ATO ID 2004/696: GST and supply of mineral ore to a common stockpile alongside a ship bound for overseas
Date of decision: 10 August 2004
Business line: Indirect Tax

Issue
Is the entity, an ore supplier, 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 is contracted to supply a type of ore (type A ore) to a common stockpile alongside a ship bound for overseas?

Decision
Yes, the entity is making a GST-free supply provided the ore is exported within the 60 day period as required by item 1 in the table in subsection 38-185(1) of the GST Act.

Facts
The entity is an ore supplier. The entity enters into a contract to supply a certain type of ore to a purchaser (type A ore). Under the terms of the contract, the entity is required to deliver the type A ore to the port, where it is unloaded onto a common stockpile alongside a ship which has been engaged to carry the ore to a destination outside Australia. After delivery into the common stockpile, the ore is blended with other similar ore delivered by a different supplier creating a new and specific blend of ore (type AB ore). The type AB ore is then loaded onto the foreign bound ship. The purchaser of the entity's type A ore is contracted to sell the blended type AB ore to a foreign customer. The entity receives documentation from the Port Authority which: The entity and the purchaser are both registered for goods and services tax (GST).

Reasons for decision
Summary: Under section 38-185 of the GST Act, certain supplies of goods, for consumption outside of Australia, are GST-free. The entity's supply of type A ore is a supply of goods. As such, the GST status of the supply of the type A ore is appropriately considered under section 38-185 of the GST Act. Item 1 in the table in subsection 38-185(1) of the GST Act (Item 1) provides that a supply of goods is GST-free if the supplier exports the goods before, or within 60 days after, the earlier of consideration being received or an invoice being issued. Therefore, under Item 1, a supply of goods that are exported is GST-free where: The entity is contracted to supply type A ore to the purchaser by delivering the type A ore to the port. Therefore, as the entity is making a supply of goods (type A ore), the first element in Item 1 is satisfied. Item 1 further requires that the supplier exports the goods from Australia. Amongst other things, paragraph 22 of Goods and Services Tax Ruling GSTR 2002/6 provides that the requirement that the supplier is the entity that exports the goods is satisfied where the supplier is responsible for delivering the goods to the operator of a ship or aircraft who, or that, has been engaged by another party to transport those goods to a destination outside Australia. Further, paragraph 119 of GSTR 2002/6 states: In the case of 'break bulk' commodities and other goods that are carried out of Australia on board a ship without being packed in a freight container, the supplier exports where the supplier delivers the goods on board or alongside the ship. The entity delivers the type A ore to the port and unloads it onto a common stockpile alongside the ship which has been engaged to carry the ore to an overseas destination. However, the supply will only be GST-free provided the goods are in fact exported. If the goods are not transported out of Australia, Item 1 will not apply. The documentary evidence provided by the Port Authority shows that the goods supplied by the entity, that is type A ore, were loaded on board a ship engaged to carry those goods to an overseas destination. It follows that the type A coal was removed from Australia. Therefore, the second element of Item 1 is satisfied. Provided the ore is exported within the 60 day period as required by the third element of Item 1 (or such further period as the Commissioner allows), the entity's supply of type A ore satisfies the requirements of Item 1 and will be GST-free supply.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 38-185 subsection 38-185(1)
Related public rulings and determinations: GSTR 2002/6
Related ATO interpretative decisions: ATO ID 2003/14
Subject references: Goods and services tax Exports Export of goods GST free Consumption outside Australia GST supplies & acquisitions Taxable supply