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Edited version of your written advice
Authorisation Number: 1012800777695
Date of advice: 18 May 2015
Ruling
Subject: GST and international services
Question
Is GST payable on the supply of your services to your overseas-based clients?
Answer
No. GST is not payable on the supply of your services because you are not making a taxable supply.
The supply in the circumstances you described is 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) (item 2). This is because:
● the supply of your services is made to non-residents who are not in Australia when your services are done
● the supply of your 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 in accordance with paragraph (a) of item 2, and
● the supply does not involve a supply of a right or option to acquire another thing; does not relate to making input taxed supplies of real property; and there is no agreement with the overseas-based entities to provide your services to another entity in Australia. Hence, the supply of your services is not excluded from being GST-free under item 2.
Where you have incorrectly calculated your GST payable, you have to correct this mistake in your activity statement. For further information you can refer to the Correcting GST errors page on our website.
Relevant facts and circumstances
You provide marketing services in Australian and you are registered for GST.
Your clients are overseas-based entities.
You provide marketing services in supermarkets throughout Australia. The task includes:
● educating customers about the products available in the Australian market
● educating them on the benefits of the products
● providing samples (Samples are taken form the supermarket and you do not buy your own.) and
● encouraging sales.
All your dealings are with the overseas offices of your clients. You usually receive job orders from your clients via standard e-mail. Upon receiving their request you send them a formal quote. If they are happy with the quote they generally ask you to put together a proposed schedule for their marketing campaign. After they confirm the schedule, you proceed with carrying out the marketing campaign at the supermarkets.
You do not make any direct sales or collect money from customers at the supermarkets. The customer buys the products from the supermarket directly. You merely promote the products and that results in sales.
You invoice your clients directly for the services you provide.
Your clients do not have an office or staff based in Australia. As far as you know they are not residents of Australia and are neither registered nor required to be registered for GST in Australia.
You provided samples of job orders that you have received and copies of tax invoices you have issued showing the amount of GST payable.
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 Subsection 38-190(1).
A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(2).
A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(2A).
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-190(3).
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