Private ruling: GST and importation of a good
Date of advice: 4 October 2017
Published: March 2018

Ruling: Q1: Is the importation of the good by entity A into Australia a taxable importation under section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes. | Q2: Is Entity A entitled to register for GST under section 23 of the GST Act? | A2: Yes. | Q3: Is Entity A entitled to claim input tax credits on the taxable importation under section 15-5 of the GST Act? | A3: Yes.

Relevant facts and circumstances: Entity A is a company incorporated in outside of Australia. Entity A owns the good. The good is leased to Entity B. Entity A leases the good to Entity B for a fee. During the entire period that the good is in Australia it will continue to be subject to the Lease between Entity A and Entity B. Entity A will import the good into Australia. From the time the good is in Australia (being approximately 24 months), it will be used for private purposes by Entity B.

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 section 13-5 | A New Tax System (Goods and Services Tax) Act 1999 section 15-5 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision: Detailed Reasoning - Taxable importation: GST is payable on taxable importation you make. Under section 13-5 of the GST Act, you make a taxable importation if: (a) goods are imported, and (b) you enter the goods for home consumption (within the meaning of the Customs Act 1901 ). However, the importation is not a taxable importation to the extent that it is a non-taxable importation. Goods and Services Tax Ruling GSTR 2003/15 provides guidance on the operation of the provisions in the GST Act which apply to the importation of goods into Australia. Goods are typically imported into Australia when they are brought to Australia to be unloaded or landed here. 'Imported' in this context has its ordinary meaning. If you lodge an import entry in your name as the 'owner' of the goods, you enter the goods for home consumption within the meaning of the Customs Act 1901 and you are liable to pay GST on that importation if the importation is a taxable importation. Based on the facts provided, the good was imported as it was brought into Australia for the use of your leasing enterprise and you have entered the good for home consumption when completing the customs formalities. Hence, the importation of the good is a taxable importation to the extent it is a non-taxable importation. There are no provisions that would result in the importation being a non-taxable importation. Therefore, the conditions in section 13-5 of the GST Act are satisfied. Consequently, you are liable for GST on the importation of the good. | Detailed Reasoning - Creditable importation: An entity is entitled to claim input tax credits on a creditable importation. Under section 15-5 of the GST Act, you make a creditable importation if: (a) you import goods solely or partly for a creditable purpose; and (b) the importation is a taxable importation; and (c) you are registered or required to be registered. All the requirements above must be satisfied for an importation to be a creditable importation. It has already been established that you will imported the good as the owner and you will do so as part of your leasing enterprise so a creditable purpose and that the importation is a taxable importation as such paragraphs 15-5(a) and (b) of GST Act are met. However, there is a requirement that you be registered for GST or required to be registered or GST for the provision to the met. | Detailed Reasoning - Registration: Section 23-5 of the GST Act provides you are required to be registered under the GST Act if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold. Or section 23-10 provides you may choose to register if you are carrying on an enterprise (whether or not your GST turnover is at, above or below the registration turnover threshold). Furthermore, you are entitled to an Australian Business Number (ABN) if you carry on an enterprise in Australia; or you make supplies that are connected with the indirect tax zone (Australia). Paragraphs 149 to 151 provide an example of the goods that are supplied by way of lease and importation in GSTR 2000/31 as follows: 149. A supply of goods by way of lease may involve a supply of goods to Australia. This is illustrated in the following example. | Detailed Reasoning - Example 16 - Goods supplied by way of lease: 150. UK Crane Co (a United Kingdom resident company) leases a specialised crane to Construct Co (an Australian resident company) for use in Australia. The supplier imports the crane into Australia from the United Kingdom. 151. As the supplier imports the goods into Australia, the supply is connected with Australia under paragraph 9-25(3)(a). The supply is also a taxable importation under section 13-5. We now need to consider the GST status of the supply under the lease to determine if it is a taxable supply. The reason for this is that where the lease payments satisfy the GST turnover threshold under subsection 188-10(1) of the GST Act, you will be required to be registered for GST in Australia. | Detailed Reasoning - Taxable supply: The leasing of the good in Australia will be a taxable supply where section 9-5 of the GST Act is satisfied. This section provides: (a) you make a 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 the 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. The meaning of supply under paragraph 9-10(2)(a) of the GST Act includes a supply of goods. As you import the good as the owner for the purpose of your leasing enterprise you make a supply that is connected with Australia under paragraph 9-25(3)(a) of the GST Act. As such paragraph 9-5(a) to (c) are satisfied as you make a supply of the good under lease for consideration being the lease payments, the supply is made in the course of your enterprise of leasing that you carry on, and the supply is connected with Australia, as has already been established. It remains to determining if you are required to be registered or can choose to be registered for GST in Australia. | Detailed Reasoning - GST turnover threshold: You have stated the lease payment amount is $xxx per year and you expect the goods to be in Australia for approximately 24 months as such your supply of goods by leasing in Australia will satisfy the GST turnover threshold of both the current and projected GST turnover as the lease payment are in excess of the threshold of $75,000 for the current and projected GST turnover threshold pursuant to subsection 188-10(1) of the GST Act. Therefore, the supply of the good under the lease will also be a taxable supply and you will be required to remit 1/11 th of the lease payments to the ATO from when the supply is connected with Australia pursuant to paragraph 9-25(3)(a) of the GST Act. This will be the case regardless of the fact the lease was entered into outside Australia. Please note that supplies made for a period or on a progressive basis are treated as separate supplies where section 156-5 of the GST Act is satisfied. Therefore, where you import the good and provide it under a lease, you will be required to be registered for an ABN and GST registration in Australia. Accordingly, all the requirements of section 15-5 of the GST Act are satisfied and you will make a creditable importation. You are entitled to claim an input tax credits for the GST paid on the taxable importation of the goods into Australia.

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