ATO Interpretative Decision

ATO ID 2002/165 (Withdrawn)

Goods and Services Tax

GST and credit card processing services supplied to a non-resident
FOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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, making a GST-free supply under item 2 in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies credit card processing services to a non-resident entity that is not 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 credit card processing services to a non-resident entity that is not in Australia.

Facts

The entity is an Australian resident. The entity supplies credit card processing services to a non-resident entity that is not in Australia.

The entity uses its personal bank account to receive on-line transfers from the non-resident entity's customer's credit card provider. The entity waits until the funds have cleared and then transfers them to the non-resident entity's bank account. The entity's services to the non-resident entity are not financial supplies under section 40-5 of the GST Act.

The non-resident entity acquires these services in carrying on its enterprise. The non-resident entity is neither registered nor required to be 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 Australia, are GST-free. As a supply of credit card processing services is not a supply of goods or real property, it is appropriate to consider the GST-status of this supply under section 38-190 of the GST Act.

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:

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

In this case, the non-resident entity is not in Australia when the thing supplied is done. In addition, the non-resident entity acquired the services in carrying on its enterprise and is not registered or required to be registered for GST.

Therefore, the entity is making a GST-free supply under Item 2 when it supplies credit card processing services to a non-resident entity that is outside Australia.

Date of decision:  4 December 2000

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
   section 40-5

Keywords
Goods & services tax
Consumption outside Australia
GST free

Business Line:  GST

Date of publication:  22 February 2002

ISSN: 1445-2782

history
  Date: Version:
  4 December 2000 Original statement
You are here 12 August 2005 Archived

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