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Edited version of your written advice
Authorisation Number: 1013031462719
Date of advice: 8 June 2016
Ruling
Subject: GST and supply of sales representative services to non-residents
Question 1
Is your supply of sales representative services in return for the commission from Company A subject to goods and services tax (GST)?
Answer 1
No
Based on the information provided your supply of sales representative services to Company A will be GST-free under paragraph (a) of Item 2 in the table in subsection 38-190(1) of the GST Act as:
• you are supplying services not goods or real property,
• your supply is not work physically performed on goods in Australia nor directly connected with real property situated in Australia,
• your supply is to a non-resident who is not in Australia when your services are performed (done),
• there is no agreement for you, nor are you are providing your services to another entity in Australia.
Question 2
Is your supply of sales representative services in return for the commission from Company B subject to goods and services tax (GST)?
Answer 2
No, the supply of your sales representative services to Company B in return for the commission is GST-free.
Relevant facts and circumstances
You are a sole trader and are registered for goods and services tax (GST). You provide sales representative services to entities in Australian and overseas.
You have sales representative agreements with Company A and Company B to act as a sales representative to market and obtain orders for their products in Australia.
Fact of agreement with Company A
Company A is a non-resident entity based in an overseas country which is not registered for GST in Australia.
Company A sells merchandise to Australian retail stores in Australia.
You market and obtain orders for the products (goods) in Australia. When the retail stores order goods from Company A, you receive a commission from Company A. Your services include marketing the goods, placing orders with, and co-ordinating supplies and orders with Company A.
Company A is not in Australia when the supply of your sales representative services provided.
You have no authority to enter into any contracts with the Australian retailers in Australia on Company A's behalf.
Company A is not in Australia in relation to your supply of the services, nor do they have any other representatives acting on their behalf in Australia in relation to those services.
You have provided a copy of the agreement between you and Company A.
Under the agreement, you are responsible for the costs of products samples. The cost of samples will be deducted by Company A for your commission at a rate determine by Company A. You may not resell or otherwise distribute samples until Company A ships the product to the customers in stores.
You advised us that you do not resell the products. You use the products yourself or give them to your friends and families.
Fact of agreement with Company B
Company B is a non-resident entity based in an overseas country which is not registered for GST in Australia.
Company B sells merchandise to Australian retail stores in Australia.
You market and obtain orders for the products (goods) in Australia. Your services include marketing the goods, placing orders with, and co-ordinating supplies and orders with Australian.
When the retail stores orders goods from Company B, you receive a commission of x% base commission on each sale up to a quarterly target of less than $x and x% tier if sales exceed a quarterly target of $x.
Company B is not in Australia when the supply of your sales representative services provided.
You have no authority to enter into any contracts with the Australian retailers in Australia on behalf of Company B.
Company B is not in Australia in relation to your supply of the services, nor do they have any other representatives acting on their behalf in Australia in relation to those services
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 Subsection 38-190(1)
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-190(3)
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