Edited version of private advice

Authorisation Number: 1052319184124

Date of advice: 17 December 2024

Ruling

Subject: Supplies of producing music and the rights in relation to music content to a non-resident entity

Question 1

Is the intangible supply producing and recording a musical composition to a non-resident entity a GST-free supply under section 38-190 of the A New Tax System (Goods and Services Tax) Act 1999?

Answer 1

Yes.

Question 2

Is the supply of rights made in relation to your music content to various non-resident entities under agreement, a GST-free supply under section 38-190 of the A New Tax System (Goods and Services Tax) Act 1999?

Answer 2

Yes.

This ruling applies for the following periods:

Not applicable

Relevant facts and circumstances

You are registered for GST.

You carry on an enterprise of music composition & production, and you compose, produce and manage music compositions.

You conduct your business activities in your home studio in Australia.

You have entered into an agreement with several non-resident entities based outside of Australia.

You make a supply of rights in relation to your music content.

You also make a supply of producing and recording musical compositions.

The non-resident entities are not registered or required to be registered for GST.

The non-resident entities provide consideration in relation to these 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 38-190

Reasons for decision

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) defines a taxable supply as follows:

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 (Australia); 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 carry on an enterprise of music composition & production, and you compose, produce and manage music compositions. You make the following intangible supplies:

•                     supply of a right to act as a licensor digital distributor of your content

•                     supply of a right to represent, access, use, pitch, license, sub-license and administer your supplies

•                     supply of a right to exploit a master recording

•                     supply of producing a master recording and the assignment of the rights to the title and interest of this recording

•                     supply of arranging, producing, orchestrating, producing, sweetening, adapting, conducting, performing, and recording a musical composition.

The supplies listed above satisfy the requirements of section 9-5 of the GST Act as you receive consideration for your supplies, the supplies are made in the course of carrying on your enterprise, the supplies are connected with Australia as the music composition is produced in Australia and you are registered for GST.

The supply is a taxable supply unless it is GST-free or input taxed. There is no provision in the GST Act under which the supply would be input taxed, therefore it must be determined whether this supply is GST-free.

GST-free supplies

Under subsection 38-190(1) of the GST Act certain supplies of things, other than goods or real property, for consumption outside Australia are GST-free.

Item 2 in the table in subsection 38-190(1) of the GST Act provides that a supply that is made to a non-resident who is not in Australia 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 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.

The Goods and Services Tax Ruling, Goods and services tax: in the application of items 2 and 3 and paragraph (b) of item 4 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999: explains the Commissioner's view on when is a 'non-resident' or other 'recipient' of a supply 'not in Australia when the thing supplied is done' and when is 'an entity that is not an Australian resident' 'outside Australia when the thing supplied is done'.

Paragraph 257 states:

If a non-resident company does not have a fixed and definite place in Australia at, or through which, the business of the non-resident company is carried on in Australia, the company is not in Australia.

The recipients of your supplies are located outside Australia and are not registered or required to be registered for GST. Therefore, your supplies are made to non-resident entities who are not in Australia when the thing supplied is done.

You make intangible supplies of producing and recording musical compositions to non-resident entities. The supply is neither a supply of work physically performed on goods situated in Australia, nor a supply directly connected with real property situated in Australia. Consequently, the requirements of item 2(a) in the table in subsection 38-190(1) of the GST Act are satisfied. Hence the supply will be GST-free.

Under item 2 in the table in subsection 38-190(1) of the GST Act, only one of the requirements of (a) or (b) should be satisfied.

Supply of rights

Item 4 in the table in subsection 38-190(1) of the GST Act provides that a supply that is made in relation to rights if:

(a)           the Supply of rights

Australia or

(b)           the supply is to an entity that is not an Australian resident and is outside Australia when the thing supplied is done.

You have entered into a number of agreements with non-resident entities who are outside Australia when the various rights to use and distribute or supply your intangible supplies are provided. Consequently, the requirements of item 4(b) in the table in subsection 38-190(1) of the GST Act are satisfied.

Under item 4 in the table in subsection 38-190(1) of the GST Act, only one of the requirements of (a) or (b) should be satisfied. Hence the supply will be GST-free.

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