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Edited version of your written advice
Authorisation Number: 1051468587485
Date of advice: 19 December 2018
Ruling
Subject: GST and advertising revenues
Question
Are the advertising revenues received by you through your online channel subject to GST?
Answer
No, the advertising revenues received by you through your online channel are not subject to GST provided the recipient of your supply for which you receive the advertising revenues is not in Australia in relation to the supply.
This ruling applies for the following period:
December 2018 – December 2022
The scheme commences on:
November 2017
Relevant facts and circumstances
You produce media and online content in Australia. You are registered for GST.
You manage the entire video production engaging cast members from Australia. You also do the editing subsequent to the production.
You upload the media or online content over the internet via a platform.
You entered into an agreement with a company overseas to provide you with management services in order to maximise the revenues from channel. The services include:
● acting as a liaison between you and the platform operator with respect to your channel;
● working with the platform operator to resolve any technical problems with your channel; and
● discussing the most optimal featured video placement strategy for your videos on the platform.
You assign the entity to receive revenues on your behalf.
The platform operator determines the location of the viewer and then plays the ad that is relevant to them in their country. The platform operator controls the ad in terms of timing and determines which ad to play.
The platform operator is a non-resident entity.
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
(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 advised that the platform operator controls the ad in terms of timing and determines which ad to play. Therefore, we take the view that you make a supply to the platform operator by making your online channel available for ads placed with the platform operator.
You make the supply for consideration and in the course of your enterprise. The supply is connected with the indirect tax zone as you make it through your enterprise that you carry on in the indirect tax zone. You are registered for GST. Paragraphs 9-5(a) to 9-5(d) of the GST are satisfied. Therefore, your supply is a taxable supply unless it is GST-free or input taxed.
There is no provision in the GST Act under which your supply would be input taxed.
Under subsection 38-190(1) of the GST Act certain supplies of things, other than goods or real property, for consumption outside the indirect tax zone are GST-free.
Item 2 in the table in subsection 38-190(1) (item 2) provides that a supply that is 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 the non-resident’s enterprise, but is not registered or required to be registered for GST.
Item 3 in the table in subsection 38-190(1) of the GST Act (item 3) provides that a supply is GST-free if:
(a) the supply is made to a non-resident who is not in the indirect tax zone when the thing supplied is done; and
(b) the effective use or enjoyment of the supply takes place outside the indirect tax zone.
Item 3 does not apply to a supply of work physically performed on goods situated in the indirect tax zone when the thing supplied is done, or a supply directly connected with real property situated in the indirect tax zone.
For the purpose of item 2 and item 3, a non-resident is in the indirect tax zone if it carries on its enterprise in the indirect tax zone.
Subsection 9-27(1) of the GST Act states:
(1) An *enterprise of an entity is carried on in the indirect tax zone if:
(a) the enterprise is *carried on by one or more individuals covered by subsection (3) who are in the indirect tax zone; and
(b) any of the following applies:
(i) the enterprise is carried on through a fixed place in the indirect tax zone;
(ii) the enterprise has been carried on through one or more fixed places in the indirect tax zone for more than 183 days in a 12 month period;
(iii) the entity intends to carry on the enterprise through one or more places in the indirect tax zone for more than 183 days in a 12 month period.
‘Individuals’ referred to in paragraph 9-27(1)(a) above include:
(a) if the entity is an individual – that individual;
(b) an employee or officer of the entity;
(c) an individual who is, or is employed by, an agent or other agent of independent status that is acting in the ordinary course of the agent’s business as such an agent.
You make the supply to the platform operator that is a non-resident entity. The supply is neither a supply of work physically performed on goods situated in the indirect tax zone nor a supply directly connected with real property situated in the indirect tax zone.
Therefore, your supply is GST-free under item 2 provided the platform operator is not in Australia in relation to your supply. Accordingly, the advertising revenues that you receive through your online channel are not subject to GST.
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