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Edited version of your written advice
Authorisation Number: 1051315930198
Date of advice: 6 December 2017
Ruling
Subject: GST and supply of software development services to a non-resident
Question
Is GST payable on your supply of services to X where you provide (render) these services to Y?
Answer
No.
Your supply of these services under such circumstances is GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) (item 2), as:
● software development services are not supplies of goods or real property; and
● the customer in question is a non-resident who is ‘not in Australia’ for the purposes of item 2; and
● the supply of the software development services is not a supply of work physically performed on goods situated in Australia when the work is done nor a supply that is directly connected with real property situated in Australia; and
● although you provide (render) these services to a third party who is in Australia:
● the third party would have been an Australian-based business recipient of the services you supply if it had instead contracted you to supply the services to it, rather than X contracting you to supply these services; and
● the supply you make is not input taxed
(The exclusion at subsection 38-190(3) of the GST Act does not apply);
and
● the exclusions at subsections 38-190(2) and 38-190(2A) of the GST Act do not apply.
An entity is an Australian-based business recipient of a supply made to it if:
(a) the entity is registered for GST; and
(b) the enterprise of the entity is carried on in Australia; and
(c) the entity’s acquisition of the thing supplied is not solely of a private or domestic nature.
Relevant facts and circumstances
You are registered for GST in Australia.
There is a contract between you and X (an overseas based company) (the client) to provide software development services to a third party, Y. Individual A, as your employee, is the specified personnel in the contract.
You invoice X for the services provided by Individual A. X then invoices Y.
You are not involved in any contract negotiations between X and Y. You simply supply the employee’s services to X.
Y is based in Australia and individual A performs their role from their home in Australia.
Y is 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 38-190
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