Private ruling: GST - overseas supplies of goods
Date of advice: 6 May 2026
Published: 13 July 2026

Ruling: Q1: Are supplies made to you creditable acquisitions under section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No. | Q2: Are supplies you make taxable supplies under section 9-5 of the GST Act? | A2: No.

Relevant facts and circumstances: You are registered for GST. You carry on a business in Australia of buying and reselling equipment (goods). You are based in Australia only. You purchase the goods exclusively from offshore suppliers.These goods you supply may require the use of software to run the equipment. The software is not in any physical form and requires keycodes to activate. Under the arrangements you have with offshore suppliers, the offshore supplier supplies to you the equipment and the associated software (if any required) in intangible form and licences to use that software. The intangible things (the software and the licences) are never supplied to you separately. You resell these goods (and any associated software and licences referred to above) to overseas customers. Any such software or licences you supply to your customers are supplied with the hardware to these overseas customers. You do not sell the software and licences separately to customers and they are always supplied with the goods to which they operate on. Your offshore suppliers ship the goods from an overseas country to your customer who is also located in an overseas country. The customer's overseas location is the final destination of the goods. The goods do not pass into Australia at any point. Payments for the goods are deposited directly into your Australian bank account. Payments to overseas suppliers for the purchase of goods are also made directly from this Australian bank account.

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 subsection 9-25(1) | A New Tax System (Goods and Services Tax) Act 1999 subsection 9-25(2) | A New Tax System (Goods and Services Tax) Act 1999 subsection 9-25(3) | A New Tax System (Goods and Services Tax) Act 1999 subsection 9-25(3A) | A New Tax System (Goods and Services Tax) Act 1999 section 11-5 | A New Tax System (Goods and Services Tax) Act 1999 Division 96

