Scenario 3 - Not subject to GST
For source of ATO view, refer to paragraph 65 of GSTR 2000/31External Link - Goods and services tax: supplies connected with Australia
An advert is placed on a website owned by a non-resident business for an Australian resident advertiser advertising goods and services.
In this scenario the supply (the advertising) is being done by a non-resident enterprise. The provisions of section 9-5 of the GST Act need to be considered to determine if the supply of advertising is a taxable supply.
You make a taxable supply if:
- you make the supply for consideration
- the supply is made in the course or furtherance of an enterprise that you carry on
- the supply is connected with Australia, and
- 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.
The supply is made for consideration and made in the course of the non-resident’s enterprise. Therefore, the supply will be a taxable supply where:
- the supply is connected with Australia
- the non-resident enterprise is registered or required to be registered, and
- the supply is neither GST-free nor input taxed.
In respect of whether a supply of advertising is connected with Australia, subsection 9-25(5) of the GST Act provides:
- (5) A supply of anything other than goods or real property is connected with Australia if
- the thing is done in Australia
- the supplier makes the supply through an enterprise that the supplier carries on in Australia, or
- all of the following apply
neither paragraph (a) or (b) applies in respect of the thing
the thing is a right or option to acquire another thing
the supply of the other thing would be connected with Australia.
Paragraph 65 in goods and services tax ruling 'GSTR 2000/31 – Goods and services tax: supplies connected with Australia' states that if the thing being supplied is a service, the supply of that service is typically 'done' where the service is performed. In this instance the advertising service is not done in Australia. Furthermore, the non-resident does not make the supply through an enterprise that it carries on in Australia, and the supply is not of a right to acquire something that would be connected with Australia. Therefore, the provisions in subsection 9-25(5) of the GST Act are not satisfied and the supply is not connected with Australia.
As the supply is not connected with Australia, the supply is not a taxable supply for the purposes of section 9-5 of the GST Act. However, Division 84 of the GST Act needs to be considered to determine if the Australian recipient must reverse charge. This has been considered in chapter 4 of the resolved issues, and provided the advertising was for a wholly creditable purpose in this instance it will not be a taxable supply.
For more information, refer to:
End of further information
- GSTR 2000/31External Link – Goods and services tax: supplies connected with Australia
- A New Tax System (Goods and Services Tax) Act 1999, in particular
- Section 9-5
- Section 9-25
- Section 38-190
- Division 84
- Section 8 of A New Tax System (Australian Business Number) Act 1999.