Edited version of your private ruling

Authorisation Number: 1012611072241

Ruling

Subject: GST and supply of visa support services

Question

Is the supply of visa support services made by the Australian company to the overseas entity GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?.

Advice

No, based on the information received the supply of visa support services made by the Australian company to the overseas entity is not GST-free under item 2 in the table in subsection 38-190(1) of the GST Act by virtue of subsection of 38-190(3) of the GST Act.

Relevant fact

You are a company established in Australia and are registered for the goods and services tax (GST).

You advised you provide processing and collection services to an overseas entity under the agreement you have provided us.

Agreement between you and overseas entity

The Agreement provides amongst other things the following:

B1 Appointment as Sole External Provider of Visa support services

B1.1 We hereby appoint you our sole external provider of the following visa support services in the locations, and from the relevant commencement dates specified in Schedule 1, subject to the terms and conditions of this Contract:

a) Provision and operation of Visa Application Centres for receipt of all visa applications from applicants, whether by mail, in person or otherwise, on our behalf in the locations specified in Schedule 1;

b) Checking of such applications for completeness and, if the application is incomplete, noting what information is missing;

c) Providing receipts to applicants identifying the type of application, date received and visa application fee received;

d) Receipting and banking of all our application fees into a nominated bank account - this must comprise one aggregate deposit per working day, regardless of the method of payment that applicants have used;

e) Recording, tracking and securely storing payments and remittable items during the time they are held by you;

f) Collection and entry of data from all applications received (unless specifically agreed to the contrary by both parties) into a database that is compatible with the technical specification file required by us and transmittal of data file to us ('data capture');

g) Scanning of all passports; using a passport scanner specified by us and in accordance with the Standard Operating Procedures;

h) Secure transfer (whether by hard copy or by electronic or other means) of all applications, and remittable items, along with detailed remittance sheets and banking records to and from the relevant Processing Branch as specified in Schedule 1, unless times and frequencies are otherwise agreed in response to changes in application volumes;

i) Receipt of all inward and outward correspondence and remittable items;

j) Provision of courier services via a mutually agreed courier company for the return of documentation to applicants;

k) Ensuring that applicants are able to obtain information about the location and status of their passports including the ability to send SMS notifications to applicants;

l) Provision and maintenance of a website giving information (e.g contact details and office hours) to applicants about the visa application centre operations and linked to the overseas entity's official website, provided that the overseas entity must approve this website before it goes live;

m) Provision and operation of a call centre facility for the handling of customer enquiries for the regions referred to in Schedule 1 and in language(s) as agreed and set out in the Standard Operating Procedures;

n) Assist applicants at the counter with information and forms as required;

o) Provision of reports to us as specified in the Standard Operating Procedures;

p) Provision to applicants of information and material prepared and supplied to you by us;

q) Provision of such other additional visa support services (for example biometrics services and video conferencing facilities) as may be agreed in a variation to this Contract;

r) Scanning into a secure online portal, which can be accessed by us, all applications and supporting documentation in accordance with the Standard Operating Procedures;

s) Provision and regular updating of the relevant Standard Operating Procedures, provided that you must first obtain our written agreement to any proposed change to the Standard Operating Procedures;

t) All other services, labour, materials, equipment and everything else, whether of a permanent or temporary nature, as specified … from this Contract.

Under the Agreement:

• you must not provide any other customer services (for example, selling transport cards, guide books, travel insurance, and using a Visa Application Centre to provide services to a third party) without our prior written approval, which may be conditional.

• You will provide the visa support services described in clause B1 on working days at your own premises. The Visa Application Centres must be open to applicants during the hours specified in Schedule 1 each working day.

• You may only receive your fee for the satisfactory completion of the visa support services in full accordance with the terms and condition of this contract.

• You are authorised to act as our agent when required in relation to the visa support services under this contract, but only in respect of those matters specified in section B.

