Are you making GST free supplies under sections 38-190 and 38-355 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you supply transport and logistic services to an International entity - a non-resident customer through its Australian agent?
Yes, your supply of transport and logistics service is GST-free under sections 38-190 and 38-355 of the GST Actto the extent that the customer is not in Australia and the supply is of transport or the arranging the international transport of goods to an overseas destination. This ruling applies for the following period : 1 October 20XX to 30 September 20XX The scheme commenced on: 18 October 20XX
You are a global transport and logistics provider offering tailor-made transport and freight solutions You are an Australian company with a registered office in Sydney and presences at various locations throughout Australia You provide logistics and modern supply chain management services as part of a global Shipping network You perform services for numerous customers in Australia and worldwide and are not related to the overseas entity or its Australian agent, other than under the commercial contract outlined which was negotiated at arm's length You are registered for GST You have been contracted by the Australian agent on behalf of the overseas entity for the acquisition of their logistics services, which took effect from XX XXX 2024 The contract for your services expressly provides that the Australian agent is an agent of overseas entity, and that the Australian agent acquires the logistics services on behalf of the overseas entity. Therefore, your supply is being made to overseas entity, the principal The overseas entity is an Indonesian based company. The company is a part of a group and is a company incorporated under the laws of Delaware, United States of America
The overseas entity is not an Australian registered company nor are they required to be registered in Australia for GST The overseas entity does not have any presence in Australia and does not have any employees in Australia. Its only physical connection with Australia is through its purchasing agent, as described above The Australian agent is an agent of the overseas entity and a company that is incorporated under the laws of Delaware, United States of America The Australian agent purchases good from Australian suppliers for export to Indonesia as required The role of the Australian agent, as the overseas entity agent in Australia, is not of such a character as to amount to the Australian agent carrying on the overseas entity's business in Australia. The Australian agent carries on its own business of providing procurement services to the overseas entity. You have been contracted by the Australian agent to perform logistics services and supply chain management services to be performed in Australia, which includes freight forwarding, customs brokerage and the coordination of warehousing, container consolidation and export packing for goods imported or exported from Australia
The Australian agent has a registration with ASIC as a foreign company that can conduct business activities in Australia. They have a registered office and staff working in Australia. The Australian agent is registered for GST The Australian agent does not carry on a business to the public at large and only performs its procurement services for the overseas entity (or its related parties). Australian staff work out of a warehouse office space within one of your warehouses that is used by you in performing your warehousing and container packing services You make available this small area of office space in one of your Australian warehouses for use by Australian agent staff. This is a separate supply or a separate component of your supply, and is not GST-free under section 38-190
A New Tax System (Goods and Services Tax) Act 1999 section 9-5 A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(1) A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(3) A New Tax System (Goods and Services Tax) Act 1999 section 38-355
Section 9-5 GST is payable on a taxable supply. Section 9-5 of the GST Act provides that you make a taxable supply if: (a) you make the supply for consideration; and (b) the supply is made in the course or furtherance of an enterprise that you carry on; and (c) the supply is connected with Australia; and (d) you are registered, or required to be registered. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. From the facts given, you satisfy all the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act as: (a) you receive consideration for your supply of arranging transport and logistic services for international freight services; (b) you make this supply in the course or furtherance of an enterprise that you carry on; (c) your supply is connected with Australia as you make this supply through an enterprise that you carry on in Australia; and (d) you are registered for GST in Australia.
The supply of transport and logistics services provided by you to a non-resident entity is not input taxed under any provisions of the GST Act or any other legislation. The next step is to determine whether this supply will be GST-free under the GST Act. Supply of logistics - Section 38-190 Section 38-190 of the GST Act discusses when the supplies of things other than goods or real property, for consumption outside Australia are GST-free. Specific to the supplies you make to overseas entity - a non-resident customer through its Australian agent is item 2 in the table in subsection 38-190(1) of the GST Act. Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident is GST-free if it is made to a non-resident, who is not in Australia when the thing supplied is done, and: (a) the supply 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; or (b) the non-resident acquires the thing in carrying on the non-resident's enterprise but is not registered or required to be registered for GST.
