ATO Interpretative Decision
ATO ID 2004/823 (Withdrawn)
Goods and Services Tax
GST and supply of installation services supplied by a non-resident entity through a subcontractorFOI status: may be released
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This ATO ID is withdrawn on the basis that a precedential view exists. The ATO view for this issue is covered in Goods and Services Tax Ruling GSTR 2005/6This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 non-resident, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when, through a subcontractor, the entity supplies services to install goods that are in Australia?
Decision
Yes, the entity is making a taxable supply under section 9-5 of the GST Act when, through a subcontractor, the entity supplies services to install goods that are in Australia as the entity's supply is connected with Australia.
Facts
The entity is a non-resident that is registered for goods and services tax (GST).
The entity enters into an agreement with a customer to install the customer's goods that are in Australia. The entity does not make the supply through an enterprise in Australia nor does it have the infrastructure in Australia to physically install the customer's goods in Australia. The agreement with the customer allows the entity to subcontract the installation activity to another party.
The entity subcontracts the installation activity to a subcontractor in Australia. The subcontractor installs the goods in Australia for the entity's customer and directly invoices the entity for the services. There is no contractual relationship between the customer and the subcontractor.
The entity's supply of installation services is not a GST-free supply or an input taxed supply.
Reasons for Decision
Under section 9-5 of the GST Act, an entity makes a taxable supply if:
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- it makes the supply for consideration
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- it makes the supply in the course or furtherance of an enterprise that it carries on
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- the supply is connected with Australia, and
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- it is registered, or required to be registered for GST.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
The entity makes the supply for consideration in the course of an enterprise that it carries on and it is registered for GST. Furthermore, the supply is not GST-free or input taxed. Therefore, if the entity's supply is connected with Australia, it will be a taxable supply under section 9-5 of the GST Act.
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:
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- the thing is done in Australia, or
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- the supplier makes the supply through an enterprise that the supplier carries on in Australia.
Section 195-1 of the GST Act defines 'thing' to mean anything that can be supplied or imported such as a service, advice, information, or a right. Paragraph 65 of Goods and Services Tax Ruling GSTR 2000/31 provides that if the 'thing' being supplied is a service, the supply of that thing is typically done where the service is performed. If the service is performed in Australia, the service is done in Australia and the supply of that service is connected with Australia under paragraph 9-25(5)(a) of the GST Act.
The entity subcontracts the installation activity to a subcontractor in Australia to physically install the customer's goods. While the agreement allows for the entity to subcontract out the installation activity and the entity does not physically install the customer's goods, the entity's obligation under the agreement is to supply the services to install the customer's goods and not an obligation to arrange for the services to install the goods. Consequently, where the entity sub-contracted another party to install the customer's goods in Australia, it does not relieve the entity of its responsibility for the supply of the installation services.
As the entity is supplying an installation service and that service is performed in Australia, the entity's supply is connected with Australia.
Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when the entity provides its services, through a subcontractor, to install goods that are in Australia.
Date of decision: 8 June 2004
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
subsection 9-25(5)
paragraph 9-25(5)(a)
section 195-1
Related Public Rulings (including Determinations)
Goods and Services Tax Ruling GSTR 2000/31
ATO ID 2004/824
Keywords
Goods and services tax
GST international services
Connected with Australia
GST supplies & acquisition
GST supply
Taxable supply
ISSN: 1445-2782
| Date: | Version: | |
| 8 June 2004 | Original statement | |
| You are here | 17 February 2006 | Archived |
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