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Edited version of your written advice

Authorisation Number: 1013125405948

Date of advice: 23 November 2016

Ruling

Subject: Supplies made through an electronic distribution platform

Question

Will the entity be treated as the supplier to Australian consumers from 1 July 20XX; and therefore, will be liable to remit GST on taxable supplies?

Answer

Yes. The entity will be treated as the supplier to Australian consumers from 1 July 20XX; and therefore, the entity will be liable to remit GST on taxable supplies.

Relevant facts and circumstances

The entity is a body that oversees and supports a market through which members are allowed to make supplies to end users. It supervises the carrying on of the members' business and provides infrastructure that enables the members to carry on such business.

The physical infrastructure provided by the entity includes computer systems and servers through which the entity communicates with members and others involved in the market. As the entity's intermediaries are located worldwide, the vast majority, if not all correspondence and communication are made electronically through this infrastructure either via the entity's website or individually via email or other forms of electronic communication.

Further email correspondence is also used extensively by the entity in the conduct of its day-to-day business of managing, monitoring and overseeing the marketplace.

Supplies are made to end users by means of electronic communication

The entity is not registered for GST. However, it will register for GST effective from 1 July 20XX. At this point in time, the entity does not intend to be a member of a GST group. The entity will enter into an agreement with members that it will account for the GST liabilities for supplies made to Australian consumers through the market.

The supplies are made by members to Australian consumers. The private ruling request only concerns supplies indirectly to Australian consumers, or directly to Australian consumers, who are not registered for GST.

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 84-55

A New Tax System (Goods and Services Tax) Act 1999 section 84-70

Reasons for decision

GST is payable on a taxable supply.

A supply is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if all of the following are satisfied:

Assuming the requirements of paragraphs (a), (b) and (d) above are satisfied, what remains to be determined is whether the supply made is connected with the indirect tax zone.

According to subsection 9-25(5) of the GST Act, a supply of anything else other than goods or real property is connected with the indirect tax zone if:

Subsection 9-25(7) of the GST Act states:

An entity is an Australian consumer of a supply made to the entity if:

The entity's clients include Australian resident individuals and Australian companies. This private ruling pertains only to the entity's business with an Australian client who is either not registered for GST or, if registered for GST, does not acquire the supply solely or partly for the purposes of an enterprise that is carried on by that client. Therefore, the recipient of the supply is an Australian consumer. Accordingly, the supply is connected with the indirect tax zone.

As all the requirements of section 9-5 of the GST Act are satisfied, the supply is a taxable supply. There is no provision in the GST Act under which the supply would be GST-free or input taxed.

The supplier

Under the basic rules, the entity's members would be the suppliers and would be required to register for GST and would be liable for GST on their supplies to Australian consumers.

GST law amendments allow the responsibility for GST liability that arises under the amendments to be shifted from the supplier to the operator of an electronic distribution platform.

Section 84-70 of the GST Act states:

84-70 Meaning of electronic distribution platform

(1)

The entity operates a business within which members compete with each other to make supplies. The entity allows the members to make supplies available to end users. The service is delivered and the supplies are made by means of electronic communication. The entity will enter into an agreement with members that it will account for the GST liabilities for the supplies made through the market. Therefore, the entity is an operator of an electronic digital platform.

Subsection 84-55(1) of the GST Act provides that if an inbound intangible consumer supply is made through an electronic distribution platform, the operator of the platform, instead of the supplier, is treated for the purposes of the GST law:

Therefore, from 1 July 20XX and subject to subsection 84-55(4) of the GST Act, the entity would be liable to remit GST on taxable supplies made through the marketplace.

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