Private ruling: GST and importation of a good
Date of advice: 19 November 2017
Published: May 2018

Ruling: Q1: Is the importation of the good a taxable importation under section 13-5 of the of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, unless it is a non-taxable importation.

Relevant facts and circumstances: The good was construction in Australia and ownership was held by Entity A with Entity B and Entity C being the owners of Entity A. The goods were removed from Australia and the ownership was transferred to Entity C. There was no financial consideration with the transfer of registration. The plan is to return the good to Australia. There have also been various upgrades and improvements to the goods during the time it was outside of Australia.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 13-5, | A New Tax System (Goods and Services Tax) Act 1999 section 13-10, | A New Tax System (Goods and Services Tax) Act 1999 section 42-5, | A New Tax System (Goods and Services Tax) Act 1999 section 42-10, and | A New Tax System (Goods and Services Tax) Act 1999 section 171-5.

Reasons for decision: Summary: Division 13 of the GST Act defines taxable importations, states who is liable for the GST and describes how to work out the GST on importations. This division applies whether or not you are registered for GST. Section 13-1 of the GST Act states that GST is payable on taxable importations. Subsection 13-5(1) of the GST Act provides that: 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. Where you import the good into Australia you will satisfy paragraph 13-5(1)(a) of the GST Act. Paragraph 95 of Goods and Services Tax Ruling GSTR 2003/15 - Importation of Goods into Australia (GSTR 2003/15) states: 95. The second requirement for a taxable importation is that goods are entered for home consumption. This is achieved by the lodgement of an import declaration in the Integrated Cargo System (ICS) provided by the CEO of Customs. An import declaration is the specified format in which Customs requires information to be provided in respect of imported goods. When it is processed and approved, the import declaration allows the goods to be removed from Customs control. Imported goods can be entered for home consumption on an import declaration or entered for warehousing using a warehouse declaration. Only entries for home consumption using an import declaration are relevant for the purposes of section 13-5. As you will import the good for your own use, you will have to lodge the relevant forms with Customs for home consumption of the good. Once the good is removed from Customs control, the good will be considered as having entered for home consumption. At that point, you will satisfy paragraph 13-5(1)(b) of the GST Act. Therefore, the importation of the good will be a taxable importation to the extent it is not a non-taxable importation. | Detailed Reasoning - Non-taxable importation: Under section 13-10 of the GST Act, an importation is a non-taxable importation if: (a) it is a non-taxable importation under Part 3-2 of the GST Act; or (b) it would have been a supply that was GST-free or input taxed if it had been a supply. There are three categories of non-taxable importations: ● Goods that are imported and would have been treated as GST-free if they had been supplied within Australia or goods that are imported and would have been treated as input-taxed if they had been supplied within Australia; ● goods that qualify for certain customs duty concessions; and ● goods returned to Australia in an unaltered condition and with unchanged ownership. Based on the facts, there are no provisions in the GST Act that provide for the importation of the goods to be GST-free or input taxed. Part 3-2 of the GST Act, particularly sections 42-5 and 42-10 of the GST Act, deals with importation of goods that are non-taxable importations in accordance with the Customs Tariff Act 1995 . The Customs Tariff Act 1995 is administered by Department of Immigration and Border Protection (Customs); it is a matter for Customs to determine if an importation is covered by items referred to in section 42-5 of the GST Act. Subsection 42-5(1) states: (1) An importation of goods is a non-taxable importation if the goods are covered by item 4, 8, 15, 18A, 18B, 21, 21A, 23A, 23B, 24, 25A, 25B, 25C, 32A, 32B, 33A, 33B, or 64 in Schedule 4 to the Customs Tariff Act 1995 . (1A)… (1B)… (1C) An importation of goods is a non-taxable importation if the goods are covered by: (a) Item 1, 3, 7, 12, 13 or 29 in Schedule 4 to the Customs Tariff Act 1995 ; and (b) Regulations made for the purposes of this subsection. (2) To avoid doubt, a reference to goods that are covered by an item in Schedule 4 to the Customs Tariff Act 1995 includes a reference to goods to which that item would apply apart from the operation of subsection 18(1) of that Act. Subject to any relevant by-laws, goods that qualify for certain customs duty concessions and are also non-taxable for GST include the following items from schedule 4 to the Customs Tariff Act 1995 : ● item 1 Scientific instruments. ● item 3 Educational books etc. ● item 4 Calendars, catalogues, overseas travel literature, overseas price lists or other overseas printed matter. ● item 7 Works of art being provided to certain organisations. ● item 10 Goods that are owned by the government of a foreign country, for the official use of that government, and