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Edited version of private advice
Authorisation Number: 1012633875037
Ruling
Subject: Goods and services tax (GST) and sales made through a website
Question
How do you calculate your GST liability where customers purchase or rent items or services listed on your website?
Answer
If you are registered or required to be registered for GST, your GST liability will be 1/11th of the GST-inclusive fee you charge.
Relevant facts and circumstances
You are not registered for GST.
Your GST turnover is currently under $75,000.
You are carrying on a business, being an online marketplace. People can advertise their items or services for rent or purchase on your website.
When a customer orders an item or service listed on your website, you collect the price of the item or service from the customer on behalf of the owner. You also charge the customer a certain percentage fee.
An example is as follows:
• An owner lists a bike for sale. They want a certain price for their bike.
• A listing is displayed on your website, which lists the bike at a certain amount (the price of the bike plus your fee).
• A customer views the advertisement and buys the bike (you collect a certain amount from the customer).
• You pay the owner the owner's price.
People who list items or services on your website are not likely to be registered for GST. People who list are most likely selling one-off items or running a small service orientated business.
All of the owners would be Australians located in Australia.
You operate from your home in Australia. The website server is located overseas.
Relevant legislative provisions
Reasons for decision
Summary
If you become registered or required to be registered for GST, your GST liability will be 1/11th of the GST inclusive fee you charge. This is because the fee is the consideration for the supply that you make.
Where you are only acting as an agent for the owner, you are not liable for GST (if any) on the sale or lease of an owner's item or service.
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:
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.
However, the supply is not a *taxable supply to the extent that it is *GST-free
or *input taxed.
(*Denotes a term defined in the GST Act)
You will meet the requirements of paragraphs 9-5(a) to 9-5(c) of the GST Act, because:
• you are supplying to customers the service of providing a marketplace and you receive consideration for this service (the fee); and
• you supply the service in the course or furtherance of an enterprise that you carry on; and
• you operate from premises in Australia.
You are not registered for GST. Additionally, you are not currently required to be registered for GST because your GST turnover is under $75,000 a year. Therefore, you do not meet the requirement of paragraph 9-5(d) of the GST Act.
There are no provisions in the GST Act under which the supplies of your service are GST-free or input taxed.
As you are not registered or required to be registered for GST, you do not meet all of the requirements of section 9-5 of the GST Act. Therefore, you are not making taxable supplies. Hence, GST is not payable on the supply you make in return for the service fee.
However, if you become registered or required to be registered for GST at a later time, you will meet all of the requirements of section 9-5 of the GST Act. Therefore, under such circumstances, you will make taxable supplies. Hence, GST will be payable on the supplies of your service in return for the service fee.
The following advice will only be relevant if you become registered or required to be registered for GST at some stage.
In accordance with section 9-70 and subsection 9-75(1) of the GST Act, GST is 1/11th of the GST inclusive price of the supply.
If a vendor wanted to sell an item for a certain price and you charge the buyer a fee of a certain percentage of the owner's price, your GST liability on the fee would be (the owner's price x a certain percentage (your fee)) x 1/11, which is a certain amount. The certain amount would form part of the amount that the buyer pays.
Additional information
In accordance with paragraph 45 of Goods and Services Tax Ruling GSTR 2000/37, you are not liable for the GST (if any) in respect of the sale of a listed item where you are merely acting as a selling agent. If GST is payable on the sale of a listed item, the owner, being the principal, would have that GST liability.
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