ATO Interpretative Decision

ATO ID 2002/37 (Withdrawn)

Goods and Services Tax

• This ATO ID no longer reflects the ATO view. The ATO view on this issue is covered in GST Fact Sheet - GST and real estate services for non-resident property owners-supplied on or after 1 April 2005.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, a real estate agent, making a GST-free supply under subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies property management services to a non-resident property owner?

Decision

Yes, the entity is making a GST-free supply under subsection 38-190(1) of the GST Act when it supplies property management services to a non-resident property owner.

Facts

The entity is a real estate agent. The entity is providing property management services to a non-resident who owns a residential property in Australia. When the entity provides the services, the non-resident property owner is not in Australia.

The non-resident property owner leases the residential property to a tenant at market rates on a regular and continuous basis. There is no private use of the property. This supply is an input taxed supply under section 40-35 of the GST Act. These are the only supplies that the non-resident makes. The non-resident is not registered for goods and services tax (GST).

The entity is registered for GST.

Reasons for Decision

Under section 38-190 of the GST Act, certain supplies of things other than goods or real property, for consumption outside of Australia, are GST-free. As a property management service is not a supply of goods or real property, its GST status is appropriately considered under section 38-190 of the GST Act.

Of most relevance to this case is item 2 in the table in subsection 38-190(1) of the GST Act (Item 2).

Under Item 2, a supply made to a non-resident is GST-free if:

•

the non-resident is not in Australia when the thing supplied is done, and under paragraph (b)

•

the non-resident makes the acquisition in carrying on its enterprise; and

•

the non-resident is not registered or required to be registered for GST.

The non-resident is not in Australia when the property management services are supplied.

The rental of the residential property is an enterprise under paragraph 9-20(1)(c) of the GST Act. Therefore, the non-resident has acquired the property management services in the carrying on of its enterprise.

The non-resident is not registered, nor is it required to be registered for GST. This is because an entity is only required to be registered if it is carrying on an enterprise and its annual turnover meets the registration turnover threshold (section 23-5 of the GST Act). The only supplies the non-resident makes are input taxed supplies of residential accommodation under section 40-35 of the GST Act. Input taxed supplies are excluded from the calculation of an entity's annual turnover under Division 188 of the GST Act. Therefore, the non-resident's annual turnover does not meet the registration turnover threshold and accordingly, the non-resident is not required to be registered.

All of the requirements for a supply to be GST-free under paragraph (b) of Item 2 are, therefore, satisfied. Accordingly, the entity is making a GST-free supply under subsection 38-190(1) of the GST Act when it supplies property management services to a non-resident property owner that is not in Australia when the services are performed.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   paragraph 9-20(1)(c)
   section 23-5
   section 38-190
   subsection 38-190(1)
   subsection 38-190(1) table item 2
   subsection 38-190(1) table item 2 paragraph (b)
   section 40-35
   Division 188

Keywords
Goods & services tax
Exports
Consumption outside Australia
GST free
GST registration
GST turnover threshold
GST offshore supplies

Business Line:  GST

Date of publication:  24 January 2002

ISSN: 1445-2782