Private ruling: Goods and services tax (GST) and the sale of goods
Date of advice: 20 March 2020
Published: May 2020
Ruling period: 28 October 20XX onwards
Date scheme commenced: 28 October 20XX onwards

Ruling: Q1: Do the supplies made by the non-resident to the Australian entity under the Forward sale structure meet the requirements of Section 83-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, the supplies made by the non-resident to the Australian entity under the Forward sale structure meet the requirements of Section 83-5 of the GST Act. | Q2: If the answer to question 1 is 'yes', then, is the representative member of the GST group in which Australian entity is a member, liable to account for GST in relation to the supply of goods from the non-resident to Australian entity? | A2: Yes, the representative member of the GST group in which the Australian entity is a member, liable to account for GST in relation to the supply of goods from the non-resident to the Australian entity.

Relevant facts and circumstances: You are a non-resident company that carries on your enterprise outside Australia. You are registered for GST. You are currently in the process of negotiating the terms of a proposed sale with an Australian company. You will purchase goods from third parties in Australia and have them delivered to an Australian storage depot. You will then sell the purchased goods to the Australian company which the Australian company in turn will sell with the purpose of the goods being exported from Australia. The Australian company will take title of the goods when payment is made and at the time of sale the goods will be made available to the Australian company at the Australian storage depot. The Australian company is registered for GST. Copy of a signed "Reverse Charge Agreement" between the non-resident ('the Supplier') and the Australian entity ('the Recipient') states that The parties are entering into a Reverse Charge Agreement under section 83-5 of the A New Tax System (Goods and Services Tax) Act 1999 ("the GST Act") in relation to the supply of goods by the Supplier to the Recipient under the Sale Agreement between the parties dated ____________("the supply"). For the purposes of Division 83 of the GST Act: (a) the Supplier confirms that it is a non-resident of Australia and does not make the supply through an enterprise that the supplier carries on in Australia; and (b) the Recipient confirms that it is registered or required to be registered for GST in Australia; and (c) the parties agree that the GST payable on the supply made by the Supplier to the Recipient is payable by the Recipient or a representative member of the GST Group of the Recipient and is not payable by the Supplier.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Division 83 Detailed reasoning | Note: Where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in section 195-1 of the GST Act. Question 1 | Reverse charge agreement | Division 83 of the GST Act provides the GST on taxable supplies made by non-residents can, with the agreement of the recipients, be "reverse charged" to the recipients. | Section 83-5 of the GST Act states: | (1) The GST on a taxable supply is payable by the recipient of the supply, and is not payable by the supplier, if: | (a) the supplier is a non-resident; and | (b) the supplier does not make the supply through an enterprise that the supplier carries on in the indirect tax zone; and | (c) the recipient is registered or required to be registered; and | (d) the supplier and the recipient agree that the GST on the supply be payable by the recipient. | (2) However, this section does not apply to: | (a) a supply that is a taxable supply under section 84-5 (which is about offshore supplies); or | (b) a taxable supply made by a non-resident through a resident agent; or | (c) a supply that is disregarded under paragraph 118-15(3)(b) or (c) or 188-20(3)(b) or (c) (which are about supplies of rights or options offshore). | (3) This section has effect despite section 9-40 (which is about liability for the GST). | Supplier i.e. the non-resident does not make the supply through an enterprise that it carries on in Australia. The recipient, i.e. the Australian entity is registered for GST. Both supplier and recipient, have agreed in writing that the GST on the supply be payable by the recipient. | Subsection 83-5(2) does not negate subsection 83-5(1) of the GST Act because: | (a) the supply in question is not an offshore supply | (b) the supply is not made by the non-resident through a resident agent | (c) it is the supply of goods and not the supply of right or options. | Therefore, the supply made by the non-resident to the Australian entity satisfies the requirement of section 83-5 of the GST Act. Question 2 | Recipients who are members of GST groups | Section 83-10 of the GST Act states: | (1) If section 83-5 applies to a taxable supply but the recipient of the supply is a member of a GST group, the GST on the supply: | (a) is payable by the representative member; and | (b) is not payable by the member (unless the member is the representative member). | (2) This section has effect despite section 83-5. | The Commissioner has received a written agreement between the non-resident and the Australian entity which states that GST on the supply made by the non-resident to the Australian entity is payable by either the Australian entity or the representative member and is not payable by the non-resident. Therefore, given the Australian entity is the member of the GST group, pursuant to subsection 83-10(1) of the GST Act, the representative member will be liable to account for GST in relation to the supply of goods from the non-resident to the Australian entity.