ATO Interpretative Decision

ATO ID 2002/439 (Withdrawn)

Goods and Services Tax

• The ATO View on this issue is covered in Goods and Services Tax Ruling GSTR 2003/7 and paragraphs 105-110 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, an Australian sporting body, making a GST-free supply under item 2 in the table in subsection 38-190(1) and subsection 38-190(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a service to an international sporting body, where the service is carried out in Australia?

Decision

No, the entity is not making a GST-free supply under item 2 in the table in subsection 38-190(1) and subsection 38-190(3) of the GST Act when it supplies a service to an international sporting body, where the service is carried out in Australia. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is an Australian sporting body. The entity is a member of an international sporting body. The international sporting body is a non-resident entity.

One aspect of the operations of the international sporting body is to develop the future of the sport. As part of these operations, the international sporting body sends members from a separate national sporting body to Australia.

The entity enters into an agreement with the international sporting body to deliver a developmental program in Australia to the members of the separate national sporting body. Neither the international sporting body, nor a representative of the international sporting body is in Australia when the developmental program is delivered.

The entity charges the international sporting body an amount to cover the costs it incurs in delivering the developmental program to the members of the separate national sporting body.

The entity is registered for goods and services tax (GST). The supply satisfies all of the other positive limbs of section 9-5 of the GST Act.

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 supply being made by the entity is not a supply of goods or real property, the GST status of the supply is appropriately considered under section 38-190 of the GST Act.

Under paragraph (a) of item 2 in the table in subsection 38-190(1) (Item 2), 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

•

it is not a supply of work physically performed on goods situated in Australia when the work is done; and

•

it is not a supply directly connected with real property situated in Australia.

The entity enters into an agreement with the international sporting body to conduct developmental programs in Australia. Therefore, the entity is making a supply of services to the international sporting body, a non-resident entity. At the time the entity makes this supply, the non-resident entity is not in Australia. Furthermore, the service the entity provides is not a supply of work physically performed on goods, and neither is the supply directly connected with real property situated in Australia. Therefore, it would appear that the supply the entity is making is GST-free under paragraph (a) of Item 2.

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

•

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

•

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

The entity is making a supply under an agreement entered into directly with a non-resident. This agreement requires the entity to deliver a developmental program to the members of a separate national sporting organisation whilst those members are in Australia. Therefore, the agreement does require the supply to be provided to another entity in Australia. Accordingly, subsection 38-190(3) of the GST Act excludes the supply from being GST-free under Item 2.

The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under any other provision in Division 38 of the GST Act, nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies a service to an international sporting body, where the service is carried out in Australia.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   section 38-190
   subsection 38-190(1) table item 2
   subsection 38-190(1) table item 2 paragraph (a)
   subsection 38-190 (3)
   Division 40

Keywords
Goods & services tax
GST international services
GST supplies & acquisitions
Taxable supply

Business Line:  GST

Date of publication:  17 April 2002

ISSN: 1445-2782