Private ruling: GST and export of goods
Published: May 2012

Ruling: Q1: Can the supply described below be considered GST-free under the provisions of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No. | Q2: If so, should the Australian supplier refund the GST to you? | A2: Not applicable. Facts You are a retailer of machines who is based outside Australia. You purchased a number of machines from an Australian supplier's online auction. The tax invoice shows that the price includes GST. The machines were paid in full via bank transfer shortly after the closing of the auction, after which the machines were placed at your disposal. As outlined in your letter to the Australian supplier, you authorised a third party to collect the machines. You also authorised the third party to organise the logistics of the machines from Australia to your office outside Australia. The machines were exported by sea more than 60 days after the issue of the invoice and arrived in the destination outside Australia a few more days later. You have not provided the Australian supplier with export documents as they were not requested, although you have informed them that the machines were exported. The logistics organiser retained the copies of the export documents. The machines were not altered or used in any way before they were exported. You do not carry on any enterprise in Australia. The only activity you have carried out is to purchase machines from Australia over the internet and arrange for the machines to be transported to your location outside Australia. When the machines were supplied, you were neither registered nor required to be registered for GST in Australia. You have contacted the Australian supplier to obtain a refund. They advised you that where goods are to be exported, you must still pay the invoice in full, including the GST, and you can claim the GST back from the Australian Customs and Border Protection Service (Customs). After receiving negative responses from the Australian supplier, you decided to apply for a private ruling.


