Notice to Australian Suppliers Australian GST Côte d Ivoire Operations

Transcription

1 Notice to Australian Suppliers Australian GST Côte d Ivoire Operations 21 December 2009 The purpose of this document is to provide guidance to Australian based suppliers of Lihir Gold Limited s Côte d Ivoire subsidiaries, including Equigold Mines CI SA, Equigold CI SA, LGL Development CI SA, LGL Exploration CI SA and LGL Holdings CI SA (collectively the LGL Equigold companies) on the application of Australian Goods and Services Tax (GST) on supplies made to them. This document is intended to provide generic guidance only and should not be seen as providing definitive advice. Accordingly, the LGL Equigold companies will not accept liability should reliance be placed on this guidance without due consideration to the precise circumstances of any particular transaction entered into. We recommend that each supplier seek independent professional advice in order to confirm the appropriate GST classification of their supplies made. Background The LGL Equigold companies are incorporated in Côte d Ivoire, West Africa and are not incorporated or registered in Australia. Furthermore, the LGL Equigold companies are not registered or required to be registered for Australian GST purposes as they do not make supplies connected with Australia and are therefore under the turnover threshold stipulated in Division 23 of A New Tax System (Goods and Services Tax) 1999 (the GST Act), which requires entities to be registered. Executive Summary The default GST treatment for all supplies of goods and services made to the LGL Equigold companies is that they should be GST-free. The LGL Equigold companies are not registered or required to be registered for Australian GST purposes and are non-residents for Australian taxation purposes. Therefore all supplies made to the LGL Equigold companies will fall under the GST-free provisions of subdivision 38-E of the GST Act, Exports and other supplies for consumption outside Australia. All goods and service contracts and invoices are to be made out to any of the LGL Equigold companies as the recipient of the supply. Invoices should not be made out to any of the LGL Equigold companies associated Australian companies. If there is a specific reason for the contract or invoice to be made to an Australian recipient, this must be arranged prior to the contract being entered into or the invoice being sent. The following table summarises the various supplies and services that are made to the LGL Equigold companies. The criterion that must be met in order for the supply to be GST-free is summarised below. The table should be read in conjunction with the comments in the body of this document. 06 BP 2212 Abidjan 06 Equigold CI SA Phone: Société Anonyme au Capital de Incorporée en Côte d Ivoire Fax: de Francs CFA RCCM CI-ABJ-1996-B Website: Côte d Ivoire

2 Page 2. Type of Supply Specific Terms Criteria/Conditions to meet Supply of goods Supplies made on the following terms: FOB; CIF; FCA (where delivery obligation is to an international shipping or airfreight carrier but not a freight forwarder); and All other terms specified in Appendix 1. The supplier exports the goods from Australia before, or within 60 days (or such further period as the Commissioner allows) after: a. The day on which the supplier receives any of the consideration for the supply; or b. If on an earlier day, the supplier gives an invoice for the supply the day on which the supplier gives the invoice. Supply of goods Supplies made on the following terms: Ex-works; and FCA (where delivery obligation is within Australia or to a freight forwarder within Australia); In addition to the criteria mentioned above, the following criteria also must be met: A supplier of goods is treated as having exported goods from Australia if: a. Before the goods are exported, the supplier supplies them to an entity that is not registered or required to be registered; and b. The entity exports the goods from Australia; and c. The goods have been entered for export within the meaning of section 113 of the Customs Act 1901; and d. Since their supply to that entity, the goods have not been altered or used in any way, except to the extent (if any) necessary to prepare them for export; and e. The supplier has sufficient documentary evidence to show that the goods were exported. Supply of services Where the service is performed wholly in Cote d Ivoire or any other country outside of Australia; The service is performed outside of Australia. Supply of services Where the service is work physically performed on goods situated in Australia or connected with real property in Australia. The relevant LGL Equigold company is not in Australia at the time of the supply. The relevant LGL Equigold company is a non-resident entity with no permanent establishment in Australia and is not registered or required to be registered for GST.

