ATO Interpretative Decision

ATO ID 2001/574

Goods and Services Tax

GST and the acquisition of an IT industry domain name from a non-resident overseas supplier by a resident GST registered Australian entity
FOI status: may be released

This version is no longer current. Please follow this link to view the current version.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 business operator in the Information Technology (IT) industry, liable for any GST amount under subsection 84-10(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it acquires an IT industry domain name from a non-resident overseas supplier solely for a creditable purpose?

Decision

No, the entity is not liable for any GST amount under subsection 84-10(1) of the GST Act when it acquires an IT industry domain name from a non-resident overseas supplier solely for a creditable purpose.

Facts

The entity is a business operator in the IT industry. As a part of its business the entity acquires domain names' by reserving them from suppliers of domain name registrations and then supplies the domain names to its clients.

The entity reserves a domain name from a non-resident overseas supplier of domain names registrations and then supplies this domain name, in the course of its enterprise, to its resident Australian client. The acquisition of the domain name by the entity is solely for a creditable purpose.

The non-resident overseas supplier's reservation of the domain name is not done in Australia nor is it supplied through an enterprise that the non-resident overseas supplier is carrying on in Australia.

The entity is registered for goods and services tax (GST).

Reasons for Decision

Division 84 of the GST Act applies to supplies not connected with Australia.

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

(a)

the thing is done in Australia; or

(b)

the supplier makes the supply through an enterprise that the supplier carries on in Australia; or

(c)

all of the following apply:

(i): neither paragraph (a) nor (b) applies in respect of the thing;
(ii): the thing is a right or option to acquire another thing;
(iii): the supply of the other thing would be connected with Australia.

In this case, the reservation of domain name is an intangible supply and not a supply of goods or real property. Furthermore, the supply is not connected with Australia as the non-resident overseas supplier's reservation of the domain name is not done in Australia nor is it supplied through an enterprise that the non-resident overseas supplier is carrying on in Australia nor is it a right or option to acquire another thing. Therefore, the supply is appropriately considered under Division 84 of the GST Act.

Under section 84-5 of the GST Act, a supply of anything other than goods or real property that is a supply not connected with Australia, is a taxable supply if:

•: the recipient of the supply acquires the thing supplied solely or partly for the purpose of an enterprise that the recipient carries on in Australia, but not solely for a creditable purpose; and
•: the supply is for consideration; and
•: the recipient is registered, or required to be registered.

Where a supply is a taxable supply under section 84-5 of the GST Act, the GST amount payable on that supply is payable by the recipient of the supply (subsection 84-10(1) of the GST Act).

In this case, the acquisition of the domain name by the entity is solely for a creditable purpose. As such, section 84-5 of the GST Act does not apply and the entity is not liable to pay any GST amount under subsection 84-10(1) of the GST Act when it acquires an IT industry domain name from a non-resident overseas supplier solely for a creditable purpose.

[HISTORY: This ATO ID was amended on 25 June 2007 to reflect changes in legislation]

Date of decision: 12 October 2000

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   subsection 9-25(5)
   Division 84
   subsection 84-5(1)
   subsection 84-10(1)

Related Public Rulings (including Determinations)
GST Ruling GSTR 2000/31
GST Ruling GSTR 2002/2

Related ATO Interpretative Decisions
ATO ID 2001/573
ATO ID 2001/575

Other References:
Electronic Commerce Issues Register - Chapter 4

Keywords
Goods and services tax
GST international services
GST offshore supplies
Connected with Australia
Reverse charge on offshore intangible supplies
Taxable supply

Business Line: GST

Date of publication: 15 November 2001

ISSN: 1445-2782

history

	Date:	Version:
You are here	12 October 2000	Original statement
	27 June 2008	Archived

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).