Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1051280183738

Date of advice: 7 September 2017

Ruling

Subject: GST and making a supply to a non-resident

Question 1

Is the supply of services to a non-resident entity GST-free under section 38-190 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), where the non-resident entity engages another resident entity to coordinate the timing of our services?

Answer

Yes.

Relevant facts and circumstances

You provide a service to a non-resident for goods that are in Australia. You do not perform any activity that changes or affects the goods in a physical way. Your service only changes the location of the goods.

You are proposing to enter into contracts with non-resident companies to provide your services to their goods in Australian that are owned by non-residents. These companies do not have an office or permanent establishment in Australia.

However, the non-resident companies engage another resident to coordinate the timing of services in that they provide the updates on arrival times, etc to you.

Relevant legislative provisions

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999

Section 38-190 of the A New Tax System (Goods and Services Tax) Act 1999

Reasons for decision

An entity makes a taxable supply if all the conditions in section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are met.

Section 9-5 of the GST Act provides::

In this situation, where you make the supply for consideration, in the course of your enterprise, the supply will be connected with Australia; and you are registered for GST. As such your supply of services to a non-resident would be a taxable supply unless it is GST-free or input taxed. There are no provisions that would result in the supply being input taxed, however, consideration needs to be given to whether it is GST-free under section 38-190 of the GST Act.

Of particular relevance is subsection 38-190(1) of the GST Act. This section provides that a supply of a thing, other than goods or real property, is GST-free if the supply satisfies the requirements in one of the items in the table in

According to item 2 in the table in subsection 38-190(1) of the GST Act (item 2) provides that a supply made to a non-resident is GST-free if the non-resident is not in Australia when the thing supplied is done and either of the following applies:

Non-resident is not in Australia

Goods and Services Tax Ruling GSTR 2004/7 gives guidance on determining if a non-resident is in Australia for the purpose of subsection 38-190(1) of the GST Act.

According to paragraph 241 of GSTR 2004/7, a non-resident company is in Australia for the purpose of item 2 if that company carries on business (or in the case of a company that does not carry on business, carries on its activities) in Australia:

You advised that the non-resident entities you are wanting to contract with do not have offices or a permanent establishment in Australia and therefore, are not in Australia.

Supply is neither a supply of work physically performed on goods in Australia nor a supply directly connected with real property in Australia

A supply is a supply of work physically performed on goods where something is done deliberately to the goods to change them or otherwise affect them in some physical way.

A supply is directly connected with real property if there is a very close link or association between the supply and a particular real property.

This is neither a supply of work physically performed on goods situated in Australia nor a supply connected with real property in Australia as your service is involved with the provision of line launch for ships. Therefore, the condition in the first dot point is met and Item 2 is satisfied.

Therefore, the supply is GST-free under subsection 38-190(1) of the GST Act unless the supply is excluded from being GST-free by subsection 38-190(3) of the GST Act.

Supply provided to another entity in Australia

Subsection 38-190(3) of the GST Act provides that a supply covered by item 2 is not GST-free if:

In your circumstance, you provide your services to another entity in Australia, this entity will not be an Australian based business nor an employee of an Australian based business, as such, your supply will not be excluded by subsection 38-190(3) of the GST Act and will be GST-free under subsection 38-190(1).


Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).