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 Subsection 38-185(1). | A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-185(3). | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1. Reasons for decision | Summary | The supply in the circumstances described is not GST-free. | Detailed reasoning | There is no provision in the GST legislation for you to obtain a refund directly from this office for the GST included in the purchase price of the machines. | However, the supplier may treat the supply of the goods to you as GST-free where the supplier is satisfied that they hold sufficient documentary evidence to substantiate that you have exported the goods within the specified time limit. If this is the case, you may seek a refund from the supplier. | A supply of goods that are subsequently exported from Australia is GST-free if the requirements of one of the items in the table in subsection 38-185(1) of the GST Act are met. · Item 1 in the table in that subsection (Item 1) provides that a supply of goods is GST-free if the supplier exports them from Australia within 60 days (or such further period as the Commissioner allows) after: | · the day on which the supplier receives any of the consideration for the supply, or | · if, on an earlier day, the supplier gives an invoice for the supply - the day on which the supplier gives the invoice. | Goods and Services Tax Ruling GSTR 2002/6 Goods and Services Tax: Exports of goods, items 1 to 4 of the table in subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GSTR 2002/6) explains the requirements for supplies of goods to be GST-free exports. For the supply of goods to be GST-free under item 1, the supplier must export the goods before, or within a 60 day period (or such further period as the Commissioner allows). The law requires the goods to be actually exported before or within the time period. | Given that goods can only leave Australia on board a ship or aircraft, paragraph 33 of GSTR 2002/6 provides that the time at which goods are exported from Australia is the time at which the ship or aircraft departs its final Australian port or airport and clears the territorial limits of Australia. | Paragraphs 34 and 35 of GSTR 2002/6 provide that the timing requirement is met if the ship or aircraft departs its final Australian port or airport and leaves Australia before or within 60 days (or such further period as the Commissioner allows) after the earlier of: | · the day on which the supplier receives any of the consideration for the supply or | · the day the supplier gives an invoice for the supply. | Subsection 38-185(3) of the GST Act operates to treat the supplier in certain circumstances as having exported the goods when in fact the recipient exports the goods. Where the subsection applies the supply of goods may be GST-free under item 1. | The following requirements must all be met for subsection 38-185(3) of the GST Act to apply: · before the goods are exported, the supplier supplies them to an entity that is not registered or required to be registered (paragraph 38-185(3)(a)) | · that entity exports the goods from Australia (paragraph 38-185(3)(b)) | · the goods have been entered for export within the meaning of section 113 of the Customs Act 1901 (paragraph 38-185(3)(c)) (this is met where an export entry document has been communicated to Customs - see paragraph 73 of GSTR 2002/6). · since their supply to that entity, the goods have not been altered or used in any way, except to the extent (if any) necessary to prepare them for export , (paragraph 38-185(3)(d)) | · the supplier has sufficient documentary evidence to show that the goods were exported(paragraph 38-185(3)(e)), and | · if that entity is covered by paragraph 168-5(1A)(c) - the supplier has a declaration by that entity stating that: | · a payment has not been sought under section 168-5 for the supply; and | · if the goods are wine (within the meaning of the Wine Equalisation Tax Act) - a payment has not been sought under section 25-5 of that Act for the supply. However, if the goods are re-imported into Australia, the supply is not GST-free unless the re-importation is a taxable importation. | Subsection 38-185(3) of the GST Act makes it clear that the subsection does not limit the operation of item 1, but rather the subsection expands it. In addition to satisfying all the elements in subsection 38-185(3), a supplier must also satisfy the other requirements of item 1. | Paragraph 72 of GSTR 2002/6 provides that the phrase 'that entity that exports the goods' in subsection 38-185(3) of the GST Act, means that the recipient must export the goods. This requirement is met where: · the recipient contracts at the recipient's own expense with an international carrier for the transportation of the goods to a destination outside Australia, or | · the recipient 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. | In this case, the invoice was issued on 2 October 2008 and payment was made on 9 October 2008 after which time the machines where placed at your disposal. You authorised a third party to arrange the transport of the machines from Australia by sea. | As the Australian supplier is no longer responsible for the machines once the third party takes delivery of the machines, the Australian supplier is not the exporter for the purposes of item 1. Hence, in this instance, you as the buyer are the exporter and you need to satisfy the elements of subsection 38-185(3) of the GST Act for the supply to be GST-free. | Under paragraph 38-185(3)(a) of the GST Act, it is a requirement that the recipient of the supply is not registered, and that the recipient is not required to be registered for GST. A supplier is able to ensure that a recipient is not registered by checking the Australian Business Register. The supplier must be satisfied, on reasonable grounds, that the entity it supplies to is not required to be registered. Where a supplier is not in a position to be aware of these circumstances, enquiries should be made of the recipient. | In this instance, the Australian supplier may have reasonable grounds to believe that the requirements of paragraph 38-185(3)(a) are satisfied. | The requirements of paragraph 38-185(3)(b) are also satisfied as you have arranged a third party to export the machines on your behalf. | For the purpose of satisfying the requirements of paragraph 38-185(3)(c) of the GST Act, the supplier needs to be able to substantiate that the goods were entered for export. As you have not provided the Australian supplier with copies of export documents, they would not have evidence that an export entry was lodged. | The requirements of paragraph 38-185(3)(d) may be met as the Australian supplier may be satisfied on reasonable grounds that the goods supplied have not been used since their supply for a purpose other than is necessary to prepare them for export. | Paragraph 38-185(3)(e) of the GST Act requires that the supplier have sufficient documentary evidence to show that the goods were exported. This evidence does not usually come into existence at least until the goods are in the process of being exported. Evidence that simply demonstrated that it is intended that the goods be exported is not sufficient. Paragraph 280 of GSTR 2002/6 provides that where the recipient is the exporting entity, the supplier will only know that the goods have been exported if the recipient provides the supplier with evidence of export. The GST law specifically requires the supplier to obtain and hold such evidence. | Paragraph 281 of GSTR 2002/6 further provides that the onus is on the supplier to obtain evidence that the goods were exported. If a supplier does not obtain and hold sufficient evidence to show that the goods have been exported, the supplier cannot be treated as having exported them for the purposes of item 1. The supply is not GST-free. | If the supplier obtains sufficient documentary evidence of the export within the 60 day period, or if obtained after the end of this period, before the due date for lodgement of the next Activity Statement, the requirement to have documentary evidence that the goods were exported is satisfied. | The requirements of subsection 38-185(3) of the GST Act, in particular paragraph 38-185(3)(e), are likely to impact on the commercial arrangements between the supplier and the recipient as regards the supply of goods for export. For example, the sale transaction may be treated as GST-free because the recipient has undertaken to supply the required documentary evidence within a specified period of time. On the other hand, the sale transaction may be treated as taxable until the recipient provides the required information. In this instance, the onus is on the Australian supplier to be satisfied that the machines were exported. If you provided sufficient documentary evidence to enable the supplier to substantiate and identify that the machines were exported, then the requirements of paragraph 38-185(3)(e) would have been satisfied. | The requirements of paragraph 38-185(3)(f), in this instance, are not applicable. | In the circumstances you described, not all the requirements of subsection 38-185(3) are satisfied. Furthermore, the machines left Australia more than 60 days after the invoice was issued. Therefore, the supply of the machines, in the circumstances you described is not GST-free under item 1. | The supply of the machines, in the circumstances described, is not GST-free under any other provisions in the GST Act or another Act. Hence, were all the requirements of section 9-5 of the GST Act are satisfied, the supply is a taxable supply.


Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.