Edited version of private advice

Authorisation Number: 1051960237728

Date of advice: 10 March 2022

Ruling

Subject: GST and supply of online digital content via streaming platform

Question 1

Is your supply of online digital content to an online streaming platform service provider ('the Provider') a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act?

Answer

Yes. Your supply of online digital content to the Provider is a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act as it is a supply to a non-resident who is not in the indirect tax zone (Australia) when the thing supplied is done and it neither a supply of work physically performed on goods situated in Australia nor a supply directly connected with real property situated in Australia.

Question 2

Is your supply of online digital content to Australian resident donors a taxable supply under section 9-5 of the GST Act?

Answer

Yes. Yoursupply of online digital content to Australian resident donors is a taxable supply under section 9-5 ofthe GST Act.

Question 3

Is your supply of online digital content to non-resident donors a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act?

Answer

Yes. Your supply of online digital content to non-resident donors is a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act.

This ruling applies for the following period:

10 March 2022 to 9 March 2026

The scheme commences on:

10 March 2022

Relevant facts and circumstances

• You carry on an enterprise.
• You have an ABN, with an annual GST turnover over $75,000 and are registered for GST.
• You are an online content creator.
• The content of your entertainment varies and is dependent on demand and could be anything from podcasting, livestreaming daily activities or art. There is no fixed content, and this can change according to trends.
• Your content is made available digitally on an online streaming platform ('the Platform').
• Your participation in the Program ("Program"), including your supply of online content, is governed by the Agreement ("Agreement") and Terms of Service.
• The Provider's Program ("the Program") permits content creators to monetise the broadcasting, streaming, distribution, and exhibition of their user content through various products, services, or programs.
• You are eligible to receive various fees under the Agreement as part of the Program (collectively, the "Program Fees"), which are payable by the Provider under the terms set out in the agreement.
• You are paid monthly by the Provider in accordance with the Agreement.
• The Agreement provides that the customers of the Provider are not, by virtue of your participation in the Program, your customers.
• You have no influence on who subscribes to their Platform account and the number of subscriptions can vary each month as subscribers may subscribe one month and then unsubscribe if they are unsatisfied with your content.
• Your viewers are all over the world and there is no ability within the Platform to determine where they are located.
• You also receive donations from their viewers through PayPal in the viewer's respective currency.
• Most of your viewers who donate to you via PayPal are overseas viewers.
• You do not issue any invoices to their viewers who make donations to them.
• There is no exchange directly with your viewers outside of the Platform.
• You do not send any content to subscribers outside of the Platform.
• The Provider does not have any representative in Australia that is involved with your supplies.

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 9-10

A New Tax System (Goods and Services Tax) Act 1999 section 9-15

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(2)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(2A)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(3)

Reasons for decision

Question 1

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

(a)  the supplier makes the supply for consideration; and

(b)  the supply is made in the course or furtherance of an enterprise that the supplier carries on; and

(c)   the supply is connected with Australia; and

(d)  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 the above must be satisfied for your supply of online digital content to be a taxable supply.

In your case, their supply of online content is governed by Agreement and Terms of Service. Your supply of online digital content, including rights relating to exclusive use of the content for a period, is made to the Provider. This supply is made for consideration, being the various Program Fees, you are entitled to receive in accordance with the agreed terms.

Your supply satisfies paragraphs (a) to (d) of section 9-5 of the GST Act as:

(a)  you make a supply of online content and associated rights to the Provider in consideration the Program Fees; and

(b)  the supply is made during an enterprise that you carry on as a content creator; and

(c)   your supply is connected with Australia as it is made through an enterprise that you carry on in Australia; and

(d)  you are registered for GST.

However, your supply of online digital 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 digital content input taxed.

GST-free supplies

Relevant to your supply of online digital 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 (an intangible) is GST-free where the supply is made to a non-resident who 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 need to be satisfied.

In your case, your supply of online content and associated rights is made to the Provider.

