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Edited version of your written advice
Authorisation Number: 1013043221982
Date of advice: 29 June 2016
Subject: GST and supply of agency services
Question
Is the commission that you receive for your supply of agency services subject to GST?
Answer
Yes. The commission that you receive for your supply of agency services is subject to GST.
Relevant facts and circumstances
You are registered for GST.
You entered into an agency agreement with another entity (the principal). The principal is a resident entity.
Under the agreement, the principal appoints you to act as its regional agent to collect international parcels from customers.
The customers bring the parcels to your business premises. The principal collects the parcels from you and brings them to its warehouse. The parcels are then shipped out by a domestic and international transport supplier appointed by the principal.
You ensure that all the collected items meet the customs requirements overseas. The customers fill in a form with their details and the description of the contents of the parcels.
The contractual relationship in relation to the transport of the parcels is between the principal and the customers. The principal takes responsibility for any issues occurring after the parcels are shipped out including any delay in the delivery of the parcels.
You receive from the customers the payment for the supply made by the principal. From the payment that you receive, you send an amount to the principal and keep the rest as your commission.
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 38-355
Reasons for decision
GST is payable on a taxable supply.
Section 9-5 of the A New Tax System (Goods and Services tax) Act 1999 (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 the indirect tax zone; 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 under section 195-1 of the GST Act)
You receive a commission as consideration for your supply of agency services. You make the supply in the course of carrying on your enterprise. The supply is connected with the indirect tax zone. You are registered for GST. All the requirements in paragraphs 9-5(a) to 9-5(d) of the GST Act are satisfied. Therefore, your supply of agency services is a taxable supply unless it is GST-free or input taxed.
Subsection 38-355(1) of the GST Act provides that certain supplies of transport and related matters are GST-free if conditions are met. These supplies include the international transport of goods and the services in arranging the international transport of goods.
While your agreement with the principal is about shipping parcels overseas, the supply that you make to the principal under the agreement is of agency services which mainly involve receiving parcels and collecting payments from the customers. You are not making a supply of international transport of goods or a supply of arranging such transport. Therefore, subsection 38-355(1) of the GST Act does not apply to your supply.
There is no provision in the GST Act under which your supply of agency services would be input taxed. Therefore, your supply is a taxable supply. Accordingly, the commission that you receive for your supply of agency services is subject to GST.
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