3 Page 3. Supplies of Goods to the LGL Equigold companies All goods supplied to the LGL Equigold companies should be classified as GST-free as a supply of goods by an Australian supplier to a non-resident recipient, for use in that non-resident s offshore business operations, and therefore not subject to GST on the basis that the supply constitutes a GST-free export of goods. Section of the GST Act stipulates when an export supply of goods is GST-free. Section states that for a supply of goods to be GST-free from an Australian supplier, the supplier must export the goods to a recipient outside of Australia within 60 days. However, where the supplier is not responsible for the export of goods i.e. goods shipped on ex-works terms, the supply can still be GST-free under section (3) provided the recipient is not registered or required to be registered for Australian GST, the goods are exported within 60 days and the following conditions are satisfied: The entity exports the goods from Australia; and The goods have been entered for export within the meaning of section 113 of the Customs Act 1901; and Since their supply to that entity, the goods have not been altered or used in any way, except to the extent (if any) necessary to prepare them for export; and The supplier has sufficient documentary evidence to show that the goods were exported. Typically, the LGL Equigold companies will request that all supplies made by Australian suppliers be delivered through their freight forwarder Antrak Logistics in Western Australia. When delivery is made to Antrak Logistics prior to the goods being entered for export (i.e. on ex-works or FCA terms) the delivery obligation takes place within Australia. For this reason, the conditions of section (3) listed above must be met in order for the supply to be GST-free. Appendix 3 of GSTR 2002/6 discusses what are commonly known as Incoterms. Incoterms are a set of uniform rules codifying the interpretation of trade terms used in international traded. These terms are drafted by the International chamber of Commerce. The most recent list was published on 1 January 2000, referred to as Incoterms 2000 and is attached at Appendix 1. As mentioned above, two Incoterms are commonly used on LGL Equigold company purchase orders for the vast majority of supplies of goods by Australian suppliers. The first is Ex-works which involves the seller placing the goods at the disposal of the buyer (an LGL Equigold company) at the seller s premises. The other regularly used Incoterm on LGL Equigold company purchase orders is FCA (Free Carrier). Typically, in this situation, the seller would deliver the goods to a place within Australia, nominated by the buyer, for example Antrak Logistics depot. Where this is the case, the delivery obligation is within Australia, and the conditions of (3) must be met for the supply to be GST-free. This is also under the assumption that the goods are exported within 60 days. The 60 day time limit is considered to be met where the supplier or recipient delivers the goods to a freight forwarder or the operator of the ship or aircraft within 60 days. Where delivery obligation is to an international shipping or airfreight carrier and the supplier clears the goods for export, the conditions of section (3) do not need to be met as the supplier is deemed to have exported the goods and the supply will be GST-free under the general provisions of section Given that the LGL Equigold companies are neither registered nor required to be registered, supplies made to the LGL Equigold companies are likely to satisfy the conditions of section (3) and therefore should be treated as GST-free. The relevant LGL Equigold company will provide supporting documentation to evidence that the goods were exported within the 60 day limit and provide a declaration that the goods were not altered prior to export. We consider that this constitutes sufficient evidence. Section of the GST Act is attached at Appendix 2 for your reference. A flowchart is also attached as a basic guide to the GST classification of exported goods.

4 Page 4. Supplies of Services to the LGL Equigold companies Services provided to the LGL Equigold companies by Australian service-providers should be treated as a GST-free export for Australian GST purposes regardless of where the service is performed. Services provided to the LGL Equigold companies by Australian service-providers will fall under item 2 in the table of supplies in section (1) of the GST Act which are supplies made to a non-resident who is not in Australia when the thing supplied is done. Provided that the non-resident acquires the thing in carrying on its non-resident enterprise and they are not registered or required to be registered for Australian GST purposes, then the supply will be GST-free. Generally, if a non-resident was registered or required to be registered and the service provided was a supply of work physically performed on goods situated in Australia or directly connected with real property, then the supply would more than likely be taxable. However, as the LGL Equigold companies are neither registered nor required to be registered for Australian GST purposes, in addition to not being in Australia when the supply is made (i.e. they do not have a permanent establishment in Australia), all supplies of services to the LGL Equigold companies should be GST-free. Section of the GST Act is attached at Appendix 2 for your reference. A flowchart is also attached as a basic guide to the GST classification of supplies other than goods or real property. * * * * * Should you require further clarification of the above issues to your precise circumstances, we recommend that you contact your professional taxation advisor.

