ATO Interpretative Decision
ATO ID 2001/576
Goods and Services Tax
GST and sale of a right to a non-residentFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a music publisher, making a GST-free supply under item 4 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies, to an overseas advertising agency, a right to use its music tracks in an overseas advertisement?
Decision
Yes, the entity is making a GST-free supply under item 4 in the table in subsection 38-190(1) of the GST Act when it supplies, to an overseas advertising agency, a right to use its music tracks in an overseas advertisement.
Facts
The entity is a music publisher. The entity enters into a contract with an overseas advertising agency to supply a right to use its music tracks in an overseas advertisement.
The right is exercised overseas.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Subsection 38-190(1) of the GST Act specifies the circumstances where the supply of things other than goods or real property, for consumption outside Australia is GST-free. Rights to the use of music tracks are neither goods nor real property. As such, the supply of a right to use the music tracks is appropriately considered under subsection 38-190(1) of the GST Act.
Item 4 in the table in subsection 38-190(1) of the GST Act (Item 4) is of particular relevance to this case. Item 4 provides that a supply is GST-free if it is a supply that is made in relation to rights if:
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- the rights are for use outside Australia; or
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- the supply is to an entity that is not an Australian resident and is outside Australia when the thing supplied is done.
The entity enters into a contract with an overseas advertising agency to supply a right to use its music tracks in an overseas advertisement. The right is exercised overseas. As such, the rights are for use outside Australia and the supply satisfies the requirements of Item 4.
Furthermore, the supply is not excluded from being GST-free under subsection 38-190(2) of the GST Act as it is not a supply of a right to acquire something the supply of which would be connected with Australia and would not be GST-free.
Therefore, the entity is making a GST-free supply under Item 4 when it supplies, to an overseas advertising agency, a right to use its music tracks in an overseas advertisement.
Date of decision: 03 November 2000
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
subsection 38-190(1)
subsection 38-190(1) table item 4
subsection 38-190 (2)
Keywords
Goods & services tax
Consumption outside Australia
GST free
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 3 November 2000 | Original statement |
| 29 July 2005 | Archived |