Private ruling: goods and services tax (GST) and sales of books and commission
Published: September 2013

Ruling: Q1: Is GST payable by you on your sales of books that you have purchased from people? | A1: Yes. | Q2: Is GST payable by you where you sell books on behalf of people under the consignment arrangement? | A2: GST is not payable by you on your sales of the books on behalf of people under the consignment arrangement. However, GST is payable by you on the service charge.

Relevant facts and circumstances: You are registered for GST. One of your commercial operations is buying and selling second hand books. You purchase second hand books from people and on-sell them. You also enter into consignment arrangements with people under which you agree to perform the service of selling the people's books on their behalf in return for a service charge, which is a set rate of commission on the selling price of the book. Under the consignment arrangement, title to the books does not transfer from the person to you.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1) | A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 9-40

Reasons for decision: Summary: Question 1 GST is payable by you on your sales of books that you purchased from people because: · you supply the books for consideration · you supply the books in the course or furtherance of an enterprise that you carry on · these supplies are connected with Australia · you are registered for GST, and · your sales of the books are not GST-free or input taxed. | Detailed Reasoning - Detailed reasoning: GST is payable by you on your taxable supplies. You make a taxable supply where you satisfy the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which states: 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 Australia; and (d) 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 in section 195-1 of the GST Act) In regards to the situation where you buy books from people and on-sell them you meet the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because: · you supply the books for consideration · you supply the books in the course or furtherance of an enterprise that you carry on · these supplies are connected with Australia, and · you are registered for GST. There are no provisions of the GST Act which your sales of the books are GST-free or input taxed. Therefore, as all of the requirements of section 9-5 of the GST Act are met, you make taxable sales of the books that you have purchased from people. Hence, GST is payable by you on your sales of the books that you have purchased from people. | Summary: GST is not payable by you on your sales of books under the consignment arrangement because you are not considered to be the supplier for GST purpose. GST is payable by you on the service charge because; · you supply a selling service for consideration (the service charge) · you supply the service in the course of furtherance of an enterprise that you carry on · this supply is connected with Australia · you are registered for GST, and · your supply of the service is not GST-free or input taxed. | Detailed Reasoning - Detailed reasoning: Paragraph 15 of Goods and Services Tax Ruling GSTR 2000/37 provides that when an agent uses his or her authority to act for a principal, then any act done on behalf of that principal is an act of the principal. Paragraph 45 of GSTR 2000/37 provides that when an agent is authorised to undertake a transaction on behalf of the principal, thereby binding the principal to the legal effects of the transaction, then the transaction is made by the principal through the agent. In regards to the situation where you sell books under the consignment arrangement, you are acting as an agent for principals (the people) and you are authorised by those principals to undertake transactions (sales of books) on behalf of the principals, thereby binding the principals to the legal effects of the transactions. Therefore, in accordance with paragraph 45 of GSTR 2000/37, we consider that the people are supplying the books through you to third parties under the consignment arrangement. Hence, as you are not supplying the books for GST purposes under the consignment arrangement, you do not have a GST liability on the sale of the books to the third parties under this arrangement. Where you sell books under the consignment arrangement, you are supplying a selling service to the people. This supply meets the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because: · you supply the service for consideration (the service charge) · you supply the service in the course of furtherance of an enterprise that you carry on · this supply is connected with Australia, and · you are registered for GST. There are no provisions of the GST Act which your supplies of this service are GST-free or input taxed. Therefore, as all of the requirements of section 9-5 of the GST Act are met, you make taxable supplies of selling services. Hence, GST is payable by you on your supplies of the selling services.