5 Page 5. Appendix 1 Extract from GSTR 2002/6 'TERMS OF TRADE' OR 'INCOTERMS' Introduction (i) Terms of trade or 'Incoterms' are a set of uniform rules codifying the interpretation of trade terms used in international trade. Incoterms are drafted by the International Chamber of Commerce and on 1 January 2000 a new set of rules were published as Incoterms A brief summary of each term is provided in the table below. (ii) (iii) (iv) The Incoterms only deal with the relation between sellers and buyers under the contract of sale. The scope of the Incoterms is limited to matters relating to the rights and obligations of the seller and buyer with respect to delivery of goods sold. The terms 'are designed to arrange for the transfer of risk from Seller to Buyer at an unambiguous convenient place where goods can be inspected.' 63 Incoterms do not cover, amongst other matters, transfer of ownership - that is, they do not relate to when or where title changes. You will note that the seller's obligations increase as we go down the table. Note that the terms are divided into 4 categories. 1 The 'E'-term is where the seller's obligation is at its minimum. The seller usually places the goods at the buyer's disposal at the seller's own premises. In practice, the seller frequently assists the buyer to load the goods on the collecting vehicle. 2 The 'F'-terms requires the seller to deliver goods for carriage as instructed by the buyer. 3 The 'C'-terms requires the seller to contract for carriage. As with the "F"-terms, the seller fulfils the contract in the country of shipment or dispatch (i.e., contracts of sale are departure or shipment contracts). However, the division of costs (between seller and buyer) is fixed at a point in the country of destination. 4 The 'D'-terms is different in nature from the 'C'-terms. The seller is responsible for the arrival of goods within the country of import (i.e., contracts are arrival contracts).

6 Page 6. INCOTERMS 2000 EXW FCA FAS FOB CFR CIF CPT CIP DAF DES DEQ DDU DDP Ex works The seller places the goods at the disposal of the buyer at the seller's premises. Free Carrier The seller delivers the goods to the carrier nominated by the buyer. The seller also clears the goods for export. Free Alongside Ship The seller places the goods alongside the vessel nominated by the buyer. The seller also clears the goods for export. Free On Board The seller delivers the goods over the ship's rail at the port of shipment. The seller also clears the goods for export. Cost and Freight The seller delivers goods over the ship's rail and pays costs and freight to bring the goods to the port of destination. The seller also clears the goods for export. However, the buyer is responsible for loss or damage to the goods. Cost Insurance and Freight The seller delivers goods over the ship's rail and pays costs and freight to bring the goods to the port of destination. The seller also clears the goods for export and obtains marine insurance against the buyer's loss or damage to the goods during the carriage. Carriage Paid To The seller delivers the goods to the carrier nominated by him and pays the cost of carriage to bring the goods to the named destination. Carriage and Insurance Paid To The seller delivers the goods to the carrier nominated by himself, and pays the cost of carriage to bring the goods to the named destination, and procures insurance against the buyer's loss or damage to the goods during the carriage. Delivered at Frontier The seller places the goods at the disposal of the buyer at a named frontier (e.g., country of export). The goods are not unloaded and are before the Customs border of the adjoining country. (This is used when there are land frontiers). Delivered Ex Ship The seller places the goods at the disposal of the buyer at a named port of destination. The goods are not unloaded. (This is used when the goods are delivered by sea or inland waterway). Delivered Ex Quay The seller places the goods at the disposal of the buyer on the quay (wharf) at a named port of destination. The goods are discharged on the quay (wharf). The buyer clears the goods for import. Delivered Duty Unpaid The seller delivers the goods to a named place of destination. The goods are not unloaded. The buyer pays any duty (including taxes). Delivered Duty Paid The seller delivers the goods to a named place of destination. The goods are not unloaded. The seller also pays any duty (including taxes). References Incoterms 2000, The International Chamber of Commerce official rules for the interpretation of trade terms.

7 Page 7. Appendix 2 Section Exports of goods (1) The third column of this table sets out supplies that are GST-free: GST-free exports of goods Item Topic These supplies are GST-free... 1 Export of goods - general a supply of goods, but only if the supplier exports them from Australia before, or within 60 days (or such further period as the Commissioner allows) after: (a) the day on which the supplier receives any of the consideration for the supply; or (b) if, on an earlier day, the supplier gives an invoice for the supply - the day on which the supplier gives the invoice. 2 Export of goods - supplies paid for by instalments a supply of goods for which the consideration is provided in instalments under a contract that requires the goods to be exported, but only if the supplier exports them from Australia before, or within 60 days (or such further period as the Commissioner allows) after: (a) the day on which the supplier receives any of the final instalment of the consideration for the supply; or (b) if, on an earlier day, the supplier gives an invoice for that final instalment - the day on which the supplier gives the invoice. 3 Export of aircraft or ships a supply of an aircraft or ship, but only if the recipient of the aircraft or ship exports it from Australia under its own power within 60 days (or such further period as the Commissioner allows) after taking physical possession of it. 4 Export of aircraft or ships - paid for by instalments a supply of an aircraft or ship for which the consideration is provided in instalments under a contract that requires the aircraft or ship to be exported, but only if the recipient exports it from Australia before, or within 60 days (or such further period as the Commissioner allows) after, the earliest day on which one or more of the following occurs: (a) the supplier receives any of the final instalment of the consideration for the supply; (b) the supplier gives an invoice for that final instalment; (c) the supplier delivers the aircraft or ship to the recipient or (at the recipient's request) to another person. 5 Export of goods that are to be consumed on international flights or voyages a supply of: (a) aircraft's stores, or spare parts, for use, consumption or sale on an aircraft on a flight that has a destination outside Australia; or (b) ship's stores, or spare parts, for use, consumption or sale on a ship on a voyage that has a destination outside Australia; whether or not part of the flight or voyage involves a journey between places in Australia. 6 Export of goods used to repair etc. imported a supply of goods in the course of repairing, renovating, modifying or treating other goods from outside Australia whose destination is outside

