ATO Interpretative Decision
ATO ID 2001/778
Goods and Services Tax
GST and engineering services for the construction of property outside AustraliaFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 supplier of engineering services, making a GST-free supply under item 1 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it is subcontracted by an Australian resident company to provide engineering services to that company's overseas customer for the construction of premises outside Australia?
Decision
Yes, the entity is making a GST-free supply under item 1 in the table in subsection 38-190(1) of the GST Act, when it is subcontracted by an Australian resident company to provide engineering services to that company's overseas customer for the construction of premises outside Australia.
Facts
The entity is a supplier of engineering services. The entity is subcontracted by an Australian resident company to provide engineering services to that company's overseas customer for the construction of premises outside Australia.
The entity performs some of the design work in Australia and some work in the overseas country.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Under section 38-190 of the GST Act, certain supplies, other than goods or real property for consumption outside Australia are GST-free. As a supply of engineering services is not a supply of goods or real property, its GST status is appropriately considered under section 38-190 of the GST Act.
The most relevant item to this case is item 1 in subsection 38-190(1) of the GST Act (Item 1) which deals with supplies connected with property outside Australia. Item 1 provides that a supply is GST-free where the supply is directly connected with goods or real property situated outside Australia.
The entity is subcontracted by an Australian resident company to provide engineering services to that company's overseas customer for the construction of premises outside Australia. It is considered that this supply is a supply that is directly connected with real property situated outside Australia.
Therefore, the requirements of item 1 in the table in subsection 38-190(1) of the GST Act are satisfied and the entity is making a GST-free supply to the Australian resident company when it provides engineering services to that company's overseas customer for the construction of premises outside Australia.
Date of decision: 15 May 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 38-190
subsection 38-190(1)
subsection 38-190 table item 1
Keywords
Goods & Services Tax
Consumption outside Australia
GST free
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 15 May 2001 | Original statement |
| 12 August 2005 | Archived |