Private ruling: goods and services tax (GST) and exports.
Published: September 2011

Ruling: Q1: Will you be entitled to input tax credits on your purchases of the goods? | A1: No. | Q2: Will GST be payable by you on your sales of the goods? | A2: No.

Relevant facts and circumstances: You are registered for GST. You are an exporting company. You are in the process of the final stages of issuing an order to buy goods from suppliers located in Australia. Your suppliers will supply the goods to you in the course or furtherance of enterprises that they carry on. You will on-sell the goods. You will export the goods from Australia to another country. You will be the shipper on the Bill of Lading and on all other relevant documentation. The goods will be sent from Australia pursuant to a contract between your supplier and you on FAS Incoterms. Under that contract, your supplier will be required to deliver the goods to a wharf at a named place of delivery, which will be an international port in Australia. The goods will then be lowered onto a ship. The carrier to whom your supplier will deliver the goods will be the operator of a ship. Your supplier will clear the goods for export. In some cases, you will not pay your supplier in instalments. The goods will be exported from Australia before, or within 60 days after: (a) the day on which your supplier receives any of the consideration for the supply; or (b) if, on an earlier day, your supplier gives you an invoice for the supply - the day on which your supplier gives the invoice. In some cases, you will pay your supplier in instalments. The goods will be exported from Australia before, or within 60 days after: -the day on which your supplier receives any of the final instalment of the consideration for the supply; or -if on an earlier day, your supplier gives an invoice for that final instalment - the day on which your supplier gives the invoice. In some cases, you will not be paid for your supplies of the goods in instalments. You will export the goods from Australia before, or within 60 days after: (a) the day on which you receive any of the consideration for the supply; or (b) if, on an earlier day, you give an invoice for the supply - the day on which you give the invoice. In some cases, you will be paid for your supplies of the goods in instalments. The contracts for your sales of the goods will require you to export the goods from Australia and you will export the goods from Australia before, or within 60 days after: -the day on which you receive any of the final instalment of the consideration for the supply; or -if on an earlier day, you give an invoice for that final instalment - the day on which you give the invoice. Your suppliers are registered for GST.

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 11-5 | A New Tax System (Goods and Services Tax) Act 1999 section 38-185

