Edited version of private advice

Authorisation Number: 1051648622096

Date of advice: 18 March 2020

Ruling

Subject: GST and supply of online video content

Question 1

Are you required to be registered for the goods and services tax (GST) under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes,you are required to be registered for GST under section 23-5 of the GST Act.

Question 2

Is the supply of online video content you make to the non-resident business a GST-free supply under the GST Act?

Answer

Yes,the supply of online video content you make to the non-resident business is a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act.

Relevant facts

You are an Australian resident and currently are not registered for GST.

You have an Australian business number (ABN) and perform your work under this ABN. Your work consists of making and supplying online video content to a non-resident business located outside Australia. You have provided us with a copy of the Services Agreement you have with the non-resident business.

The non-resident business will upload the video to the countries it chooses for online viewing. Customers can globally view the content by paying a fee to the non-resident business and logging on the non-resident hosted platform.

You do not know where the viewers are located when viewing your video. The Australian company pays you for the provision of the online video content and the payment is dependent on how much money viewers pay the American business per video.

You estimate the annual income for your supplies would be above $75,000.

The non-resident business does not carry on any business activity in Australia and does not have any representative in Australia that is involved with your supply.

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 23-5

A New Tax System (Goods and Services Tax) Act 1999 section 38-190

Reasons for decision

Note: Where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in section 195-1 of the GST Act.

Detailed reasoning

Question 1

Under Section 23-5 of the GST Act you are required to register for GST if you are carrying on an enterprise and the annual turnover of your business meets the GST registration threshold of A$75,000 or more.

Goods and Services Tax Ruling GSTR 2001/7 (available at www.ato.gov.au) provides guidance on the meaning of GST turnover.

The current annual turnover is the sum of the values of all supplies made in a particular month plus the previous 11 months. The projected annual turnover is the sum of the value of all supplies made in a particular month plus the next 11 months.

Your supply of online video content is connected with Australia as the supply is made through a business that you carry on in Australia. You estimated your annual turnover would be above A$75,000. In this instance you are required to register for GST under section 23-5 of the GST Act since your annual turnover would be above the GST registration threshold of A$75,000.

Question 2

GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the GST Act if:

1. the supplier makes the supply for consideration; and
2. the supply is made in the course or furtherance of an enterprise that the supplier carries on; and
3. the supply is connected with Australia; and
4. the supplier is registered or required to be registered for GST.

However the supply is not a taxable supply to the extent that it is GST-free or input taxed.

All of the above must be satisfied for your supply of online video content to be a taxable supply.

From the information given, your supply of online video content satisfies paragraphs (a) to (d) of section 9-5 of the GST Act as:

a)    you make your supply for consideration; and

b)    the supply is made in the course of a business that you carry on; and

c)    your supply is connected with Australia as it is made through a business that you carry on in Australia; and

d)    you are required to register for GST since your annual turnover is above A$75,000.

However, your supply of online video content is not a taxable supply to the extent that it is GST-free or input taxed.

There is no provision under the GST Act that makes your supply of online video content input taxed.

GST-free supply

Relevant to your supply of online video content is item 2 in the table in subsection 38-190(1) of GST Act (item 2).

Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident is GST-free if the non-resident is not in Australia when the thing supplied is done, and:

a)    the supply is neither a supply of work physically performed on goods situated in Australia when the work is done, nor a supply directly connected with real property situated in Australia; 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.

Only one of the paragraphs in item 2 needs to be satisfied.

Paragraph (a) of item 2

From the facts given, your supply of online video content satisfy paragraph (a) of item 2 as:

·         your supply of online video content is made to a non-resident business who is not in Australia in relation to your supply when the supply is done; and

·         your supply of online video content is neither a supply of work physically performed on goods situated in Australia when the work is done nor a supply directly connected with real property situated in Australia.

However, paragraph (a) of item 2 is limited by subsection 38-190(3) of the GST Act.

There is no need to consider paragraph (b) as paragraph (a) is satisfied.

Subsection 38-190(3) of the GST Act

Subsection 38-190(3) of the GST Act provides that without limiting subsection 38-190(2) or (2A), a supply covered by item 2 in that table is not GST-free if:

a)    it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and

b)    the supply is provided or the agreement requires it to be provided to another entity in Australia; and

c)    for a supply other than an input taxed supply - none of the following applies:

                      i.        the other entity would be an Australian-based business recipient of the supply, if the supply had been made to it;

                     ii.        the other entity is an individual who is provided with the supply as an employee or officer of an entity that would be an Australian-based business recipient of the supply, if the supply had been made to it; or

                    iii.        the other entity is an individual who is provided with the supply as an employee or officer of the recipient, and the recipient's acquisition of the thing is solely for a creditable purpose and is not a non-deductible

Based on the information given subsection 38-190(3) of the GST Act does not apply to your supply as you are supplying and providing the online video content to the non-resident business.

Your supply of online video content to the non-resident business is therefore GST-free under item 2.

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