Private ruling: GST and supplies
Date of advice: 3 May 2023
Published: 19 June 2023

Ruling: Q1: Are supplies by Entity A on domestic and international voyages made whilst the cruise ships are inside Australia's 12 nautical mile limit, connected with the indirect tax zone in accordance with section 9-25 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and taxable supplies under section 9-5 of the GST Act? | A1: Whilst supplies made by Entity A when the cruise ships are inside Australia's 12 nautical mile limit meet the requirements of section 9-25 of the GST Act, supplies by Entity A to the non-resident cruise ship operator are supplies that are not connected with the indirect tax zone1 pursuant to subsection 9-26(1) of the GST Act. As the supplies made by Entity A to the non-resident cruise ship operator are supplies that are not connected with the indirect tax zone, these supplies will not be taxable supplies under section 9-5 of the GST Act. Supplies made by Entity A to the other recipients (the passengers) are supplies that are connected with the indirect tax zone and are taxable supplies under section 9-5 of the GST Act. | Q2: Are supplies by Entity A on domestic and international voyages made whilst the cruise ships are inside Australia's 12 nautical mile limit GST-free pursuant to items 2 and 3 in the table in subsection 38-190(1) of the GST Act? | A2: • Supplies to the cruise ship operator Given the supplies made by Enity A to the cruise ship operator are supplies that are not connected with the indirect tax zone under subsection 9-26(1) of the GST Act, these supplies are not drawn into the GST system. These supplies are out of scope of the GST Act and as such no GST is payable by Entity A on these supplies. • Supplies to the passengers Supplies made by Entity A to the passengers will not be GST-free under items 2 and 3 of subsection 38-190(1) of the GST Act as these recipients are in the indirect tax zone when the things supplied are done whilst the cruise ships are inside Australia's 12 nautical mile limit. | Q3: (a) Are supplies by Entity A on domestic and international voyages made whilst the cruise ships are outside Australia's 12 nautical mile limit connected with the indirect tax zone under section 9-25 of the GST Act? (b) If yes, are those supplies GST-free pursuant to items 2 and 3 in the table in subsection 38-190(1) of the GST Act? | A3: (a) Supplies made to Australian consumers whilst the cruise ships are outside Australia's 12 nautical mile limit will be connected with the indirect tax zone under paragraph 9-25(5)(d) of the GST Act. However, the supplies made to recipients that are not Australian consumers (that includes non-residents) whilst the cruise ships are outside Australia's 12 nautical mile limit, are not connected with the indirect tax zone under section 9-25 of the GST Act. The onboard supplies of photography services made to recipients that are not Australian consumers, when made outside Australia's 12 nautical mile limit, are not connected with the indirect tax zone and are therefore not drawn into the GST system. (b) Only supplies to Australian consumers were relevant to be considered for this question. These supplies made whilst the ships are outside Australia's 12 nautical mile limit are not GST-free under item 2 but will be GST-free under item 3 in the table in subsection 38-190(1) of the GST Act. | Q4: Is the proposed apportionment method a reasonable basis for determining the proportion of taxable supplies made by Entity A on board the ship? | A4: An apportionment based on the relative mileage distance travelled through the indirect tax zone would be reasonable for determining the proportion of taxable supplies made by Entity A on board the ship, where it is undertaken as a matter of practical common sense and supported by the facts in the circumstances. Entity A should keep records that explain the method used.


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 Section 9-25 | A New Tax System (Goods and Services Tax) Act 1999 Subsection 9-25(5) | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 9-25(5)(a) | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 9-25(5)(d) | A New Tax System (Goods and Services Tax) Act 1999 Subsection 9-25(7) | A New Tax System (Goods and Services Tax) Act 1999 Subsection 9-26(1) | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 9-26(1)(a) | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 9-26(1)(b) | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 9-26(1)(c) | A New Tax System (Goods and Services Tax) Act 1999 Division 38 | A New Tax System (Goods and Services Tax) Act 1999 Section 38-190 | A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-190(1) | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1 | Acts Interpretation Act 1901 Section 2B | Acts Interpretation Act 1901 Subsection 15B(2) | Customs Act 1901 Section 5C | Seas and Submerged Lands Act 1973 Section 7 Seas and Submerged Lands (Territorial Sea Baseline) Proclamation 2006 Section 6