Your supply of online digital content satisfies paragraph (a) of item 2 as:

• your supply of online digital content is made to the Provider, a non-resident who is not in Australia in relation to your supply when the supply is done; and
• your supply of online digital 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.

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

However, paragraph (a) of item 2 is limited by 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 expense.

Based on the information given, subsection 38-190(3) does not apply to your supply as you are supplying and providing the online digital content to the Provider, the non-resident operating the Platform.

Therefore, your supply of online digital content to the Provider in consideration for the Program Fees is GST-free under item 2 in the table in subsection 38-190(1) of the GST Act. No GST is payable on the Program Fees.

Question 2

Is your supply of online digital content to Australian resident donors a taxable supply under section 9-5 of the GST Act?

Detailed reasoning

As per above, a supply is a taxable supply under section 9-5 of the GST Act if the requirements in paragraph (a) to (d) are satisfied.

Your supply of online digital content satisfies paragraphs (b) to (d) of section 9-5 of the GST Act as the supply is made during an enterprise that you carry on as a content creator, your supply is connected with Australia as it is made through an enterprise that you carry on in Australia and you are registered for GST.

However, we need to consider whether paragraph (a) is satisfied. That is, whether you make a supply for consideration when you receive donations from resident donors in relation to your online content.

Supply

A supply is defined in subsection 9-10(1) of the GST Act as "any form of supply whatsoever" and includes:

(a)  A supply of goods;

(b)  A supply of services;

(c)   A provision of advice or information;

(d)  A grant, assignment or surrender of real property;

(e)  A creation, grant, transfer, assignment or surrender of any right;

(f)    A financial supply;

(g)  An entry into, or release from, an obligation:

                      i.        To do anything; or

                     ii.        To refrain from an act; or

                    iii.        To tolerate an act or situation;

(h)  Any combination of any 2 or more of the matters referred to in paragraphs (a) and (g).

The definition of supply is extremely broad. Notwithstanding the fact that you do not have a contractual relationship with any of your viewers, we consider that your creation of content that viewers access via an online platform fits within the definition of a supply. This is not altered by the fact that the Agreement you entered into with the Provider provides that the Provider's customers are not, by virtue of your participation in the Program, your customers.

Supply for consideration

According to subsection 9-15(1) of the GST Act, consideration includes:

(a)  Any payment in connection with a supply of anything; and

(b)  Any payment in response to a supply of anything.

GSTR 2006/9 Goods and services tax: supplies ("GSTR 2006/9")discusses the meaning of supply and consideration in the context of GST law. Relevantly, paragraphs 107 to 108 state:

107. The definition of consideration in section 195-1 states:

consideration, for a supply or acquisition, means any consideration within the meaning given by sections 9-15 and 9-17, in connection with the supply or acquisition.

Hence, consideration for a supply is defined as being any consideration in connection with a supply. Consideration in section 9-15 relevantly means:

(1) Consideration includes:

(a) any payment, or any act or forbearance, in connection with a supply of anything; and

(b) any payment, or any act or forbearance, in response to or for the inducement of a supply of anything.

(2) It does not matter whether the payment, act or forbearance was voluntary...

The Commissioner takes the view that the words 'in connection with the supply or acquisition' in section 195-1, and the phrases 'in connection with a supply of anything' and 'it does not matter whether the payment, act or forbearance was voluntary' in section 9-15 mean that there does not have to be an enforceable relationship for there to be a sufficient nexus between the supply and a payment. Nor does the consideration have to be agreed in advance.

108. For GST purposes you may still make a supply in the absence of enforceable obligations, provided there is something else, such as goods, services or some other thing, passing from the supplier to the recipient. For the supply to be a taxable supply there must also be consideration and a sufficient nexus between the supply and the consideration. The Ruling considers 'sufficient nexus' further in paragraph 180.

To determine if you make a supply for consideration when you receive donations from resident donors in relation to your online content, we must determine if there is a sufficient nexus between the supply and the consideration.

