GST and supply of container storage and handling services to a non-resident entity

Is the entity, a container park operator, making a GST-free supply under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies container storage and handling services to a non-resident that is not in Australia when the services are performed?

Yes, the entity is making a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act when it supplies container storage and handling services to a non-resident that is not in Australia when the services are performed.

The entity is a container park operator. The entity supplies container storage and handling services to a non-resident. The container storage and handling services are performed in Australia.

The non-resident is not in Australia when the services are performed. The services are not provided, nor required to be provided under any agreement between the entity and the non-resident, to another entity in Australia.

The entity is registered for goods and services tax (GST).

Section 38-190 of the GST Act specifies the circumstances where the supply of things other than goods or real property, for consumption outside Australia, is GST-free. The supply of container storage without rental of a specific site is the service of storing goods and is not a supply of real property. As the supply of container storage and handling services is neither the supply of goods nor real property, the GST status of the supply is appropriately considered under section 38-190 of the GST Act.

Item 2 in the table in subsection 38-190(1) of the GST Act (Item 2) provides that a supply is GST-free where it is made to a non-resident who is not in Australia when the thing supplied is done and, under paragraph (a), it is neither: • a supply of work physically performed on goods situated in Australia when the work is done; nor • a supply directly connected with real property situated in Australia.

The first requirement of Item 2 is met as the entity supplies container storage and handling services to a non-resident that is not in Australia when the services are performed.

There is no supply of work physically performed on goods where activities do not change or affect goods in a physical way. For example, a supply of transporting goods is not work physically performed on goods because the supply only changes the location of the goods, not the goods themselves. Storage and handling services, like transport, do not change or affect the goods in a physical way. Therefore, the supply of container storage and handling services is not a supply of work physically performed on goods in Australia and the requirement in paragraph (a) of Item 2 is satisfied.

The supply of storage services involves the use of real property but that use is ancillary to the dominant part of the supply, the storage services themselves. The real property merely provides the setting for the dominant part of the supply. The supply is not directly connected with real property situated in Australia and meets the other requirement of paragraph (a) of Item 2

Therefore, the supply of container storage and handling services satisfies the requirements of Item 2.

However, Item 2 is limited by subsection 38-190(3) of the GST Act which provides that a supply covered by Item 2 is not GST-free if: (a) it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and (b) the supply is provided, or the agreement requires it to be provided, to another entity in Australia.

In this case, the supply is not provided, nor required to be provided under any agreement between the entity and the non-resident, to another entity within Australia. Therefore, the supply is not excluded from being GST-free by subsection 38-190(3) of the GST Act.

The entity is making a GST-free supply under Item 2 when it supplies container storage and handling services to a non-resident that is not in Australia when the services are performed.