defined in paragraph 17(pd) of the Acts Interpretation Act. As the Territory of Cocos (Keeling) Islands is an external Territory, it is excluded from the definition of Australia under section 195-1 of the GST Act. Therefore, the entity is exporting the goods from Australia when it has the goods couriered to customer's address on the Cocos (Keeling) Islands. The customer paid for the goods at the time of sale and the entity has the goods couriered to the customer's address on the Cocos (Keeling) Islands within 60 days of the transaction. The requirements of Item 1 are satisfied. Therefore, the entity is making a GST-free supply when it sells goods to a customer from the Cocos (Keeling) Islands, and has the goods couriered to that customer's address on those island, within 60 days of receiving payment for those goods.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 subsection 38-185(1) subsection 38-185(1) table item 1 section 195-1
Related public rulings and determinations: Goods and Services Tax Ruling GSTR 2002/6
Subject references: Goods & services tax Exports Consumption outside Australia