are not to be used for purposes of trade. ● item 11 Goods that are for use by or for sale to persons who are the subject of a Status of Forces Agreement between the Government of Australia and the government of another country. ● item 12 Official use of goods by a Trade Commissioner of a Country. ● item 13 Goods relating to a Treaty. ● item 15 Goods ○ imported by passengers, ship or aircraft crew; goods that are the property of a person who has arrived in Australia on an international flight; goods purchased by persons from an inwards duty free shop ○ brought or sent into Australia by members of the Defence Force stationed outside Australia ○ imported by members of the New Zealand, Canada or United Kingdom forces ○ passengers' personal effects, furniture or household goods. ● item 18 Goods returned to Australia after repair or replacement, free of charge under warranty or supplied as part of a product safety recall. ● item 21 Goods imported for repair or alteration then exported. ● item 21A Goods imported by the holder of a Tradex order under the Tradex Scheme Act 1999 . ● item 23 Certain donated or bequeathed goods by an entity or organisation outside Australia to an organisation established in Australia. ● item 24 Will or intestacy goods that are not for sale. ● item 25 Trophies won outside Australia; or decorations, medallions or certificates awarded outside Australia; trophies or prizes sent by donors resident outside Australia for presentation or competition in Australia. ● item 26 Goods, other than tobacco, alcohol and bulk orders, with a value less than an amount prescribed by by-law (currently at or below $1,000). ● item 27 Samples of negligible value (value as prescribed by by-law). ● item 29 Goods for persons with a disability relating to the Education, Scientific and Cultural Materials Agreement. However, it is a matter for Customs to determine if an importation is defined under Schedule 4 of the Customs Tariff Act 1995 , as this is legislation administered by Customs and not the Tax Office. Section 42-10 of the GST Act deals with goods returned to the indirect tax zone in an unaltered condition and provides: (1) An importation of goods is a non-taxable importation if: (a) the goods were exported from the indirect tax zone and are returned to the indirect tax zone, without having been subject to any treatment, industrial processing, repair, renovation, alteration or any other process since their export; and (b) the importer was not entitled to, and did not claim, a payment under Division 168 (about the tourist refund scheme) related to the export of the goods; and (c) the importer; (i) is the manufacturer of the goods; or (ii) has previously acquired the goods, and the supply by means of which the importer acquired the goods was a taxable supply (or would have been taxable but for section 66-45); or (iii) has previously imported the goods, and the previous importation was a taxable importation in respect of which the GST was paid. You have stated that the good was built in Australia, exported and currently being organised to be import back into Australia and the treatment it has been subject to has been primarily for the upkeep of the good. There is a requirement under paragraph 42-10(1)(c) of the GST Act that the importer is either the manufacture of the good or has previously acquired the goods by way of a taxable supply. In your situation, the ownership of the good was transferred from Entity A to Entity C without it being a taxable supply nor had the good previously been imported and treated as a taxable importation. Therefore, the requirements of section 42-10 of the GST Act are not satisfied. Under Division 171 of the GST Act where an importation of goods is a taxable importation a security or undertakings can be required under the Customs Act 1901 before a temporary import is permitted. In these cases, the Division delays the requirement to pay assessed GST on the importation. | Detailed Reasoning - Temporary importation: Division 171 of the GST Act operates so that no GST is payable on a taxable importation if a security or undertaking described in section 162 or section 162A of the Customs Act 1901 is given and complied with, and the goods are exported within a specified period, or one of the circumstances specified in the relevant Customs regulations applies. Securities and undertakings may be taken in respect of temporarily imported goods, as prescribed by Customs regulations. These include goods imported by temporary residents or tourists, goods imported for use at a public exhibition or entertainment event, and goods covered by an inter-governmental agreement such as goods covered by an international carnet. The conditions include that the goods cannot be lent, sold, pledged, mortgaged, hired, given away, exchanged or otherwise disposed of or altered in any way. If the conditions of the security are contravened, GST becomes payable on the taxable importation, as the importation does not satisfy the requirements of section 171-5 of the GST Act. The conditions also require that the goods must be exported within 12 months (or such further time as Customs allows) after their importation. GST becomes payable if the goods are not exported, unless they have no value as a result of being accidentally damaged or destroyed, or in the case of an animal, it has died or been destroyed as a result of an accident or illness.