Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012418461119

This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.

Ruling

Subject: Goods and services tax (GST) and collecting monies for something services

Question

Is GST payable by you on the monies you collect for something services?

Answer

No.

Relevant facts and circumstances

You are a certain entity.

Your director has developed a mobile phone application to assist with a certain activity.

When a consumer places a call, connecting with the service providers, they are automatically charged at a rate per minute for the services.

Service providers pay a fee to an entity that is related to you in return for utilising the mobile phone application.

You collect the service provider fees on behalf of the service providers. You hold these monies in trust for the service providers for a certain amount of time then you distribute them to the service providers that provided the services.

The service providers and consumers may be in Australia or overseas.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 paragraph 9-25(5)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 9-25(5)(b)

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

A New Tax System (Goods and Services Tax) Act 1999 section 38-190

Reasons for decision

Summary

GST is not payable by you on the monies you collect for something services as these monies are not consideration for a supply made by you.

Detailed reasoning

GST is payable by you on your taxable supplies.

You make a taxable supply where you satisfy the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which states:

(*Denotes a term defined in section 195-1 of the GST Act)

The monies you collect from consumers for the something services are not consideration for a supply that you make. These monies are consideration for supplies made by the service providers to the consumers. You merely collect these monies on behalf of the service providers that are entitled to these monies and distribute these monies to the service providers. You are merely acting as a payment conduit.

Hence, you do not satisfy the requirement of paragraph 9-5(a) of the GST Act.

As you do not satisfy all of the requirements of section 9-5 of the GST Act, you do not make a taxable supply in return for the monies in question. Hence, GST is not payable by you on the monies in question.

Additional information

Each service provider would need to determine whether it has a GST liability on the monies in question.

A supply of a service is connected with Australia if the service is performed in Australia or the supply is made through an enterprise the supplier carries on in Australia.

A supply of a service that is consumed overseas may be GST-free under section 38-190 of the GST Act. The location of the consumer needs to be considered to determine whether consumption takes place overseas.

Goods and Services Tax Ruling GSTR 2004/7 provides guidance on section 38-190 of the GST Act.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).