Private ruling: Goods and services tax (GST) and freight forwarding services
Published: May 2013

Ruling: Q1: Is GST payable on your supply of the freight forwarding services, that is, the services you perform in relation to imported goods? | A1: GST will not be payable on your supply of the service of transporting the goods to Australia. GST will not be payable on your supply of local delivery services relating to imported goods if: · the place of consignment is after the port at which the goods are unloaded, and · you are contracted to transport the goods to Australia. GST will not be payable on your supplies of the services performed in Australia other than local delivery services if the place of consignment is after the port at which the goods are unloaded and you are contracted to transport the goods to Australia. Otherwise, GST is payable on your supplies of the services in question. Where you pay for an expense that some other entity is liable to pay to the relevant third party, you do not have a GST liability on the corresponding reimbursement you receive from your customer of that amount.

Relevant facts and circumstances: You are registered for GST. You perform various freight forwarding services relating to goods imported into Australia by ship. You are based in Australia. Sometimes you are contracted to transport the goods to Australia. Sometimes you are not contracted to transport the goods to Australia. On arrival of the goods in Australia, you are required to recover your costs of local port arrival charges, ocean freight is paid to shipping lines, transport of container, unpack and distribution costs, as well as administration costs involved in processing the required paperwork, etc. Your customers are not non-residents.

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 | A New Tax System (Goods and Services Tax) Act 1999 section 38-190 | A New Tax System (Goods and Services Tax) Act 1999 section 38-355

