Private ruling: GST, agency and imports
Published: April 2012

Ruling: Q1: Where Entity A acts as agent for a non-resident (Entity B) in importing wines are they liable for the goods and services tax (GST) and entitled to input tax credits? | A1: Where Entity A acts as agent for a non-resident (Entity B) in importing wines they are liable for the GST on the importation. However, for Entity A, acting as agent, to be entitled to input tax credits the non-resident (Entity B) will need to be registered for GST.

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. Entity A in Australia imports wine from Entity B outside of Australia. Entity B sells wine at the cellar door to Australian tourists. The Australian tourist is charged for the wine and an amount to cover the cost of freight. Entity A will register the sale with Entity A. Entity A calculates the WET on the selling price of the wine and invoices Entity B for that amount. Entity A will then arrange for the wine to be imported to the Australian resident and will pay the WET. Entity A will enter nil sales on their BAS. Entity A is registered for GST and deferred GST on imports.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Division 13 and | A New Tax System (Goods and Services Tax) Act 1999 Division 15.

Reasons for decision: Summary: GST is a tax on the consumption of most goods, services and anything else in Australia, including things that are imported. GST is payable on importations of goods into Australia where the importation is a taxable importation. You make a taxable importation under Division 13 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if you enter for home consumption (within the meaning of the Customs Act) goods imported into Australia. Generally, the entity that makes the taxable importation, including an entity that makes a taxable importation through an agent, is liable to pay the GST on that taxable importation. However, general law agency principles are overridden in one special circumstance provided for under Division 57 of the GST Act. If the entity that makes a taxable importation is a non-resident and that non-resident makes the taxable importation through a resident agent, the resident agent is liable to pay the GST on the taxable importation, not the non-resident principal. Hence, where Entity A imports wine for a non-resident (Entity B) they will be liable for the GST on the taxable importation. The amount of GST is 10% of the value of the taxable importation. The value of the taxable importation is essentially the value of the goods plus the cost of bringing the goods to Australia, including insurance, plus customs duty and wine tax. Input tax credits are available for creditable importations. An entity makes a creditable importation under Division 15 of the GST Act if the entity imports goods solely or partly for a creditable purpose, the importation is a taxable importation, and the entity is registered for GST. Ordinarily, if a non-resident makes a creditable importation, the non-resident is entitled to the input tax credit under section 15-15 of the GST Act. However, if a non-resident makes a creditable importation through a resident agent, only the agent is entitled to claim the credit. The non-resident is not entitled to the input tax credit on the creditable importation. It is important to note that a resident agent is not entitled to an input tax credit under section 57-10 simply because it is liable for GST under section 57-5. A taxable importation made through a resident agent does not necessarily result in a creditable importation being made. The requirements for a creditable importation must be satisfied by the non-resident. That is, the non-resident must import the goods for a creditable purpose and be registered for GST. For Entity A to be entitled to claim the input tax credits on the taxable importation of wine as agent on behalf of the non-resident the non-resident must make the importation of the wine as part of their enterprise activities and also be registered for GST in Australia. Where the non-resident (Entity B) is not registered for GST, Entity A, acting as agent, will not be entitled to claim any input tax credits on the taxable importation. Where the non-resident (Entity B) makes the importation as part of their enterprise activities and is registered for GST in Australia, Marlborough Wine Tours Ltd will be entitled under section 57-10 of the GST Act as agent to claim the input tax credit. The amount of the input tax credit is the same as the amount of the GST paid to Customs on importation, unless the importation is not wholly for a creditable purpose, such as where the goods are to be applied partly for a private purpose. For further information on importing goods into Australia please refer to Goods and Services Tax Ruling GSTR 2003/15. This public ruling can be accessed on the ATO website at www.ato.gov.au.

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.