ATO Interpretative Decision
ATO ID 2002/41 (Withdrawn)
Goods and Services Tax
GST and supply of insurance brokerage services to an overseas entityFOI status: may be released
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The ATO view on this issue is covered in Goods and Services Tax Ruling GSTR 2004/7.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 12 August 2005
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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, an Australian resident insurance broker, 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 supplies insurance brokerage services to a non-resident insurer and receives a commission for those services?
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 supplies insurance brokerage services to a non-resident insurer and receives a commission for those services.
Facts
The entity is an Australian resident insurance broker. The entity is supplying insurance brokerage services to a non-resident insurance company that is not in Australia when the insurance brokerage services are provided.
The entity charges a commission to the non-resident insurance company for the service of writing the policies on its behalf.
The entity is registered for goods and services tax (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 supply of insurance brokerage services is not considered to be 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) which deals with supplies that are made to a non-resident outside of Australia.
Item 2 provides that a supply is GST-free where it is made to a non-resident who is not in Australia when the thing supplied is done, and under paragraph (a):
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- it is not a supply of work physically performed on goods situated in Australia when the work is done; and
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- it is not a supply directly connected with real property situated in Australia.
In this case, the entity is supplying insurance brokerage services to a non-resident insurer that is not in Australia when the insurance brokerage services are provided. Furthermore, although the insurance brokerage services relate to insurance policies for goods situated in Australia, it is not a supply of work physically performed on goods situated in Australia, nor is it directly connected with real property situated in Australia. As such, the supply satisfies the requirements in paragraph (a) of Item 2.
Therefore, the entity is making a GST-free supply under Item 2 when it supplies insurance brokerage services to a non-resident insurer that is not in Australia when those services are provided and receives a commission for those services.
Date of decision: 9 November 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 38-190
subsection 38-190(1) table item 2
subsection 38-190(1) table item 2(a)
Keywords
Goods & services tax
Consumption outside Australia
GST free
ISSN: 1445-2782
| Date: | Version: | |
| 9 November 2001 | Original statement | |
| You are here → | 12 August 2005 | Archived |