Reasons for decision: Summary: Your suppliers are making composite supplies of goods to you. As the things supplied to you are goods and these goods are sent from an overseas location (the starting point for the delivery of the goods) to an overseas location to meet your order, the sales of these goods to you is not connected with Australia. Therefore, the sale of the goods to you is not a taxable supply. Hence, you are not making creditable acquisitions of these goods. Therefore, you are not entitled to input tax credits on your purchase of these goods. | Detailed Reasoning - Detailed reasoning: In accordance with section 11-5 of the GST Act, one of the requirements for making a creditable acquisition is that the thing supplied to the acquirer is a taxable supply, for GST purposes (paragraph 11-5(b) of the GST Act). One of the requirements for a supply to be taxable, for GST purposes is that the supply is connected with Australia (paragraph 9-5(c) of the GST Act). The connected with Australia rules for sales of goods are different to the connected with Australia rules for supplies of intangibles. The deals that you enter into with your offshore suppliers involve several different parts, that is goods, software and licences. We need to determine whether to characterise each supply made to you as being a 'mixed supply' or instead a 'composite supply'. Paragraph 16 of Goods and Services Tax RulingGSTR 2001/8 Goods and services tax: Apportioning the consideration for a supply that includes taxable and non-taxable parts (GSTR 2001/8) defines the term 'mixed supply'. It states: 16. In this Ruling the term 'mixed supply' is used to describe a supply that has to be separated or unbundled as it contains separately identifiable taxable and non-taxable parts that need to be individually recognised. Paragraph 17 of GSTR 2001/8 defines the term 'composite supply'. It states: 17. In this Ruling, the term 'composite supply' is used to describe a supply that contains a dominant part and includes something that is integral, ancillary or incidental to that part. You treat a composite supply as a supply of a single thing. Paragraphs 55 to 63 explain what are integral, ancillary or incidental parts. Paragraph 55 of GSTR 2001/8 provides a broad overview of how to determine whether a supply is a composite supply. It states: 55. Some supplies include parts that do not need to be separately recognised for GST purposes. We refer to these parts of a supply as being integral, ancillary or incidental. In a composite supply, the dominant part of the supply has subordinate parts that complement the dominant part. If such a supply is analysed in a commonsense way, it can be seen that the supply is essentially the provision of one thing. It need not be broken down, unbundled or dissected any further. For this reason, a composite supply may appear, at first, to have more than one part, but is treated as if it is the supply of one thing. Paragraphs 58 to 59A of GSTR 2001/8 provide the following guidance to assist in determining whether an item or feature is an integral, ancillary or incidental part of a composite supply. They state: 58. You will need to consider all of the facts to determine whether the supply that you make has any parts that are integral, ancillary or incidental. 59. No single factor (by itself) will provide the sole test you use to determine whether a part of a supply is integral, ancillary or incidental to the dominant part of the supply. Having regard to all the circumstances, and taking a commonsense and practical approach, indicators that a part may be integral, ancillary or incidental include where: • you would reasonably conclude that it is a means of better enjoying the dominant thing supplied, rather than constituting for customers an aim in itself; or • it represents a marginal proportion of the total value of the package compared to the dominant part; or • it is necessary or contributes to the supply as a whole, but cannot be identified as the dominant part of the supply; or • it contributes to the proper performance of the contract to supply the dominant part. 59A. The factors listed in paragraph 59 of this Ruling are not necessarily the only ones that may be taken into account in properly characterising a supply. In any given case there may be other particular circumstances that are relevant. It may also be necessary to weigh up those factors which may point to part of a supply being integral, ancillary or incidental against the relative significance of the parts in the supply and therefore consider whether the parts should be recognised as separate parts. It is a question of fact and degree whether a supply is mixed or composite. You enter contracts to procure goods from your offshore suppliers. These goods come with associated software and licences. The software is used to run the goods, and the licences are just licences to use that software. The intangible things are a better means of enjoying the goods, rather than an intangible thing constituting for the end users of the goods an aim in itself. The intangible things are necessary and contribute to the supply of the goods, but the intangible things are not the dominant part of an overall transaction. The intangible things contribute to the proper performance of the contract to supply the goods. In accordance with paragraph 55 of GSTR 2001/8, in a composite supply, the dominant part of the supply has subordinate parts that complement the dominant part. The software and licences are subordinate and incidental things that complement the dominant part of a composite supply of goods. Therefore, we need to consider the connected with Australia rules for supplies of goods. The definition of 'connected with Australia' in the case of goods is contained in subsection 9-25(1), subsection 9-25(2), subsection 9-25(3) and subsection 9-25(3A) of the GST Act. Supplies of goods from overseas which the seller arranges to ship to an overseas country, being the final destination of the goods, are not connected with Australia as such arrangements do not meet any of the connected with Australia definitions for supplies of goods. Your suppliers have entered into such arrangements. Therefore, the supplies made to you under the circumstances in question are not taxable supplies for GST purposes as the requirement of paragraph 9-5(c) of the GST Act is not met. Hence, the supplies made to you are not creditable acquisitions. (Division 96 of the GST Act was considered in preparing this ruling. Division 96 contains special overriding connected with Australia rules for certain situations. For Division 96 of the GST Act to potentially have application to a given supply, the supply must be comprised of more than one of the following kinds of supply: • a supply of goods • a supply of real property • a telecommunications supply • a supply of anything, other than goods or real property, that is not a telecommunications supply. Division 96 of the GST Act would never have application to a composite supply as a composite supply is treated as a supply of a single thing, and therefore, it would never be characterised as a supply of two or more of the kinds of things listed in the paragraph immediately above. Therefore, as the supplies made to you are composite supplies of goods, Division 96 has no application to these supplies; it is not relevant.) | Detailed Reasoning - Question 2: Are supplies you make taxable supplies under section 9-5 of the GST Act? | Detailed Reasoning - Reasoning: You are making composite supplies of goods to your customers. These supplies are not connected with Australia as the goods are shipped from an overseas location to your customer who is also located at an overseas location. Therefore, you are not making taxable supplies to your customers under the circumstances in question.