Information received for the private ruling

You have provided the following information:

• You offer all the services listed at clause B1.1 in the Contract. You consider the services you make to the overseas entity are for the processing/collection of Visa applications.

• The processing/collection process is outlined as follows:

1. When an applicant walks into the office, staff goes through the application and ensures that it meets minimum lodgement requirements.

In the case of mail applications, applicants fill an authorisation form and provide their credit or debit card details to charge the appropriate fees.

Your role is limited to checking that the application form (all sections thereof) is completely filled in pursuant to clause B1.1c of the Contract. In the event that the application is incomplete you return the application to the customer rejecting the application on the basis of incomplete information, noting the incomplete sections.

You do not check the content of the information in the sections on the application form that has been completed or the validity of the information provided. Your staff are not authorised or qualified to assist applicants fill up the forms.

2. You issue a receipt to the applicants and you have given us a copy of a receipt.

3. Once done, a data entry is done. The immigration application documents are scanned and uploaded onto a portal.

4. The next business day, the overseas entity downloads the documents using the same portal.

5. Once the documents are downloaded, the overseas entity takes over and starts processing the application.

6. After the stipulated timeframe, the applicant receives the decision letter from the overseas entity electronically to the nominated email account. During the period the overseas entity may contact the applicants directly if required.

• You collect the following fees from the applicant on behalf of the overseas entity - service fee, visa fee and courier fee (when applicable).

• You do not provide any direct consultancy services to the applicants. All visa related enquires are referred to the overseas entity. You are more or less of a collection centre having no influence on the decision process whatsoever. You are not authorised by the overseas entity to provide any immigration advice.

• The overseas entity is not registered for GST. The overseas entity does not have an office in Australia and their staff are not in contact with you.

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 38-190

A New Tax System (Goods and Services Tax) Act 1999 Section 195-1

Reasons for decision

GST is payable on a taxable supply. To be a taxable supply, the supply must meet the conditions under section 9-5 of the GST Act. This section provides that you make a taxable supply if:

a) you make the supply for consideration; and

b) the supply is made in the course or furtherance of an enterprise that you carry on; and

c) the supply is connected with Australia; and

d) you are 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.

From the information received, you satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act when you supply visa support services to the overseas entity as specified in the contract you gave to us as:

a) you make the supply for consideration; and

b) the supply is made in the course of an enterprise (business) that you carry on; and

c) the supply of your visa support services is connected with Australia as you are making the supply through a business that you carry on in Australia and the services are done in Australia; and

d) you are registered for GST.

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

Your supply of visa support services is not input taxed under any provision in the GST Act. The next step is to consider whether the supply of visa support services is GST-free as they are made to a non-resident of Australia.

GST-free

Under section 38-190 of the GST Act certain supplies other than supplies of goods or real property for consumption outside Australia are GST-free.

Of particular relevance to the supply of visa support services is item 2 in the table in subsection 38-190(1) of the GST Act (Item 2).

Item 2 appears as follows:

(* denotes a defined term under section 195-1 of the GST Act)

For a supply to be within the scope of Item 2, the supply must be made to a non-resident who is not in Australia when the thing supplied is done. The expression 'not in Australia' requires that the non-resident is not in Australia in relation to the supply.

From the facts given, the overseas entity is a non-resident and is not in Australia at the time you make your supply. The requirement for the non-resident 'not to be in Australia in relation to the supply' is therefore satisfied.

We will now consider the other requirements in paragraphs (a) and (b) of Item 2. Only one of the paragraphs needs to be satisfied for the supply of visa support services to be GST-free under Item 2.

Paragraph (a) of item 2

Under paragraph (a) of Item 2, a supply of a thing that is made to a non-resident who is not in Australia when the thing supplied is done, is not GST-free if the supply is connected with real property situated in Australia or is a supply of work physically performed on goods situated in Australia when the work is done.

Goods and Services Tax Ruling GSTR 2003/7 (available at www.ato.gov.au) provides guidance on when a supply is directly connected with goods and when a supply of work is physically performed on goods.

