Issue
Is the entity, an insurance broker, making a GST-free supply under item 7 in the table in section 38-355 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it arranges insurance on behalf of its client for the international transport of goods from overseas to Australia?
Decision
Yes, the entity is making a GST-free supply under item 7 in the table in section 38-355 of the GST Act when it arranges insurance on behalf of its client for the international transport of goods from overseas to Australia.
Facts
The entity is an insurance broker. The entity arranges an insurance policy with an insurer on behalf of a client who is transporting goods from overseas to their place of consignment in Australia. The entity receives a commission for this service.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Section 38-355 of the GST Act provides that certain supplies of transport and related services are GST-free. Under paragraph (c) of item 7 in the table in section 38-355 of the GST Act (Item 7), the supply of arranging insurance is GST-free if the supply of the insurance itself is covered by item 6 in the table in section 38-355 of the GST Act (Item 6).
As an insurance broker, the entity is providing the service of arranging insurance on the behalf of its client. This service is GST-free under paragraph (c) of Item 7 if the supply of the insurance itself is GST-free under Item 6. Therefore, if the supply of the insurance itself is GST-free under Item 6, the entity's service is GST-free under Item 7.
Paragraph (c) of Item 6 states that the supply of insuring the transport of goods from a place outside Australia to their place of consignment in Australia is GST-free. As the insurer is supplying insurance for the transport of the client's goods from overseas to their place of consignment in Australia, The entity is supplying the service of arranging an insurance policy for the transport of goods from overseas to Australia. The supply of the insurance itself is covered by paragraph (c) of Item 6, and is therefore GST-free under section 38-355 of the GST Act. As such, the supply of arranging that insurance is also GST-free under Item 7.
Therefore, the entity is making a GST-free supply under Item 7 when it arranges insurance on behalf of its client for the international transport of goods from overseas to Australia. [Note: As the entity is not making a taxable supply under section 9-5 of the GST Act when it arranges insurance for its client, there is no GST payable by the entity in relation to that supply.]