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Edited version of your private ruling

Authorisation Number: 1012513887115

Ruling

Subject: GST and supply of intellectual property

Question 1

Will your assignment of intellectual property be a taxable supply pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes.

Relevant facts and circumstances

In the first instance you wish to exploit the value of your intellectual property in Australia by using it within entities that you control in Australia. To do this, you will have an assignment contract completed at arm's length by other directors with the value based on that determined earlier by an independent entity. You are registered for GST.

Consideration for the assignments will be paid to you at the time of the assignment. Payment will be immediate, not by instalments or over time. As such there will be two GST inclusive payments.

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 section 9-25

Reasons for decision

Summary

Your assignment of intellectual property will be a taxable supply pursuant to section 9-5 of the GST Act.

Detailed reasoning

GST is payable on taxable supplies. The concept of 'supply' is defined broadly under the GST law; subsection 9-10(1) of the GST Act notes that a supply is any form of supply whatsoever. Further paragraph 9-10(2)(e) of the GST Act confirms that supplies that allow for the use of intellectual property are supplies for the purposes of the GST Act:

(2) Without limiting subsection (1), supply includes any of these:

Therefore your proposed assignments of intellectual property are supplies for GST purposes.

Under section 9-5 of the GST Act, you make a taxable supply where the following four requirements are met:

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

Your supplies, made by way of assigning intellectual property will meet the four requirements in that the two supplies will be made for consideration, made in the course of your enterprise and you are registered for GST. Your supplies will also be connected with Australia under subsection 9-25(5) of the GST Act as the assignments will be done in Australia and also done through an enterprise that you carry on in Australia.

There are no provisions in the GST law that would make your proposed supplies GST-free or input taxed. While there is provision in the GST law for the GST-free supply of rights either for use outside Australia or in limited circumstances to an entity outside Australia, this not contemplated in your contracted arrangements.

Therefore the assignments of intellectual property you propose will be subject to GST.

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