Reasons for decision: Summary: You will make a GST-free supply of international transport and associated services under item 5 and item 5A in the table in subsection 38-355(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) (items 5 and 5A) in some circumstances. Therefore, GST will not be payable on your supplies of these services. | 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 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) You satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because: · you supply freight forwarding services for consideration · you supply these services in the course or furtherance of an enterprise that you carry on · your supplies of the these services are connected with Australia as you supply these services through an enterprise that you carry on in Australia, and · you are registered for GST. There are no provisions in the GST Act under which your supplies of the services are input taxed. Therefore, what remains to be determined is whether your supplies of the services are GST-free. | Detailed Reasoning - International transport and associated services: Item 5 provides that subject to subsection 38-355(2) of the GST Act, the international transport of goods from a place outside Australia to their place of consignment in Australia is GST-free. Item 5A provides that subject to subsection 38-355(2) of the GST Act, the following supplies of services are GST-free: (a) loading or handling of goods the international transport of which is covered by item 5, during the course of the international transport; or (b) supply of a service, during the course of the international transport of goods covered by item 5, that facilitates the international transport. In accordance with subsection 38-355(2) of the GST Act, paragraphs (a) and (b) of item 5, and item 5A, do not apply to a supply to the extent that the thing supplied is done in Australia, unless: · the recipient of the supply is a non-resident and is not in Australia when the thing supplied is done in Australia; or · the supply is done by the supplier of the transport of the goods from or to Australia (whichever is relevant). International transport is defined in section 195-1 of the GST Act to include in relation to the import of goods - the transport of the goods from a place outside Australia to their place of consignment in Australia. Place of consignment is defined in section 195-1 of the GST Act. It states: Place of consignment of goods means: (a) if the goods are posted to Australia - the place in Australia to which the goods are addressed; or (aa) if the supplier of the goods is to deliver the goods in Australia - the place in Australia to which the goods are to be delivered under the contract for the supply of the goods; or (ab) if: (i) neither paragraph (a) nor (aa) applies; and (ii) the goods are to be transported into Australia by an entity supplying a transport service to an entity that is to import the goods into Australia; the place in Australia to which the goods are to be delivered under the contract for the supply of the transport service; or (b) in any other case - the port or airport of final destination as indicated on the *transportation document. Transportation document is defined in section 195-1 of the GST Act. It states: transportation document includes the following: (a) a consignment note; (b) a house bill of lading; (c) an ocean bill of lading; (d) a house air waybill; (e) a master air waybill; (f) a sea waybill; (g) a straight line air waybill; (h) a sub-master air waybill; (i) other similar documents. | Detailed Reasoning - Determining the place of consignment in your case: Scenario 1: Where the goods are delivered in Australia under a contract for the sale of goods that requires the seller to transport the goods to Australia and deliver the goods in Australia, the place of consignment will be the place in Australia to which the seller is required to deliver the goods. Scenario 2: Where scenario 1 does not occur and the importer contracts a company to transport the goods to Australia and deliver the goods in Australia, the place of consignment will be the place in Australia the goods are required to be delivered to under the transport contract. (The importer is the entity that causes goods to be brought to Australia for its own purposes, for example, for the purposes of sale and enters the goods for home consumption). Scenario 3: Where neither scenario 1 nor 2 occurs, the place of consignment is the port of final destination as indicated on the transportation document. Your supplies of the services of transporting the goods to Australia will be GST-free under item 5 in the table in subsection 38-355(1) of the GST Act. Your supplies of delivery services within Australia will be part of the international transport of imported goods where the place of consignment is after the port where the goods are unloaded. Your supplies of delivery services within Australia are supplies of things done in Australia. Therefore, you will make a GST-free supply of a delivery service within Australia under item 5 in the table in subsection 38-355(1) of the GST Act where the place of consignment is at some point after the port at which the goods are unloaded and you are contracted to transport the goods to Australia. Your supplies of services relating to the imported goods (other than local delivery) after the goods arrive in Australia will be: · supplies of the services of loading and handling of goods, the international transport of which is covered by item 5, during the course of the international transport of the goods; and · supplies of services during the international transport of the goods covered by item 5 that facilitate the international transport, where the place of consignment is after the port at which the goods are unloaded. Your supplies of these services are supplies of things done in Australia. Therefore, you will make a GST-free supply of these services under item 5A where you are contracted to transport the goods to Australia. Where you make a GST-free supply, you will not make a taxable supply and therefore, GST will not be payable on these supplies. Your supplies of the relevant freight forwarding services will not be GST-free apart from in the circumstances as explained above. Where your supplies of the relevant freight forwarding services are not GST-free, GST will be payable on your supplies of the services as all of the requirements of section 9-5 of the GST Act will be satisfied. Where you recover your costs of local port arrival charges from your customer, GST will not be payable on the amounts you charge (to recover local port arrival charges) if the place of consignment is after the port at which the goods are unloaded and you are contracted to transport the goods to Australia. Where you recover your costs of local port arrival charges from your customer, GST will be payable on the amounts you charge (to recover local port arrival charges) if the place of consignment is the port at which the goods are unloaded or you are not contracted to transport the goods to Australia. Where you charge for unpacking services that are performed before the place of consignment, GST will not be payable on these charges if you are contracted to transport the goods to Australia. Where you charge for unpacking services, GST will be payable on these charges if these services are performed at or beyond the place of consignment or you are not contracted to transport the goods to Australia. Where you charge amounts to recover your administration costs in processing the required paperwork after the goods arrive at the port at which the goods are unloaded, GST will not be payable on these charges you impose if the place of consignment is after the port at which the goods are unloaded and you are contracted to transport the goods to Australia. Where you charge amounts to recover your administration costs in processing the required paperwork after the goods arrive at the port at which the goods are unloaded, GST will be payable on these charges if the place of consignment is the port at which the goods are unloaded or you are not contracted to transport the goods to Australia. | Detailed Reasoning - Paying agents: In accordance with paragraph 49 of Goods and Services Tax Ruling GSTR 2000/37, where you pay for an expense for which some other entity is liable, the reimbursement you receive from your customer for this expense will not be consideration for any supply that you make. Therefore, the requirement of paragraph 9-5(a) of the GST Act will not be satisfied. As not all of the requirements of section 9-5 of the GST Act will be satisfied, GST will not be payable on the reimbursement.