1051356071490 | Legal database

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Edited version of your written advice

Authorisation Number: 1051356071490

Date of advice: 29 March 2018

Ruling

Subject: GST and supply of services to a non-resident

Question

Is the supply of services to the non-resident entity GST-free?

Answer

Yes. The supply of services to the non-resident entity is GST-free

Relevant facts and circumstances

The entity provides services to a number of overseas entities.

The entity receives commission payments directly from those entities.

The entity is supplying services to a non-resident company that is not in Australia when the services are provided.

The services relate to goods situated in Australia, it is not a supply of work physically performed on those goods.

The entity 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

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

(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.

The entity makes the supply of services for consideration and in the course of its enterprise. The supply is connected with the indirect tax zone as the entity makes the supply through an enterprise that it carries on in the indirect tax zone. The entity is registered for GST.

All the requirements in paragraphs 9-5(a) to 9-5(d) are all satisfied. Therefore, the supply of services by the entity is a taxable supply unless it is GST-free or input taxed.

There is no provision in the GST Act under which the supply of the services would be input taxed. What remains to be determined is whether the supply is GST-free.

Under item 2 in the table in subsection 38-190(1) of the GST Act (item 2), a supply made to a non-resident who is not in the indirect tax zone when the thing supplied is done is GST free if:

(a) the supply is neither a supply of work physically performed on goods situated in the indirect tax zone when the work is done nor a supply directly connected with real property situated in the indirect tax zone; or

(b) the non-resident acquires the thing in carrying on its enterprise, but is not registered or required to be registered.

The supply of the services is made by the entity to a non-resident who is not in the indirect tax zone when the services are performed.

Although the services relate to goods situated in Australia, the supply of the services is not a supply of work physically performed on goods nor a supply directly connected with real property.

The requirement in paragraph (a) of item 2 is satisfied; therefore, the supply of services by the entity is GST-free.

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