Is the supply of a repair of goods located in Australia under warranty by you, an Australian GST registered company to the non-resident entity a GST-free supply under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Yes This ruling applies for the following period : All periods ending on or after: • 1 September 2023 The scheme commenced on: 1 September 2023
• You are an Australian company that is registered for the goods and services tax (GST). • You entered into a Service Contract with a non-resident entity located overseas on 1 September 2023 to repair goods located in Australia under warranty. • The non-resident entity does not have a presence in Australia. • The non-resident entity is not registered or required to be registered for GST. • You provide repair services on site at a farm located within Australia to the non-resident entity. • You use your own tools and supplies to carry out the work. • The non-resident entity provides any goods that are required to carry out the work. You do not provide goods as a part of the repair. • The warranty formed a part of the original payment made to the non-resident entity for the supply of the goods from their customer.
Section 9-5 of the A New Tax System (Goods and Services) Tax Act 1999 Section 38-191 of the A New Tax System (Goods and Services Tax) Act 1999
These reasons for decision accompany the Notice of private ruling This is to explain how we reached our decision. This is not part of the private ruling. Summary The supply of repair service that you carry out on a farm is work done under warranty for the non-resident entity. In this instance the repair of goods to the non-resident company satisfies all the requirements of subsection 38-191(1) of the GST Act. Detailed reasoning GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the GST Act if: a) the supplier makes the supply for *consideration; and b) the supply is made in the course or furtherance of an *enterprise that the supplier *carries on; and c) the supply is *connected with indirect tax zone (Australia); and d) the supplier is *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.
You make the supply for consideration; and the repair is made in the course of an enterprise that you carry on in Australia. The repair is connected with Australia as the repair is made through an enterprise that you carry on in Australia and the repair is done in Australia; and you are registered for GST. However, your supply is not a taxable supply to the extent that it is a GST-free or input taxed supply. There is no provision under the GST Act that makes your supply of the repair of faulty goods under warranty an input taxed supply. GST-free supply Section 38-191 of the GST Act is about supplies relating to the repair, renovation, modification or treatment of goods under warranty. The supply is GST-free where all the requirements in that section are met. Section 38-191 of the GST Act states: (1) A supply of anything other than goods or *real property is GST-free if: a) the *recipient is a *non-resident who: i. is not in the indirect tax zone when the thing supplied is done; and ii. acquires the thing in *carrying on the recipient's *enterprise, but is not *registered or *required to be registered; and
b) the supply is constituted by the repair, renovation, modification or treatment of goods; and c) the repair, renovation, modification or treatment is done in order to meet the recipient's obligations under a warranty relating to the goods; and d) either: i. *consideration for the warranty was included in the consideration for the supply of the goods; or ii. the supply of the warranty was a separate *taxable supply to the supply of the goods. (2) A supply of goods is GST-free if: a) it is made in the course of a supply that is GST-free under subsection (1), and to the same *recipient; and b) either: i. the goods are attached to, or become part of, the goods to which the warranty relates; or ii. the goods become unusable or worthless as a direct result of being used to repair, renovate, modify or treat the goods to which the warranty relates. (* denotes a defined term in section 195-1 of the GST Act).
The non-resident entity will not be in Australia when you make your supply. The non-resident entity acquires your supply in carrying on its business and is not registered for GST or required to be registered for GST; and your supply is the repair of the faulty goods; and the repair is done in order to meet the non-resident entity's obligations under a warranty relating to the goods; and the consideration for the warranty was included in the consideration for the supply of goods to the farm. Therefore, your repair of faulty goods to the non-resident entity will satisfy all the requirements in subsection 38-191(1) of the GST Act. Additionally, any goods that are required to be supplied for the repairing of the equipment to which the warranty relates is GST-free under subsection 38-191(2) of the GST Act.