ATO Interpretative Decision
ATO ID 2002/300
Goods and Services Tax
GST and living away from home allowance paid to a contractorFOI status: may be released
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With effect from 1 July 2015, the term 'Australia' is replaced in nearly all instances within the GST, Luxury Car Tax and Wine Equalisation Tax legislation with the term 'indirect tax zone' by the Treasury Legislation Amendment (Repeal Day) Act 2015. The scope of the new term, however, remains the same as the repealed definition of 'Australia' used in those Acts. For readability and other reasons, where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in subsection 195-1 of the GST Act.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Does a living away from home allowance paid to the entity, an independent contractor, by the recipient of its services, form part of the consideration for the entity's taxable supply of services to the recipient under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Decision
Yes, a living away from home allowance paid to the entity by the recipient of its services, does form part of the consideration for the entity's taxable supply of services to the recipient under section 9-5 of the GST Act.
Facts
The entity is an independent contractor. In the course of this enterprise, the entity is contracted to provide services to a recipient. The supply of these services is a taxable supply under section 9-5 of the GST Act.
The provision of part of these services requires that the entity lives away from home. In addition to a set hourly rate, the recipient of the entity's services pays the entity an allowance for each day that the entity has to live away from home.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Under section 9-5 of the GST Act, an entity makes a taxable supply if:
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- it makes a supply for consideration;
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- the supply is made in the course or furtherance of an enterprise that it carries on;
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- the supply is connected with Australia; and
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- the entity is registered or required to be registered for GST.
The entity is making a taxable supply of services to the recipient. However, it needs to be determined whether the payment of the living away from home allowance forms part of the consideration for the entity's taxable supply of services to the recipient.
Consideration is defined in subsection 9-15(1) of the GST Act to include any payment, act or forbearance in connection with, in response to or for the inducement of a supply of anything. In this case, the allowance is an additional payment for the entity's supply of services provided away from the entity's home. Therefore, it forms part of the total consideration for the entity's supply of services.
The living away from home allowance paid to the entity by the recipient of the entity's services, does form part of the consideration for the entity's taxable supply of services to the recipient under section 9-5 of the GST Act.
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
subsection 9-15(1)
paragraph 9-20(2)(a)
Keywords
Goods & services tax
GST supplies & acquisitions
GST consideration
Taxable supply
ISSN: 1445-2782