Referring to the nexus test in Goods and Services Tax Ruling GSTR 2001/4 Goods and Services Tax: GST consequences of court orders and out-of-court settlements:

The nexus test in Australia

89. Consideration 'for a supply or acquisition' is defined in section 195-1 as any consideration, within the meaning given by sections 9-15 and 9-17, which is 'in connection with the supply or acquisition

90. The Commissioner considers that, in the context of the GST Act, the expression 'you make the supply for consideration' in paragraph 9-5(a) means the same as 'there is consideration for the supply that you make'.

91. The references in the GST Act to 'supply for consideration' and more commonly to 'consideration for a supply' underscore the close coupling between the supply and the consideration that is necessary before a payment will be consideration for a supply that will make the supply subject to GST.

92. In a similar fashion to the GST legislation in New Zealand, the nature of the nexus required between supply and consideration is specified in the definition of consideration. A payment will be consideration for a supply if the payment is 'in connection with', 'in response to' or 'for the inducement' of a supply.

93. In determining whether a payment satisfies the requirements of subsection 9-15(1), the test is whether there is a sufficient nexus between the supply and the payment made.

94. This test may establish a nexus between consideration and supply in a broader range of cases than the 'direct link' test which applies in the European Community and in Canada. While caution needs to be exercised in applying decisions on connective terms in other contexts, the term 'in connection with' has been held to be broader in scope than 'for'.

95. The meaning given to the term 'in connection with' in Berry's Case is similar to that which was described by the Court of Appeal in New Zealand Refining, but needs to be applied with regard to the structure of the definition of supply in the GST Act. In Berry's Case, Kitto J held that 'in connection with' was a broader test than 'for'. At page 659 he commented that consideration will be in connection with property where:

'the receipt of the payment has a substantial relation, in a practical business sense, to that property'.

96. In determining whether a sufficient nexus exists between supply and consideration, regard needs to be had to the true character of the transaction. An arrangement between parties will be characterised not merely by the description which parties give to the arrangement, but by looking at all of the transactions entered into and the circumstances in which the transactions are made.

Subsection 9-15(2) of the GST Act provides that 'it does not matter whether the payment, act or forbearance was voluntary'. In this case, it does not matter that the donation made by the resident donors to you is voluntary. We consider that the donations via PayPal have a substantial relation, in a practical business sense, to your supply of online digital content. Although there is no obligation on the resident donors to make these payments, the payments are made "in response to" your supply and a sufficient nexus exists between payments and the supply of the online digital content.

As such, your supply of online digital content satisfies paragraphs (a) to (d) of section 9-5 of the GST Act outlined above. There is no provision under the GST Act that makes your supply of online digital content input taxed or GST-free.

As the supply of the digital online content to resident donors is a taxable supply, GST is payable.

Question 3

Is your supply of online digital content to non-resident donors a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act?

Detailed reasoning

A supply is a taxable supply under section 9-5 of the GST Act if the requirements in paragraph (a) to (d) are satisfied.

As per above, the donations via PayPal are voluntary payments made in connection with the supply of digital content made by you to the non-resident donors.

Accordingly, your supply of online digital content satisfies paragraphs (a) to (d) of section 9-5 of the GST Act.

However, your supply of online digital 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 digital content input taxed.

GST-free supplies

As per above, relevant to your supply of online digital content is item 2 in the table in subsection 38-190(1) of GST Act (item 2).

From the facts given, your supply of online digital content is made to the non-resident donors (as shown by international sales on PayPal records), for which you receive consideration in the form of PayPal donations.

Paragraph (a) of item 2

Based on this, your supply of online digital content satisfies paragraph (a) of item 2 as:

• your supply of online digital content is made to non-resident donors who are not in Australia in relation to your supply when the supply is done; and
• your supply of online digital 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

As per above, 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 certain conditions are met.

Based on the information given, subsection 38-190(3) does not apply to your supply as you are supplying and providing the online digital content to non-resident donors.

Therefore, your supply of online digital content to the non-resident donors is GST-free under item 2 in the table in subsection 38-190(1) of the GST Act.

Where a supply is GST-free, no GST is payable on the supply.

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).