8 Page 8. goods Australia, but only if: (a) the goods are attached to, or become part of, the other goods; or (b) the goods become unusable or worthless as a direct result of being used to repair, renovate, modify or treat the other goods. 7 Goods exported by travellers as accompanied baggage a supply of goods to a relevant traveller, but only if: (a)the supply is made in accordance with the rules specified in the regulations; and (b) the goods are exported as accompanied baggage of the relevant traveller. (2) However, a supply covered by any of items 1 to 6 in the table in subsection (1) is not GST-free if the supplier re-imports the goods into Australia. (3) Without limiting items 1 and 2 in the table in subsection (1), a supplier of goods is treated, for the purposes of those items, as having exported the goods from Australia if: (a) before the goods are exported, the supplier supplies them to an entity that is not registered or required to be registered; and (b) that entity exports the goods from Australia; and (c) the goods have been entered for export within the meaning of section 113 of the Customs Act 1901; and (d) since their supply to that entity, the goods have not been altered or used in any way, except to the extent (if any) necessary to prepare them for export; and (e) the supplier has sufficient documentary evidence to show that the goods were exported. However, if the goods are re-imported into Australia, the supply is not GST-free unless the re-importation is a taxable importation.

9 Page 9. Section Supplies of things, other than goods or real property, for consumption outside Australia (1) The third column of this table sets out supplies that are GST-free (except to the extent that they are supplies of goods or real property): Supplies of things, other than goods or real property, for consumption outside Australia Item Topic These supplies are GST-free (except to the extent that they are supplies of goods or real property)... 1 Supply connected with property outside Australia a supply that is directly connected with goods or real property situated outside Australia. 2 Supply to non-resident outside Australia a supply that 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 nonresident's enterprise, but is not registered or required to be registered. 3 Supplies used or enjoyed outside Australia a supply: (a) that is made to a recipient who is not in Australia when the thing supplied is done; and (b) the effective use or enjoyment of which takes place outside Australia; other than a supply of work physically performed on goods situated in Australia when the thing supplied is done, or a supply directly connected with real property situated in Australia. 4 Rights a supply that is made in relation to rights if: (a) the rights are for use outside Australia; or (b) the supply is to an entity that is not an Australian resident and is outside Australia when the thing supplied is done. 5 Export of services used to repair etc. imported goods a supply that is constituted by the repair, renovation, modification or treatment of goods from outside Australia whose destination is outside Australia. (2) However, a supply covered by any of items 1 to 5 in the table in subsection (1) is not GST-free if it is the supply of a right or option to acquire something the supply of which would be connected with Australia and would not be GST-free. (2A) A supply covered by any of items 2 to 4 in the table in subsection (1) is not GST-free if the acquisition of the supply relates (whether directly or indirectly, or wholly or partly) to the making of a supply of real property situated in Australia that would be, wholly or partly, input taxed under Subdivision 40-B or 40-C. (3) Without limiting subsection (2) or (2A), a supply covered by item 2 in that table is not GST-free if: (a) it is a supply under an agreement entered into, whether directly or indirectly, with a nonresident; and (b) the supply is provided, or the agreement requires it to be provided, to another entity in Australia.

10 Page 10. (4) A supply is taken, for the purposes of item 3 in that table, to be a supply made to a recipient who is not in Australia if: (a) it is a supply under an agreement entered into, whether directly or indirectly, with an Australian resident; and (b) the supply is provided, or the agreement requires it to be provided, to another entity outside Australia.