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This edited version has been archived due to the length of time since original publication.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.

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Edited version of your private ruling

Authorisation Number: 1012469540870

Ruling

Subject: GST registration and GST free supplies

Question 1

Are you making taxable supplies under section 9-5 of the GST Act for which you receive income from an Entity and therefore required to include GST in your supplies?

Answer

No, to the extent that the Entity is a non-resident, and the supplies you make are not connected with Australia.

This ruling applies for the following periods:

When you are required to be registered

Relevant facts and circumstances

You are registered for an Australian Business Number however you are not currently registered for GST.

You create and film videos at your home premises in Australia in regards to your work. You then upload and place these videos on a website.

Your videos on the website are available for viewing locally and worldwide.

You have entered into agreements with a website in regards to your uploads and with the Entity in relation to valid views of various advertisements (Ads) related to your website videos.

You have provided via email links; the website terms of service; and the Entity's online terms and conditions.

The agreement provides that participation in the entity's online program indicates that you accept the terms and conditions provided.

The agreement is between you and the Entity.

You can stop the advertising from appearing on your page. The Entity can also stop and start the advertising.

The Entity provides you with summaries of your payments.

You state that you do not know, nor can you find out if the Entity adds GST on the Australian income however you consider it to be unlikely.

The Australian business register which shows: the Entity is registered for an ABN xx xxx xxx xxx, and registered for GST. The Entity is a non resident.

Relevant legislative provisions

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

A New Tax System (Goods and Services Tax) Act 1999 section 9-10

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(3)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-190(3)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-190(3)(b)

Reasons for decision

You have asked us to consider whether the supplies you make in relation to the income you receive from the entity are connected with Australia.

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides for taxable supplies, and states:

You make a taxable supply if:

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

Based on the facts you have provided, you are carrying on an enterprise in relation to the creation and uploading of videos and publishing on the website. You receive consideration in the form of a payment from the Entity for allowing ads to be published on your videos. However, we need to consider whether your supplies are connected with Australia and whether you are required to be registered.

Division 188 of the GST Act provides for certain supplies to be disregarded in working out current GST turnover and projected GST turnover. Supplies that are disregarded include, amongst other things, any supply that is not connected with Australia.

Section 38-190 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that certain supplies of things other than goods or real property, for consumption outside of Australia are GST-free.

In your case you allow the Entity the right to publish advertising on your videos, which you upload onto the website. It is considered that when you grant the right to the Entity to publish ads this is neither a supply of goods nor a supply of real property, therefore section 38-190 of the GST Act is relevant to determine if your supply is outside Australia and GST-Free.

Item 2 in the table in subsection 38-190(1) of the GST Act (Item 2) provides that a supply of a thing, other than goods or real property, made to a non-resident is GST-free if the non-resident is not in Australia when the thing supplied is done and:

Only paragraph (a) or (b) need to be satisfied in order to meet the requirements of item 2. However in order to meet Item 2, the supply must be made to a non-resident who is not in Australia at the time the supply is made.

In this instance we have determined that the Entity is a non resident company. We therefore need to consider whether the supply is made to a non resident, not in Australia when the thing supplied is done.

Goods and Services Tax Ruling GSTR 2004/7 provides guidance on when a non-resident is not in Australia for the purposes of Item 2. Paragraph 37 of GSTR 2004/7 provides that a non-resident company is in Australia if that company carries on business (or in the case of a company that does not carry on business, carries on its activities) in Australia:

(a) at or through a fixed and definite place of its own for a sufficiently substantial period of time, or

(b) through an agent at a fixed and definite place for a sufficiently substantial period of time.

Further to this paragraph 38 provides that we consider that it would be reasonable for a supplier to conclude that a non-resident company is in Australia if:

· the company is registered with ASIC; or

If it is found that a non-resident company is in Australia on the basis of the above test, it is necessary to consider if the entity is in Australia in relation to the supply, when the supply is done (that is, provided/performed).

From the facts provided the Entity does not seem to have a fixed address in Australia, nor is there a reference to use of the Entity using an agent.

The supply of your publishing services satisfies the requirements of paragraph (a) of Item 2, as it 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.

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

An example of a supply being provided to another entity in Australia can be found in paragraph 26 Goods and Services Tax Ruling 2000/31, it reads:

A school in Australia provides tuition to overseas students in Australia. However, it bills the overseas parents of the students directly. As the supply is being made to students in Australia the supply will not be GST free under item 2.

In your case your agreement is with the Entity program in an overseas country, you have no agreement with the advertisers. You do not provide, nor does your agreement with the Entity require you to provide your publishing services to another entity such as the advertisers. You do not have any agreement, contact or any dealings with the advertisers. Your agreement with the Entity requires you to direct any communication regarding any ads or links displayed on your web pages to the Entity and not the advertisers.

Based on the information provided, you are providing your publishing services to the Entity, a non-resident, and the actual flow of your services is to that Entity. As such, paragraph 38-190(3)(b) of the GST Act is not satisfied. Accordingly, subsection 38-190(3) of the GST Act does not negate the GST-free status of the supply of your publishing services under Item 2.

The supply of your publishing services to the Entity is GST-free under Item 2. Hence, you are not liable to pay GST on this supply.

Required to be registered for GST

Section 23-5 of the GST Act provides that you are required to be registered for GST if:

The registration turnover threshold is currently $75,000 (or $150,000 for non-profit organisations). Prior to 1 July 2007 the registration turnover threshold (other than non-profit bodies) was $50,000.

You must register if your current or projected GST turnover for any 12-month period will reach the registration threshold.

When calculating your GST turnover, it is your gross business income (not your profit), excluding any:

· GST you included in sales to your customers

· sales that are not for payment and are not taxable (for example, some sales to associates)

· sales not connected with an enterprise you run

· input-taxed sales you make

· sales not connected with Australia.

Accordingly, income you receive from the entity which is not connected with Australia, will be excluded when calculating your GST turnover. However you still need to consider whether you are required to be registered for GST based on other business income you receive.

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