Private ruling: GST and the supply of wine
Published: July 2011

Ruling: Q1: Are you liable for goods and services tax (GST) when you supply goods, through an agent, to an overseas entity? | A1: Yes, you are liable for GST when you supply goods, through an export agent, to an overseas entity. Facts · You conduct an enterprise in supplying goods and are registered for GST. · You supply the goods to retailers. · You are in the process of supplying the goods in bulk to an overseas entity through their Australian based agent. · You do not know the GST status of the overseas entity. · The agent is registered for GST. · You do not have an agency relationship with the agent. · The procedure would be that the goods would be delivered to the export agent. · They would organise the export of the goods and complete the customs formalities. · The agent would then invoice the overseas entity for those services. · You will not be involved in the packaging, loading of containers onto the vessel for final export to the overseas address. · You will not be named as the 'exporter' on the customs documents. · You will invoice the overseas entity (inclusive of GST) for the goods supplied and receive payments from them. You will remit the relevant GST amount to the Tax Office.



Reasons for decision: Summary: Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you must pay the GST payable on any taxable supply that you make. Section 9-5 of the GST Act provides that 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. In addition, section 9-25 of the GST Act provides that a supply of goods is connected with Australia if, amongst other things: (i) the goods are delivered or made available in Australia to the recipient of the supply; or (ii) the supply involves the goods being removed from Australia. From the facts provided, the supply of the goods will be for consideration and the supply will be made in the course or furtherance of your enterprise as a wine producer. The supply of the goods will be connected with Australia as the goods are being removed from Australia. Furthermore, you are registered for GST. Therefore, as the supply of the goods by you satisfies all the above conditions, the supply is taxable unless it is GST-free or input taxed. The supply of the goods is not input taxed under Division 40 of the GST Act or under a provision of another Act. Therefore, we need to consider whether the supply of your goods to the agent for export is GST-free. Subsection 38-185(1) of the GST Act sets out the conditions for exports of goods to be GST-free. Item1 and Item 2 in the table in subsection 38-185(1) of the GST Act (Item 1) and (Item 2) provide that a supply of goods is GST-free if the supplier exports them from Australia before or within 60 days (or such further period allowed by the Commissioner) after the earlier of: (a) the day on 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 invoice is given. Both Item 1 and Item 2 require, that there be an export of goods, and that the supplier is the entity that exports them. Goods and Services Tax Ruling GSTR 2002/6 provides the view of the Tax Office on the operation of subsection 38-185(1) of the GST Act and explains the requirements for a supply of goods to be a GST-free export. Paragraph 22 of GSTR 2002/6 clarifies when the requirement that the supplier is the entity that exports the goods is satisfied. The supplier is treated as being the exporter where: (a) the supplier contracts at the supplier's own expense with an international carrier for the transportation of the goods to a destination outside Australia; or (b) the supplier is responsible for delivering the goods to the operator of a ship or aircraft who, or that, has been engaged by another party to transport those goods to a destination outside Australia; or (c) the requirements of subsection 38-185(3) are met… Paragraph 28 of GSTR 2002/6 confirms that a supplier is considered responsible for delivery of goods to a ship or aircraft operator even if the supplier arranges for another party, such as a freight forwarder or consolidator to deliver the goods to the carrier, on the supplier's behalf. You have advised that it is the agent and not you that is responsible (on behalf of the overseas entity) for organising and completing all the export formalities of the goods for final delivery to the overseas entity. Therefore, under those circumstances, the agent is considered as the exporter and not you the supplier of the goods. As such, none of the requirements of Item 1 or Item 2 is met. Notwithstanding the above, subsection 38-185(3) of the GST Act provides that a supplier who is not the exporter may still be treated as 'the exporter' for the purposes of Item 1 and Item 2, provided the following conditions are met: (a) before the goods are exported, the supplier supplies them to an entity that is neither registered nor required to be registered; and (b) that entity exports the goods from Australia; and (c) the goods have been entered for export within the meaning of section 113 of the Customs Act 1901; and (d) since their supply to that entity, the goods have not been altered or used in any way, except to the extent (if any) necessary to prepare them for export, and (e) the supplier has sufficient documentary evidence to show that the goods were exported. However, if the goods are reimported into Australia, the supply is not GST-free unless the reimportation is a taxable importation. These conditions as they apply to your circumstances are briefly explained below. (a) the purchaser is not registered or required to be registered The supplier can check the purchaser's status on the Australian Business Register, and needs to determine whether the purchaser makes any supplies connected with Australia worth $75 000 or more in a 12-month period. (b) the purchaser exports the goods The supplier must have sufficient evidence to verify that the goods are supplied to an unregistered entity that exports the goods. If the export document shows an agent is the exporter, the purchaser also needs to provide documentation regarding the agency agreement. In relation to (a) and (b) above, it is considered that you cannot ascertain the status of the overseas entity and the exact relationship between the agent who is registered for GST and the entity. (c) the goods are entered for export within the meaning of section 113 of the Customs Act 1901. The supplier needs to see the export entry lodged with the Australian Customs Service by the exporter in order to check the description of the goods being exported. In your case, as the agent is fully responsible for the export formalities, you do not have access to the export documents which would reveal an export clearance number. (d) the goods were not altered or used in any way, except to the extent (if any) necessary to prepare them for export. You have advised that you cannot confirm whether the goods are used or altered in any way once they have left your premises. (e) the supplier has sufficient documentary evidence to show that the goods were exported. In this case, you do not have the documentary evidence or a declaration to substantiate that export actually occurred and that the goods were received in a foreign country. Based on the presented facts, the agent is responsible for making the arrangements for transporting the goods from their premises to the place of export and you are not at all involved in the export process. At the time of the supply, you do not know the GST status of the overseas recipient. Hence we consider that as all the requirements of subsection 38-185(3) of the GST Act are not satisfied, you are not treated as the exporter for the purposes of that subsection. As the supply of the goods to the agent on behalf of the overseas recipient entity satisfies all the conditions of section 9-5 of the GST Act, then you are making a taxable supply which is subject to GST. | Detailed Reasoning - Additional Note: You could join in a cooperative arrangement with the purchaser in the future to ensure that your supply meets the requirements of section 38-185 of the GST Act, so that you make future supplies GST-free.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.