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ATO Interpretative Decision

ATO ID 2004/326

Goods and Services Tax

GST and training provided in Australia by a non-resident company
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 non-resident company, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when:

•
it provides training seminars, in Australia, on the use of its software
•
the turnover from those seminars exceeds $50,000, and
•
the entity is not currently registered for goods and services tax (GST)?

Decision

Yes, the entity is making a taxable supply under section 9-5 of the GST Act as the entity is making a supply that is connected with Australia and the entity is required to be registered for GST.

Facts

The entity is a non-resident company. The entity provides training seminars in Australia as part of its enterprise of selling its software products and providing technical support. These training seminars are a separate and distinct supply from the supply of the software.

The seminars train purchasers in the use of the entity's software. The seminars will be conducted on a regular and continuous basis and the current turnover from these seminars exceeds $50,000. The entity is not a non-profit body and maintains no office in Australia, nor does anyone act on its behalf as an agent or employee.

The entity is not currently registered for GST. The supply of the training seminars is not input taxed under Division 40 of the GST Act or GST-free under Division 38 of the GST Act.

Reasons for Decision

Under section 9-5 of the GST Act, an entity makes a taxable supply if:

•
it makes a supply for consideration
•
the supply is made in the course or furtherance of an enterprise that it carries on
•
the supply is connected with Australia, and
•
the entity is registered or required to be registered for GST.

However, a supply is not taxable to the extent that it is GST-free or input taxed.

The entity provides training seminars for consideration and these seminars are supplied in the course of the entities enterprise of selling its software products and providing technical support. As such, the entity satisfies the first two requirements of section 9-5 of the GST Act.

Section 9-25 of the GST Act outlines when supplies are connected with Australia. The entity provides training seminars in Australia. The supply of training seminars is a supply of a service, and as such, is a supply of something other than goods or real property.

Under subsection 9-25(5) of the GST Act a supply of anything other than goods or real property is connected with Australia if:

•
the thing is done in Australia, or
•
the supplier makes the supply through an enterprise that the supplier carries on in Australia.

Paragraph 65 of Goods and Services Tax Ruling (GSTR) 2000/31 provides:

If the 'thing' being supplied is a service, the supply of that service is typically done where the service is performed. If the service is performed in Australia, the service is done in Australia and the supply of that service is connected with Australia under paragraph 9-25(5)(a). This is the case even if the recipient of the supply is outside Australia.

The entity performs the training seminars in Australia and therefore, the service is done in Australia. The entity's supply is connected with Australia.

The fourth requirement in section 9-5 of the GST Act is that the entity is registered or required to be registered for GST. The entity is not currently registered for GST. Under section 23-5 of the GST Act an entity is required to be registered if:

•
it is carrying on an enterprise, and
•
its annual turnover meets the registration turnover threshold.

As the entity is a for profit body, its registration turnover threshold is $50,000 (paragraph 23-15(1)(a) of the GST Act). An entity has an annual turnover that meets the registration turnover threshold if:

•
its current annual turnover is at or above the registration turnover threshold and the Commissioner is not satisfied that its projected annual turnover is below the registration turnover threshold (paragraph 188-10(1)(a) of the GST Act), or
•
its projected annual turnover is at or above the turnover threshold (paragraph 188-10(1)(b) of the GST Act).

In calculating an entity's current and projected annual turnover, supplies that are not connected with Australia are excluded (subsections 188-15(3) and 188-20(3) of the GST Act). However, as concluded above, as the entity performs the training seminars in Australia, the supply of the training seminars is connected with Australia. Therefore, the turnover from the training seminars in included in calculating the entity's turnover.

The turnover from the entity's seminars exceeds $50,000 and the seminars will be carried out on a continuous basis. As such the entity's turnover exceeds the GST registration turnover threshold. Therefore, the entity is required to be registered for GST.

The entity's supply satisfies the positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it provides training seminars in Australia on the use of its software.

Note: Under section 83-5 of the GST Act, the GST on taxable supplies made by non-residents can, in certain circumstances, be reverse charged to the recipient of the supply so that the recipient, not the non-resident, is liable to pay the GST. Where the GST for the supply is reverse charged, the non-resident does not need to apply for GST registration if its turnover does not meet the registration turnover threshold but for the taxable supplies to which section 83-5 of the GST Act applies (section 83-25 of the GST Act).

Date of decision:  4 June 2003

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   section 9-25
   subsection 9-25(5)
   paragraph 9-25(5)(a)
   section 23-5
   paragraph 23-15(1)(a)
   Division 38
   Division 40
   section 83-5
   section 83-25
   paragraph 188-10(1)(a)
   paragraph 188-10(1)(b)
   subsection 188-15(3)
   subsection 188-20(3)

Related Public Rulings (including Determinations)
Goods and Services Tax Ruling GSTR 2000/31

Keywords
Goods and services tax
GST annual turnover
GST turnover threshold
Connected with Australia
GST registration
Required to be registered
GST supply
Taxable supply

Business Line:  GST

Date of publication:  8 April 2004

ISSN: 1445-2782

history
  Date: Version:
You are here 4 June 2003 Original statement
  16 September 2005 Archived

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