Edited version of your written advice

Authorisation Number: 1012921697049

Date of advice: 9 December 2015

Ruling

Subject: GST and online food ordering service

Questions

1) Should you report on your BAS only the commission you receive when you supply online food ordering service to the Restaurants?

2) Do you make any acquisition from the Restaurants in relation to the online payments you accept from the customers on behalf of the Restaurants?

Answers

1) Yes.

2) No.

Relevant facts and circumstances

You are registered for goods and services tax (GST).

You supply an online food ordering service. You operate an online platform that facilitates takeaway food deliveries. You link customers to the Restaurants in the customers' area that offer food delivery or collection. Hence you act as an intermediary between the Restaurants and end consumers. You market, promote and advertise the Restaurants' food (Product) to third party customers.

You provide a copy of an Agreement with your partner Restaurants (Restaurants) which shows that you have the authority from the Restaurants to accept online payments from the customers and that you will forward the payments to the Restaurants net of commission due to you.

You charge a commission on the total amount of every order confirmed through the use of your channels, such as your website and mobile applications.

There are Terms and Conditions (Conditions) annexed to the Agreement. The Restaurant grants you a non-exclusive licence to promote the Product and the Restaurant agrees to fulfil Orders received from customers through you. The Product will be promoted by you based on promotion materials provided by the Restaurant. The Restaurant warrants to you that the Products comply with all relevant Australian laws, and regulations.

There is no agreements under Subdivision 153-B of the GST Act with each restaurant in which you are treated as suppliers or acquirers.

When an end consumer pays online, the funds received are settled into your bank account. You transfer any money collected on the Restaurants behalf to the Restaurants, less commissions and credit card processing fees payable by the Restaurants.

In the SMS confirmation you sent to customers after they place an order online, you state the Products, the name of the Restaurant who has confirmed the customers' orders and the approximate delivery time.

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 11-5

Reasons for decision

Summary

The Commissioner confirms that:

1. You do not supply the food to the customers. It is the Restaurants who supply the food to the customers.

2. You do not acquire the food from the Restaurants in order to supply to the customers. The online payments from the customers which you forward to the Restaurants are not consideration for the Restaurants' supply of the food to you.

Detailed reasoning

Characterising of the supply:

Paragraph 28 of Goods and Services Tax Ruling GSTR 2000/37 states that the following factors may indicate that a particular relationship is one of agency (although no single factor would be determinative on its own):

• any description of you as an agent, having authority to act for another party, in an agreement (expressed or implied) between you and the other party;

• any exercise of the authority that you are given to enter into legal relations with a third party;

• whether you bear any significant commercial risk;

• whether you act in your own name;

• whether you are remunerated for your services by way of commissions and whether you are entitled to keep any part of your remuneration secret from another party; and

• whether you decide the price of things that you might sell to third parties

The customers access your website or your apps to order the Product. The Agreement allows you to collect online payments from customers on the Restaurants' behalf, however, it seems the customers can choose to pay directly to the Restaurants when the customers collect the orders or when the Restaurants deliver the orders to customers.

The Restaurants know the price for which they are selling the Products to the customers. Additionally, you provide the Restaurants with a breakdown of the costs of each service the Restaurants acquire and your fee for that service.

You do not undertake contractual liability with the customers to ensure the Product is provided or to ensure that the Product is provided to the requisite standard. Rather, the Agreement states that it is the Restaurant's obligation to warrant that the foods comply with the Australian law and regulations. Your website expressly provides that the customers should contact the Restaurant in the first place if there is any dispute about their orders. Only if the customers are not successful then they should contact you for your assistance as an intermediary. Thus the customers are bound by the terms and conditions of the Restaurants.

The customers and the Restaurants are aware of the identity of one another. The customers order food from a particular Restaurant (selected through your website or your apps). The Restaurant is made aware of the identity of the customer so the Restaurant can make the delivery to the customers or the customers can collect the orders from the Restaurant.

The Agreement and Conditions annexed to the Agreement is not an open-ended authority to sell the Restaurants' products at a price determined by you. Rather, your services are limited to the sale of the Restaurants' Products at a price set by the Restaurants; marketing and promoting the Products at your discretion (but based on Product information/promotion material supplied by the Restaurants); and collecting online payments from customers.

The Agreement and Conditions describe your authority; you exercise that authority when you accept orders from customers in the name of the Restaurant, you are remunerated by a separately itemised commission or fee; and the SMS confirmation from you to the customers carries the Products and the name of the Restaurant which accepts the customers' orders.

You are supplying to the restaurants a service of marketing, promoting, advertising the restaurants' Products and receiving online payments on the Restaurants' behalf from third party customers.

Our conclusion is that you do not supply the food to the customers; it is the Restaurants who supply the food to the customers.

Taxable supply:

A supply will be a taxable supply where the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are satisfied. Section 9-5 of the GST Act 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

You make a supply of services of marketing, promoting, advertising the Restaurants' Products and receiving online payments on the Restaurants' behalf from third party customers (services). The supply is made in the course of an enterprise that you carry on, the supply is done in Australia, and you are registered for GST in Australia.

Your supply of services is neither GST-free nor input taxed under the GST legislation. Hence your supply is taxable.

You are required to report on your BAS the commission you receive when you supply your services to the Restaurants.

Creditable acquisition:

Section 11-5 of the GST Act provides that you make a creditable acquisition if:

• you acquire anything solely or partly for a creditable purpose; and

• the supply of the thing to you is a taxable supply; and

• you provide, or are liable to provide, consideration for the supply; and

• you are registered, or required to be registered. 

You acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise. However, you do not acquire the thing for a creditable purpose to the extent that:

• the acquisition relates to making supplies that would be input taxed; or

• the acquisition is of a private or domestic nature. 

You do not carry on an enterprise of supplying food. You do not acquire the food from the Restaurants to supply to customers. The money you forward to the Restaurants is not consideration for the Restaurants' supply of food to you. You merely accept the online payments from customers on the Restaurants' behalf and forward customers' payments to the Restaurants net of the commission due to you.

Since you make no creditable acquisitions of food from the Restaurants, you are not entitled to claim GST paid on the GST-inclusive amount you forward to the Restaurants (net of the commission due to you).

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