News/Notices

1 July 2004

GST (Goods & Services Tax) Information

Introduction

From 1^st July 2000, the Australian Federal Government has introduced a Goods and Services Tax (GST).

GST is a broad-based indirect consumption tax of 10% on supply of goods and services in Australia, the purchase of goods from overseas and part of import services. It replaces whole sales tax and other indirect taxes eg FID, BAD, Bed Tax and Stamp Duties on marketable securities.

Companies with annual turnover greater than $50,000 must register with the Australian Taxation Office (ATO) for GST and obtain an Australian Business Number (ABN). A company that does not have an ABN cannot charge GST on sales and is not entitled to claim from the ATO any GST they have incurred.

McArthur Shipping and Seatrans act as agents for a number of Shipping Principals involved in international transport. Both companies have registered for GST and Australian Business Numbers.

The Australian Shipping Federation (ASF) in conjunction with Liner Shipping Services (LSS) have been successful in resolving a number of transport issues with the ATO. They have provided a summary of the impact GST will have on the various charges associated with the shipping industry.

Hereunder is the summary presented by the ASF and LSS. Please note the disclaimer that precedes the summary.

Australian Shipping Federation:  GST Briefing Notes to Members, May 2000

Disclaimer: This material is a summary of advice received by the Australian Shipping Federation and Liner Shipping Services from the Australian Tax Office ("ATO"). The material should not be used or treated as professional advice and readers should rely on their own enquiries in making any decisions concerning their own interests. These notes have been prepared as a summary of the main points addressed by the ATO up to 31/5/2000.

In the context of this summary GST free means that GST is not charged.

Import Freight Charges

Import international freight is GST free from ports outside Australia to the place of consignment (which is considered to be the point where ACS authority to deal is presented) provided that the supplier of the Australian transport is also the supplier of the international transport.

Bunker adjustment factor is considered to be part of the international freight and is GST free.

Currency adjustment factor is considered to be part of the international freight and is GST free

Port service charge – GST is Applicable although there is still some doubt as to whether those items within the PSC which are GST free to the shipping company need to be shown separately as GST free.

Terminal handling charge- GST is applicable. Where a separate THC is not charged and is included in freight it is not clear whether an apportionment of THC needs to be made. Apportionment may be the safest course and the ATO has indicated that they would only seek some methodology to justify the apportionment.

Lo-Lo / Equipment hand over charge – GST is applicable

Container detention - GST is applicable

Documentation fee – GST is applicable

The status of the above charges where they are prepaid by a non-resident is still uncertain although it would appear that the amending Bill now before Parliament will have the effect of making these charges GST free when prepaid by a non-resident.

Export international freight is GST free from the place of export within Australia (which is considered to be the place where the goods are packed into a freight container or where the goods were placed on board a ship) to a destination outside Australia.

Bunker adjustment factor is GST free

Currency adjustment factor is GST free.

Port service charge- GST is applicable

Terminal handling charge- GST free

Lo-Lo/equipment hand over charge – GST is applicable

Documentation fee- GST free

Charges for moving cargo or passengers between Australian ports – GST is applicable

In general GST will be charged on all costs incurred in Australia and the company will be entitled to an input credit.

An exception to this is that the ATO has ruled that the cost of repairing international freight containers will be GST free. However the storage and transport of these containers within Australia will incur GST.

Bunkering is considered to fall within the definition of ship’ stores. Thus, where a ship bunkers in Australia, and is on a voyage that has a destination outside Australia, the bunker fuel for the ship will be considered as ships stores and thus GST free. It would not matter whether or not part of the voyage involves a journey between places within Australia.

Agency Matters

The ATO has confirmed that shipping agents will be eligible for only one ABN. A shipping agent will therefore be required to include both its own activities and that of its non-resident principals on the one BAS.

Because of the uncertainty created by the amending Bill currently before Parliament the ATO is advising agents to charge GST on their remuneration and disbursements and then claim an input credit on behalf of their non resident principals.

The ATO also stated that the presence of a local office for an overseas principal will change the GST treatment. This is because the term ‘non-resident’ has a precise definition in the legislation. Agents will need to get individual rulings from the ATO on specific instances where this issue arises.

Under accrual accounting the GST payable by you on a taxable supply is under section 29-5 attributable to:

• the tax period in which any of the consideration is received for the supply; or
• if, before any of the consideration is received, an invoice is issued relating to the supply- the tax period in which the invoice is issued.

It is these rules and not the time of the supply which determine in which tax period you attribute the GST payable on a supply.

Those Commonwealth and State Government fees and charges which are exempt from GST can be ascertained from the Treasurer’s determination 2000 which is available on www.treasury.gov.au

Where original tax invoices for disbursements, paid by an Australian agent, must be supplied to Principals the ATO has advised that the agent should retain copy tax invoices.

For more details please contact mail@mcaship.com.au