Private ruling: GST and importations by a resident agent
Date of advice: 9 November 2016
Published: March 2017

Ruling: Q1: Is Entity A entitled to claim input tax credits in relation to the GST incurred on the proposed importation of spare parts into the indirect tax zone as a creditable importation pursuant to section 15-5 of the A New System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes.

Relevant facts and circumstances: Entity A is a wholly owned subsidiary of Entity B a non-resident, and is registered for GST. Entity C is a non-resident not registered for GST and does not have a presence or personal located in Australia. Entity A imports into Australia spare parts on behalf of Entity C. Entity B is a non-resident incorporated outside of Australia and provides services to Entity C.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) 1999 Act Section 9-5, | A New Tax System (Goods and Services Tax) 1999 Act Division 13, | A New Tax System (Goods and Services Tax) 1999 Act Division 15, and | A New Tax System (Goods and Services Tax) 1999 Act Division 57.

Reasons for decision: Summary: You are entitled to input tax credits for any creditable importations that you make pursuant to section 15-15 of the GST Act. You make a creditable importation under section 15-5 of the GST Act 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. Section 15-10 of the GST Act outlines the meaning of 'creditable purpose'. Of particular relevance is subsection 15-10(1) that provides that you import goods for a creditable purpose to the extent that you import the goods in carrying on your enterprise. Typically, the 'owner' that enters imported goods for home consumption is the legal owner of the goods, (or the importer, exporter, consignee, or other person with an interest in, or control of, the goods). In this situation it is Entity C that retains title to the goods for the purposes of supplying the goods to the end recipient in Australia as spare parts, Entity C will be the owner of the goods. However, the definition of 'owner' in the Customs Act also includes an agent. If an agent enters goods for home consumption under an authority granted by the principal, it is normally the principal, not the agent that makes the taxable importation and creditable importation. This is consistent with the general law of agency. A non-resident entity makes a taxable importation through an Australian resident agent where the non-resident appoints the agent to lodge the import declaration and the resident agent is entered as 'owner' on the import declaration. As noted an agent may be the 'owner' for import declaration purposes. There are special cases, where an input tax credit for a creditable importation is allowed to an entity that does not import the goods within the meaning of Division 15 of the GST Act. One being that an Australian resident agent of a non-resident principal is entitled, under Division 57, to the input tax credits for creditable importations made by the non-resident through the agent. Entity A is an Australian resident company that carries on business in Australia and holds the importation licence necessary to import the items. A creditable importation is made through the resident agent where the resident agent has the authority to clear the goods through Customs on behalf of the non-resident, and the resident agent is entered as 'owner' on the import declaration. A credit entitlement exists where a non-resident makes a creditable importation through the agent. That is, the non-resident must satisfy the requirements of section 15-5 of the GST Act. Entity C is supplying spare parts under contract to end recipients and as such imports the goods for a creditable purpose in carrying on their enterprise. Therefore, as Entity A is acting as a resident agent on behalf of Entity C, Entity A will be entitled to claim input tax credits in relation to the GST incurred on the importation of spare parts into the indirect tax zone as a creditable importation pursuant to section 15-5 of the GST Act, as Entity A acts as a resident agent on behalf of Entity C.