Edited version of private advice

Authorisation Number: 1052024891287

Date of advice: 23 August 2022

Ruling

Subject: GST and provision of services to an overseas company

Question

Is GST chargeable to you by an Australian specialist consultant for specific services to you where the services provided form part of your consulting services as main consultant to an overseas entity (client)?

Answer

In this case there are two transactions happening. The first is a supply of consultancy services from the Australian specialist consultant to you and which is taxable. The second is the services you provide to the overseas entity which is GST-free.

Therefore, when the Australian specialist consultant invoices you for their sub-consultancy services specifically for this overseas client they have to include GST on their invoice to you.

This ruling applies for the following period:

Year ending 30 June 2023

The scheme commences on:

1 July 2022

Relevant facts and circumstances

You have a contract to provide consulting services to an overseas company.

You engage an Australian specialist consultant to provide specialist knowledge and sub-consulting services from time to time where these services are specifically for this project.

You do not charge GST on your invoices to the overseas client as the services are provided to an overseas recipient.

You believe that GST does not apply to the services supplied by the Australian specialist consultant to you as the use of the service is outside Australia as you are the conduit and intermediary by which the Australian specialist consultant service is delivered to Singapore.

Ruling Legislation

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 paragraph 9-25(5)(a)

Reasons for decision

Relevant to the supply of services made by the Australian specialist consultant to you are section 9-5 and paragraph 9-25(5)(a) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Subsection 9-25(5)(a) of the GST Act provides that a supply of things other than goods or real property (such as services) is connected with Australia if the supply is done in Australia.

GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (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 of the above must be satisfied for a supply of services to be a taxable supply.

From the information given, the supply of services by the Australian specialist consultant to you satisfies paragraphs (a) to (d) of section 9-5 of the GST Act as:

(a)          the Australian specialist consultant makes the supply of services for consideration; and

(b)          the supply is made in the course of a business that it carries on; and

(c)           the supply is connected with Australia as it is made through a business that the Australian specialist consultant carries on in Australia; and

(d)          the Australian specialist consultant is registered for GST

However, a supply of services to an entity 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 the Australian specialist consultant supply of services GST-free or input taxed.

To reiterate, in this case there are two transactions happening. The first is a supply of consultancy services from the Australian specialist consultant to you and which is taxable. The second is the services you provide to the overseas entity which is GST-free.

Therefore, when the Australian specialist consultant invoices you for their sub-consultancy services specifically for this overseas client, they have to include GST on their invoice to you. However, your provision of services to the overseas client is GST-free.

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