Paragraph 37 of GSTR 2000/37 provides a list of situations where a supply of thing is directly connected with goods or real property and includes the situation where there is a physical interaction with the goods or real property but without changing the goods or real property.

The meaning of 'a supply of work physically performed on goods' is discussed at paragraphs 57 to 69 in GSTR 2003/7. Paragraphs 57 to 59 and 68 to 69 state the following:

57. The range of supplies that are directly connected with goods includes supplies of work physically performed on goods. That is, a supply of work physically performed on goods is always directly connected with goods. However, not all supplies directly connected with goods are also supplies of work physically performed on goods. A supply of work physically performed on goods requires a much closer connection with the goods: it requires a physical intervention with the goods. For example, a supply of legal services in preparing an agreement for the lease of goods is directly connected with goods but it is not a supply of work physically performed on goods as there is no physical intervention with the goods.

58. A supply is a supply of work physically performed on goods where something is done deliberately to the goods to change them or to otherwise affect them in some physical way. The repair of goods is an example of work that is physically performed on goods.

59. In contrast, where activities do not change or affect goods in a physical way, there is no supply of work physically performed on goods. For example, a supply of transporting goods is not work physically performed on goods because the supply only changes the location of the goods, not the goods themselves.

68. In many cases it is self-evident that a supply is a supply of work physically performed on goods. However, sometimes a supply must be analysed to determine whether it is properly characterised as 'a supply of work physically performed on goods'. If the supply includes work physically performed on goods but that work is ancillary to some other dominant part of the supply that is not work physically performed on goods, then that supply is not characterised as a supply of work physically performed on goods. This depends on the particular facts of each supply.

69. For example, a supply of a report on the results of testing and analysing samples of goods is characterised as a supply of information or advice if the dominant part of the supply is the analysis of data to enable a professional opinion to be provided. The supply is not characterised as a supply of work physically performed on goods. The testing and analysis of samples of goods enables the information to be compiled and is ancillary to the supply of that information.

Section 195-1 of the GST Act defines 'goods' to mean any form of tangible personal property.

The visa support services include that you collect and check the visa application forms, collect the passports, scan them and return them to the applicants. When performing these activities the supply is directly connected to goods as the application forms and passports are tangible properties and there is physical interaction with them. However, the performed activities (collecting, checking, and scanning) do not change or affect the application forms and passports in a physical way. In this instance, there is no supply of work physically performed on goods when these activities are carried on.

Accordingly, your supply of visa support services as described in the agreement satisfies the GST-free requirements in paragraph (a) of Item 2 as:

• the overseas entity is a non-resident and is not in Australia in relation to the supply when the supply of visa support services is made; and

• the supply of visa support services is neither a supply of work physically performed on goods situated in Australia nor a supply directly connected with real property situated in Australia.

Paragraph (b) of item 2

Under paragraph (b) of Item 2, a supply of a thing other than goods or real property is GST-free if the non-resident acquires the services in carrying on their business and is neither registered nor required to be registered for GST.

The supplier must be satisfied, on reasonable grounds that the non-resident is not required to be registered for GST before they can treat their supply as GST-free under paragraph (b) of Item 2. The supplier can check the GST registration status of an entity that they deal with by checking the Australian business register at www.abr.gov.au

Where the supplier is not in a position to be aware of these circumstances, enquiries should be made of the non-resident. The Commissioner accepts that reasonable grounds to be satisfied, if the non-resident has provided a written statement, declaring that they are not required to be registered. This is only accepted where the supplier has no reason to believe the statement is not accurate.

Your supply of visa support services will satisfy paragraph (b) of Item 2 where the overseas entity is not required to be registered for GST since the overseas entity acquire the visa support services for their business purposes and currently are not registered for GST.

Limitations

Accordingly, your supply of visa support services is GST-free under Item 2(a) to the extent that they are not negated by the limitations discussed below.