Where the requirements of paragraphs (a) or (b) of item 2 are satisfied, the supply will be GST-free. However, item 2 is limited by subsection 38-190(3) of the GST Act. Limitations of item 2 - subsection 38-190(3) of the GST Act If the supply covered by item 2 is under an agreement entered into, whether directly or indirectly, with a non-resident entity and that supply is provided or the agreement requires that it is to be provided to another entity in Australia, subsection 38-190(3) of the GST Act negates the GST-free status of that supply. Goods and Services Tax Ruling GSTR 2025/1 Goods and services tax: supplies of things (other than goods or real property) made to non-residents but provided to another entity in Australia (GSTR 2025/1)discusses the operation of subsection 38-190(3) of the GST Act. Paragraphs 51 and 130 of GSTR 2025/1 provide the ATO view on when the limitation of item 2 contained in subsection 38-190(3) of the GST Act applies and states:
51. An agent that is, for example, an individual or company is also an entity as defined. However, the mere fact that the supply is made to an agent acting for a non-resident does not mean that the supply is provided (or is required to be provided) to another entity. It is a matter of determining to which entity the supply is provided. If all the agent does is to arrange on behalf of the non-resident for the supply to be made and provided to the non-resident, the supply is not provided to the agent Paragraph 130 determines whether a supply is provided to an agent in Australia. 130. Sometimes a non-resident entity makes an acquisition through a resident agent in Australia. If all the agent does is arrange on behalf of the non-resident for the supply to be made and provided to the non-resident, the supply is not provided to the resident agent in Australia.[22] In your case, the supply of your logistics services to overseas entity through its Australian agent will be GST-free under item 2 in the table in subsection 38-190(1) of the GST Act to the extent that they are not in Australia in relation to the supply when your services are performed.
You have advised that Australian agent does not carry on a business to other public companies apart from overseas entity. They act solely as purchasing agents for overseas entity. Like the discussion in paragraph 130 of GSTR 2025/1, your supply of services to overseas entity through its Australian agent will be GST-free under item 2 in the table in subsection 38-190(1) of the GST Act as the supply is made to overseas entity and is not provided to Australian agent. Supply of international transport - Section 38-355 Section 38-355 of the GST Act specifies the general rules for the GST-free supplies of international transport of goods and related matters. The purpose of this section is to allow only certain aspects of the supply of transportation of goods to be GST-free. Items 5 and 7 in the table in section 38-355 of the GST Act (Items 5 and 7) allow for the GST-free transport or arranging the international transport of goods in certain circumstances as follows: 38-355 Supplies of transport and related matters (1) The third column of this table sets out supplies that are GST-free: Supplies of transport and related matters Item Topic These supplies are GST-free... 5
Transport etc. of goods subject to subsection (2) and (3), the *international transport of goods: (a) from their *place of export in the indirect tax zone to a destination outside the indirect tax zone; or (b) from a place outside the indirect tax zone to their *place of consignment in the indirect tax zone; or (c) from a place outside the indirect tax zone to the same or another place outside the indirect tax zone. 7 Arranging transport subject to subsection (3): (a) Arranging transport covered by item 1, 2, 3 or 4; or (b) Arranging the *international transport of goods covered by item 5; or (c) Arranging insurance covered by item 6 (2) Paragraphs (a) and (b) of item 5, and item 7 in the table in subsection (1) do not apply to a supply to the extent that the thing supplied is done in Australia, unless: (a) the *recipient of the supply: (i) is a *non-resident; and (ii) is not in Australia when the thing supplied is done in Australia; or (b) the supply is done by the supplier of the transport of the goods from or to Australia (whichever is relevant). (* denotes defined terms under section 195-1 of the GST Act)
In relation to the international transport of goods, Item 5(a) in the table in subsection 38-355(1) of the GST Act ensures that the supply of the international transport from the indirect tax zone to the overseas destination continues to be GST-free even though it is supplied through an Australian agent and item 7(b) provides that arranging the international transport of goods covered by item 5 is also GST-free. Office space made available to Australian agent For completeness, you have advised thatyou make available a small area of office space in one of your Australian warehouses for use by Australian agent staff. This is a separate supply or a separate component of your supply and is not GST-free under section 38-190. This supply satisfies all the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act as: (a) you receive consideration for your supply of providing office space; and (b) you make this supply in the course or furtherance of an enterprise that you carry on; and (c) your supply is connected with Australia as you make this supply through an enterprise that you carry on in Australia; and (d) you are registered for GST in Australia.