Reasons for decision: Summary: You will not be entitled to input tax credits on your purchases of the goods, as the sales of the goods to you will be GST-free supplies under subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). | Detailed Reasoning - Detailed reasoning: You make a creditable acquisition where you satisfy the requirements of section 11-5 of the GST Act, which states: You make a creditable acquisition if: a. you acquire anything solely or partly for a *creditable purpose; and b. the supply of the thing to you is a *taxable supply; and c. you provide, or are liable to provide, *consideration for the supply; and d. you are *registered or *required to be registered. (*Denotes a term defined in section 195-1 of the GST Act) | Detailed Reasoning - Creditable purpose: Subsection 11-15(1) of the GST Act states: You acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your *enterprise. Subsection 11-15(2) of the GST Act states: However, you do not acquire the thing for a creditable purpose to the extent that: · the acquisition relates to making supplies that would be *input taxed; or · the acquisition is of a private or domestic nature. You will acquire the goods in carrying on your enterprise. Your acquisitions of the goods will not relate to making supplies that would be input taxed. Your acquisitions of the goods will not be of a private or domestic nature. Hence, you will acquire the goods for a creditable purpose, and therefore, you will satisfy the requirement of paragraph 11-5(a) of the GST Act | Detailed Reasoning - Taxable supply: GST is payable by an entity on taxable supplies that it makes. 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 c. you *carry on; and d. the supply is *connected with Australia; and e. 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. Your suppliers will satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. That is, they will supply the goods to you for consideration and in the course or furtherance of enterprises that they carry on. Additionally, these supplies will be connected with Australia and the suppliers are registered for GST. There are no provisions in the GST Act under which these supplies will be input taxed. Therefore, what remains to be determined is whether these supplies will be GST-free. | Detailed Reasoning - GST-free: Item1 in the table in subsection 38-185(1) of the GST Act provides that a sale of goods is GST-free if the supplier exports the goods from Australia before, or within 60 days (or such further period as the Commissioner allows) after: a. the day of which the supplier receives any of the consideration for the supply; or b. if, on an earlier day, the supplier gives an invoice for the supply - the day on which the supplier gives the invoice. Item 2 in the table in subsection 38-185(1) of the GST Act provides that a sale of goods for which consideration is provided in instalments under a contract that requires the goods to be exported is GST-free, but only if the supplier exports the goods from Australia before, or within 60 days (or such further period as the Commissioner allows) after: a. the day on which the supplier receives any of the final instalment of the consideration for the supply; or b. if, on an earlier day, the supplier gives an invoice for that final instalment - the day on which the supplier gives the invoice. Paragraph 25 of Goods and Services Tax Ruling GSTR 2002/6 Goods and Services Tax: Exports of goods, items 1 to 4 of the table in subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GSTR 2002/6) discusses whether a supplier exports goods where the goods are sent from Australia pursuant to a contract of sale on FAS Incoterms. It states: Similarly, a supplier exports goods where the goods are sent from Australia pursuant to a contract of sale on FAS or FCA terms, provided: · the named place of delivery is an international port or airport; and · the carrier to whom the goods are delivered, is the operator of a ship or aircraft. The goods will be sent from Australia pursuant to a contract of sale between your supplier and you on FAS Incoterms. Your supplier will deliver the goods to a wharf at a named place of delivery, which will be an international port in Australia. The goods will then be lowered onto a ship. The carrier to whom your supplier will deliver the goods will be the operator of a ship. Therefore, your supplier will be regarded as exporting the goods from Australia. In some cases, you will not pay your supplier in instalments. Your supplier will be regarded as exporting the goods from Australia. The goods will be exported from Australia before, or within 60 days after: (a) the day on which your supplier receives any of the consideration for the supply; or (b) if, on an earlier day, your supplier gives an invoice for the supply - the day on which your supplier gives the invoice. In some cases, you will pay your supplier in instalments. The contract for the sale of the goods to you will require that the supplier sells the goods to you under certain terms, and as explained above, your supplier will thereby be regarded as exporting the goods from Australia. The goods will be exported from Australia before, or within 60 days after: -the day on which your supplier receives any of the final instalment of the consideration for the supply; or -if on an earlier day, your supplier gives an invoice for that final instalment - the day on which your supplier gives the invoice. Hence, your suppliers' supplies of the goods to you will be GST-free under subsection 38-185(1) of the GST Act. Therefore, your suppliers will not make taxable supplies to you. Hence, you will not satisfy the requirement of paragraph 11-5(b) of the GST Act. | Detailed Reasoning - Consideration: You will provide consideration for the supplies of the goods to you. Hence, you will satisfy the requirement of paragraph 11-5(c) of the GST Act. | Detailed Reasoning - Registration: You are registered for GST. Hence, you will satisfy the requirement of paragraph 11-5(d) of the GST Act. | Detailed Reasoning - Conclusion: As you will not satisfy all of the requirements of section 11-5 of the GST Act, you will not make creditable acquisitions of the goods. Therefore, you will not be entitled to input tax credits on your purchases of the goods. | Summary: GST will not be payable by you on your sales of the goods, as you will make GST-free supplies of the goods under subsection 38-185(1) of the GST Act. | Detailed Reasoning - Detailed reasoning: GST is payable by you where you make taxable supplies. You satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. That is, you supply the goods for consideration and in the course or furtherance of an enterprise that you carry on. Additionally, your supplies of the goods will be connected with Australia and you are registered for GST. There are no provisions in the GST Act under which your supplies of the goods will be input taxed. Therefore, what remains to be determined is whether your supplies of the goods will be GST-free. In some cases, you will not receive payment for your supplies of the goods in instalments. You will export the goods from Australia before, or within 60 days after: (a) the day on which you receive any of the consideration for the supply; or (b) if, on an earlier day, you give an invoice for the supply - the day on which you give the invoice. In some cases, you will receive payment for your supplies of the goods in instalments. The contracts for your sales of the goods will require you to export the goods from Australia and you will export the goods from Australia before, or within 60 days after: -the day on which you receive any of the final instalment of the consideration for the supply; or -if on an earlier day, you give an invoice for that final instalment - the day on which you give the invoice. Therefore, you will make GST-free supplies of the goods under subsection 38-185(1) of the GST Act. Hence, you will not make taxable supplies of the goods. Therefore, GST will not be payable by you on your supplies of the goods.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.