Subsection 38-190(2) of the GST Act

Subsection 38-190(2) of the GST Act provides that a supply covered by any of the items 1 to 5 in the table in subsection 38-190(1) of the GST Act is not GST-free if it is the supply of a right or option to acquire something the supply of which would be connected with Australia and would not be GST-free.

From the facts given, subsection 38-190(2) of the GST Act is not applicable as the supply of visa and support services is not a supply of a right or option to acquire something the supply of which would be connected with Australia and would not be GST-free.

Subsection 38-190(2A) of the GST Act

Subsection 38-190(2A) of the GST Act provides that a supply covered by any of items 2 to 4 in the table in subsection 38-190(1) of the GST Act is not GST-free if the acquisition of the supply relates (whether directly or indirectly, or wholly or partly) to the making of a supply of real property situated in Australia that would be input taxed under Subdivision 40-B or 40-C.

From the facts given, subsection 38-190(2A) of the GST Act is not applicable as the acquisition of the supply of visa support services does not relate to the making of a supply of real property situated in Australia.

Subsection 38-190(3) of the GST Act

Subsection 38-190(3) of the GST Act provides that a supply covered by Item 2 is not GST-free 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.

Where a transaction comprises a bundle of features and acts, it may be necessary to characterise what is supplied to determine whether a particular provision applies in whole or in part. Goods and Services Tax Ruling GSTR 2001/8 provides guidance in identifying the supply and is available from the legal database of our website (www.ato.gov.au )

By having regard to the essential character or features of the transaction it can be ascertained whether a supply contains separately identifiable taxable and non-taxable parts or is a composite supply of one thing.

A composite supply is a single supply made up of one dominant part and other parts that are not treated as having a separate identity as they are integral, ancillary or incidental or the dominant part of the supply. All the facts have to be considered to determine whether the supply that you make has any parts that are integral, ancillary or incidental.

Having regard to all the circumstances, and taking a common sense and practical approach, indicators that a part may be integral, ancillary or incidental include where:

• you would reasonably conclude that it is a means of better enjoying the dominant thing supplied, rather than constituting for customers an aim in itself; or

• it represents a marginal proportion of the total value of the package compared to the dominant part; or

• it is necessary or contributes to the supply as a whole but cannot be identified as the dominant part of the supply; or

• it contributes to the proper performance of the contract to supply the dominant part.

Clause x of the agreement provides the services you are required to make to the overseas entity and you have advised you are offering all the services listed under that clause. Further the agreement provides that you may only receive the service fee upon the satisfactory completion of the visa support services in full in accordance with the terms and conditions in the agreement.

The services in Clause x of the agreement clearly indicate that the main purpose of the agreement is for you to make available a Visa Application Centre in Australia so that individuals can lodge their application forms with that centre and receive visa support services from staff of the centre (for example staff from the centre check their application forms are complete and meet the minimum lodgement requirements, assist applicants with information and forms as required, provide information and material prepared and supplied by the overseas entity to the applicants, ensure applicants are able to obtain information about the location and status of their passport, collect the payments for the applications and provide them with receipts, guide them how to obtain information from the overseas entity's official website and so on).

After considering all the information we consider the dominant part of the supply of visa support services under the agreement is to provide information and assistance to the individuals and facilitate the lodgement of their applications. The banking of the fees, scanning of the passports and applications to a secure online portal are integral to the dominant part of the supply as they contribute to the supply as a whole and cannot be identified as the dominant part of the supply. In this instance subsection 38-190(3) of the GST Act is applicable as you are required to provide your visa support services to the individuals in Australia under the agreement in order to receive the service fee.

For more information on Item 2 and subsection 38-190(3) of the GST Act refer to Goods and Services Tax Rulings GSTR 2004/7 and 2005/6 (available at www.ato.gov.au).

Summary

The supply of visa support services as specified in the contract you gave to us is not GST-free under Item 2 by virtue of subsection 38-190(3) of the GST Act. You will need to issue a tax invoice to the overseas entity for this taxable supply.

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