ATO ID 2002/531: GST and receipt of valid invoice for the export of wool
Date of decision: 21 January 2001
Business line: Indirect Tax

Issue
Is the entity, a wool exporter, giving an invoice for its supply of wool on the day that it provides an overseas buyer with written advice outlining the exact quantity and quality of the wool available and the total price, for the purposes of determining the commencement of the 60 days referred to in item 1 in the table in subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Decision
No, the entity is not giving an invoice for its supply of wool on the day that it provides an overseas buyer with written advice outlining the exact quantity and quality of the wool available and the total price, for the purposes of determining the commencement of the 60 days referred to in item 1 in the table in subsection 38-185(1) of the GST Act (Item 1). The commercial invoice that is prepared once the wool is loaded aboard the ship is considered the invoice for the purposes of Item 1.

Facts
The entity is a wool exporter. The entity enters into a purchase agreement with an overseas buyer. This initial agreement specifies the approximate quantity and quality of wool that is to be sold and exported to the overseas buyer. The entity later provides the buyer with written advice of the exact details of the quantity and quality of the wool available and the total price. The overseas buyer then issues a letter of credit to the entity. The letter of credit is subject to various conditions that do not permit the entity to draw on the letter of credit until the entity supplies the overseas buyer's financial institution with formal export documentation (such as an on board bill of lading, a signed commercial invoice for the wool and details of marine insurance of the vessel). The wool is then loaded for export and the entity prepares a commercial invoice. At this point, the entity also provides the overseas buyer's financial institution with the relevant export documentation and draws on the letter of credit. The wool is then delivered to the overseas buyer. The entity is registered for goods and services tax (GST).

Reasons for decision
Summary: Item 1 provides that a supply of goods is GST-free, if the supplier exports the goods from Australia before, or within 60 days (or such further time as the Commissioner allows) after: Therefore, it must be determined whether the entity is providing the overseas buyer with an invoice, for the purposes of Item 1, when it sends written advice outlining the exact quantity and quality of the wool available and the total price. The term 'invoice' is defined in section 195-1 of the GST Act to mean 'a document notifying an obligation to make a payment'. At the time of issue, the written advice was not indicative of a presently existing obligation to pay. Rather, it was indicative of a debt that would become due at a later stage, that is, when the wool is loaded aboard the ship. Therefore, the entity is not giving an invoice for its supply of wool on the day that it provides an overseas buyer with written advice outlining the exact quantity and quality of the wool available and the total price, for the purposes of determining the commencement of the 60 days referred to in Item 1. The commercial invoice that is prepared once the wool is loaded aboard the ship is considered the invoice for the purposes of Item 1.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 subsection 38-185(1) table item 1 section 195-1
Related ATO interpretative decisions: ATO ID 2002/530
Subject references: Goods & services tax Exports Export of goods GST supplies & acquisitions GST consideration