ATO Interpretative Decision
ATO ID 2002/1058 (Withdrawn)
Goods and Services Tax
GST and staff seconded to overseas parent entityFOI status: may be released
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Withdrawn. Information on this issue is found in GSTR 2004/7This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 business operator, making a GST-free supply under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it seconds its staff to work for its parent company overseas?
Decision
Yes, the entity is making a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act when it seconds its staff to work for its parent company overseas.
Facts
The entity is a business operator. The entity seconds its staff to work for its parent company overseas for short periods. The entity claims the costs associated with the employee working for the parent company, including salary, airfare, meals and bus expenses, from the parent company. Neither the parent company nor its representative are in Australia when the supply is made.
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. The entity's supply of staff is neither a supply of goods or real property. As such, the GST status of the supply of the staff is appropriately considered under subsection 38-190(1) of the GST Act.
Item 2 in the table in subsection 38-190(1) of the GST Act (Item 2) provides that a supply is GST-free if it is a supply that is made to a non-resident who is not in Australia when the thing supplied is done, and:
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- 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
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- the non-resident acquires the thing in carrying on the non-resident's enterprise, but is not registered or required to be registered.
The entity seconds its staff to work for its parent company. Neither the parent company nor a representative of the parent company are in Australia when the supply is made. In addition, the supply of staff is not a supply of work physically performed on goods situated in Australia nor is it a supply directly connected with real property situated in Australia. As such, the supply satisfies the requirements of Item 2.
However, the scope of Item 2 is limited by subsection 38-190(3) of the GST Act. Subsection 38-190(3) of the GST Act provides that, without limiting subsection 38-190(2) of the GST, a supply covered by Item 2 is not GST-free if:
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- it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and
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- the supply is provided, or the agreement required it to be provided, to another entity in Australia.
The entity's supply is not a supply that is provided, or is agreed to be provided, to another entity in Australia. The staff are provided to the parent company overseas. As such, the supply is not excluded from being GST-free by subsection 38-190(3) of the GST Act.
Therefore, the entity is making a GST-free supply under Item 2 when it seconds staff to work for its parent company overseas.
Date of decision: 18 February 2002
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
subsection 38-190(1)
subsection 38-190(1) table item 2
subsection 38-190(3)
Related Public Rulings (including Determinations)
Goods and Services Tax Ruling 2000/31
Keywords
Goods and services tax
Consumption outside Australia
GST free
Supplies used or enjoyed outside Australia
ISSN: 1445-2782
| Date: | Version: | |
| 18 February 2002 | Original statement | |
| You are here | 16 December 2005 | Archived |