ATO Interpretative Decision

ATO ID 2002/1045

Goods and Services Tax

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

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 information and management services to a non-resident insurance broker in relation to the non-resident insurance broker's clients in Australia?

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 information and management services to a non-resident insurance broker in relation to the non-resident insurance broker's clients in Australia.

Facts

The entity is an Australian resident insurance broker. The entity is supplying information and management services to a non-resident insurance broker in relation to the non-resident insurance broker's clients in Australia.

The entity's services involve:

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arranging the placement of the Australian clients' risks;

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advising the non-resident insurance broker of issues relevant to the Australian clients;

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attending meetings on claims brought against the Australian clients;

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passing on appropriate information about the Australian client to the non-resident insurance broker;

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producing documents for release to third parties;

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collecting premiums from the Australian client and paying appropriate authorities all stamp duty;

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keeping the non-resident insurance broker advised of all material developments in relation to the services.

The entity does not provide advice or comment on the Australian clients' insurance program nor the design of that program. The insurance is not directly connected to real property situated in Australia.

The non-resident insurance broker pays the entity a fee for these services. The non-resident insurance broker is not in Australia at the time that these services are provided and does not have a representative in Australia.

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 Australia, are GST-free. As the entity is supplying information and management services, not goods or real property, it is appropriate to consider section 38-190 of the GST Act in relation to this supply.

Item 2 in the table in subsection 38-190(1) of the GST Act (Item 2) 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:

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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

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

The non-resident insurance broker is not in Australia when the entity makes its supply of information and services. In addition, the non-resident insurance broker does not have a representative in Australia at the time of the supply. The entity is supplying the non-resident insurance broker with information and services. This is not a supply of work physically performed on goods situated in Australia nor is it directly connected with real property situated in Australia. Therefore, the entity's supply meets the requirements in Item 2.

However, subsection 38-190(3) of the GST Act provides that a supply covered by Item 2 is not GST-free if:

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

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

The entity's supply is under an agreement entered into with a non-resident insurance broker. Therefore, it needs to be determined whether the supply is provided, or is required to be provided, to an entity in Australia. Although the entity is providing information in relation to the Australian client, the entity is providing its services and information to the non-resident insurance broker. Therefore, the entity is not providing its supply to an entity in Australia and subsection 38-190(3) of the GST Act does not exclude the entity's supply from being GST-free under Item 2.

As such, the entity is making a GST-free supply under Item 2 when it supplies information and management services to a non-resident insurance broker in relation to the non-resident insurance broker's clients in Australia.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 38-190
   subsection 38-190(1)
   subsection 38-190(1) table item 2
   subsection 38-190(3)

Keywords
Goods & services tax
GST free
GST international services
GST insurance

Business Line:  GST

Date of publication:  20 November 2002

ISSN: 1445-2782