Private ruling: GST and sale of goods
Published: March 2015

Ruling: Q1: Are you liable to pay GST on your sale of goods to your Australian customer under the proposed arrangement? | A1: No. For you to be liable to pay GST on the sale of goods to the Australian customer, you must make a taxable supply. All the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) must be satisfied for the sale to be a taxable supply. Section 9-5 of the GST Act provides that you make a taxable supply if: (a) you make the supply for consideration (b) the supply is made in the course or furtherance of an enterprise that you carry on (c) the supply is connected with Australia, and (d) you are registered, or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. As stated above, one of the requirements of section 9-5 of the GST Act is that the sale is connected with Australia. In your case, based on the information provided, the requirement of paragraph 9-5(c) of the GST Act will not be satisfied because the sale of the goods will not be connected with Australia for the following reasons: • The goods will neither be delivered nor made available to the customer in Australia. • The supply involves the goods being brought to Australia but you, the supplier, will not 'import the goods' into Australia because it is the Australian customer that will complete the customs formalities and import the goods into Australia. • The supply involves the goods being brought to Australia but you will neither install nor assemble the goods in Australia. Therefore, as the sale of the goods to the Australian customer, on the terms and conditions described, will not meet all the requirements of section 9-5 of the GST Act, the sale will not be a taxable supply. Hence, you will not be liable to pay GST on this sale. Further, you will not be entitled to an input tax credit on the importation of the goods.

Relevant facts and circumstances: You are an importer and wholesaler of a specific type of goods. You sell these goods to other businesses. You do not install or assemble the goods in Australia. You are registered for GST. Normally, you purchase goods from an overseas-based manufacturer. Under the terms of the sale, they deliver the goods to the overseas port. You then arrange for the transport of the goods from the overseas port to Australia. You complete the customs formalities and pay the GST on importation. When you subsequently sell the goods to your Australian customer, the sale is a taxable supply. You are proposing a new option for your bigger Australian customers. Under this new option, the Australian customer places an order with you on FOB overseas port terms. The Australian customer pays for the goods ordered. You then place an order with the overseas-based manufacturer who delivers the goods to the overseas port. The Australian customer consolidates the goods purchased from you with other goods that they have purchased from other suppliers overseas. The Australian customer arranges for the transport of the goods from the overseas port to Australia. The customer completes the customs formalities and pays the GST on the importation.

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(1). | A New Tax System (Goods and Services Tax) Act 1999 Subsection 9-25(3). | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1.