ATO Interpretative Decision

ATO ID 2001/598 (Withdrawn)

Goods and Services Tax

• The ATO View on this issue is covered in paragraphs 44, 127, 143, 145 and 181 of Goods and Services Tax Ruling GSTR 2003/7 and paragraphs 101 and 102 of Goods and Services Tax Ruling GSTR 2003/D7.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, a supplier of marketing services, 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 marketing support services, in Australia, to a non-resident entity?

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 marketing support services, in Australia, to a non-resident entity.

Facts

The entity is a supplier of marketing services. The entity supplies marketing support services to a non-resident entity. The services are carried out in Australia and include:

•

providing advice and technical information regarding the specifications, capabilities, performance, operation, application and maintenance of the products sold and/or licensed by the non-resident entity in Australia;

•

engaging in marketing and promotional activities of the products to identify potential business opportunities and customers;

•

gathering information on market trends, competitors, and new products and services in Australia;

•

providing advice on marketing strategies and local market conditions; and

•

providing other services reasonably requested by the non-resident entity which are related to the promotion of the products in Australia.

The entity is registered for goods and services tax (GST). The non-resident entity is not in Australia when the services are supplied.

There is no agreement between the two parties to provide the supply to another entity within Australia.

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. Marketing support services are neither goods nor real property. As such, the supply of marketing support services 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 provides that a supply that is made to a non-resident who is not in Australia when the thing supplied is done, is GST-free where:

(a)

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

(b)

the non-resident acquires the thing in carrying on the non-resident's enterprise, but is not registered or required to be registered.

In this case, the entity supplies marketing support services to a non-resident entity that is not in Australia when the services are supplied. The supply of the marketing support services is not a supply of work physically performed on goods in Australia nor a supply directly connected with real property situated in Australia. Therefore, the supply satisfies the requirements of item 2 in the table in subsection 38-190(1) of the GST Act when it supplies marketing support services, in Australia, to the non-resident entity.

Item 2 in the table in subsection 38-190(1) of the GST Act is limited by subsection 38-190(3) of the GST Act which provides that a supply covered by item 2 in that table is not GST-free if:

(a)

it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and

(b)

the supply is provided, or the agreement requires it to be provided, to another entity in Australia.

In this case, there is no agreement between the entity and the non-resident recipient to provide the supply to another entity within Australia. Therefore, the supply is not excluded by subsection 38-190(3) of the GST Act from being GST-free.

As the supply satisfies the requirements in item 2 in the table in subsection 38-190(1) of the GST Act and is not excluded from being GST-free by subsection 38-190(3) of the GST Act, 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 marketing support services, in Australia, to a non-resident entity.

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)
GSTR 2000/31

Keywords
Goods & services tax
Consumption outside Australia
GST free

Business Line:  GST

Date of publication:  20 November 2001

ISSN: 1445-2782