Private ruling: GST and sale of goods on board of cruise ships
Published: May 2015

Ruling: Q1: Is the supply of goods connected with Australia pursuant to section 9-25 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and therefore a taxable supply under section 9-5 of the GST Act where the ship is on a domestic cruise and is sailing within the 12 nautical miles limit at the time of the sale? | A1: Yes. GST is payable on a taxable supply. Under section 9-5 of the GST Act 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. From the information received, you satisfy paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act as you receive consideration for your supply and the supply is made through an enterprise (business) that you carry on. Further you are registered for GST. Connected with Australia The definition of connected with Australia is in section 9-25 of the GST Act. Relevant to your supply of goods is subsection 9-25(1) of the GST Act. Subsection 9-25(1) of the GST Act is about supplies of goods wholly within Australia. Under subsection 9-25(1) of the GST Act, a supply of goods is connected with Australia if the goods are delivered, or made available, in Australia to the recipient of the supply. 'Australia' is defined in section 195-1 of the GST Act as follows: Australia does not include any external Territory. However, it includes an installation (within the meaning of the Customs Act 1901 ) that is deemed by section 5C of the Customs Act 1901 to be part of Australia. Paragraph 50 in Goods and Services Tax Ruling GSTR 2003/4 (available from the legal database of www.ato.gov.au) refers to the definition of 'Australia' in section 195-1 of the GST Act and states: 50. Australia therefore includes the entire land territory of Australia, and Australia's coastal areas and sea bed, but not any external Territories, such as Norfolk Island, Christmas Island or the Australian Antarctic Territory. Under Section 5C of the Customs Act, Australia also includes sea and resources installations (such as oil or gas rigs) that are attached to the sea bed within the territorial boundaries of Australia, or to an adjacent area or coastal areas as defined in that Act. The territorial limit of the coastal seas surrounding Australia is 12 nautical miles from the territorial sea baseline of Australian land masses. This was established by proclamation under section 7 of the Seas and submerged Lands Act 1973. When the ship is sailing within the 12 nautical miles limit, your supply of goods is connected with Australia as the goods are delivered or made available to the passengers in Australia. Accordingly, paragraph 9-5(c) of the GST Act is satisfied. Taxable supply When the ship is sailing within the 12 nautical miles limit the supply of goods on board the cruise ships is not GST-free or input tax under the GST Act. In this instance your supply of goods on board the cruise ships is a taxable supply under section 9-5 of the GST Act as all the requirements in that section are satisfied. | Q2: Is the supply of goods connected with Australia pursuant to section 9-25 of the GST Act and therefore a taxable supply under section 9-5 of the GST Act where the ship is on a domestic cruise and is sailing outside the 12 nautical miles limit at the time of the sale? | A2: No. When the ship is sailing outside the 12 nautical miles limit, your supply of goods is not connected with Australia since the goods are not delivered or made available to the passengers in Australia. Your supply of goods is therefore not drawn into the GST system. The requirement of paragraph 9-5(c) of the GST Act is not satisfied. Your supply of goods is therefore not drawn into the GST system. Accordingly, your supply of goods is not a taxable supply under section 9-5 of the GST Act when the ship is sailing outside the 12 nautical miles limit.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a company and registered for the goods and services tax (GST). You sell goods to passengers on cruise ships that are based in Australian ports. These ships undertake a mixture of domestic cruises and international cruises. The goods you sell on board the cruise ships are beauty, electrical photo, fashion, food, giftware, jewellery, liquor, publications, souvenirs, tobacco, toiletries and watches. The domestic cruises are the subject of the private ruling. Your supply of goods on the domestic cruises is made whilst the ships are sailing either within or outside Australia's 12 nautical miles limit. For the ships sailing outside Australia's 12 nautical miles limit, the domestic cruise starts and ends at a port located in Australia and the ships do not stop or lay anchor at an international port.

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