ATO Interpretative Decision
ATO ID 2001/575
Goods and Services Tax
GST and supply of IT industry domain name to a non-resident recipient outside AustraliaFOI status: may be released
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With effect from 1 July 2015, the term 'Australia' is replaced in nearly all instances within the GST, Luxury Car Tax and Wine Equalisation Tax legislation with the term 'indirect tax zone' by the Treasury Legislation Amendment (Repeal Day) Act 2015. The scope of the new term, however, remains the same as the repealed definition of 'Australia' used in those Acts. For readability and other reasons, where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in subsection 195-1 of the GST Act.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a business operator in the Information Technology (IT) industry, making a GST-free supply under item 2 in the table in subsection 38-190 (1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies an IT industry domain name to a non-resident recipient outside Australia?
Decision
Yes, the entity is making a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act when it supplies an IT industry domain name to a non-resident recipient outside Australia.
Facts
The entity is a business operator in the IT industry. As a part of its business the entity acquires 'domain names' by reserving them from suppliers of domain name registrations and then supplies the domain names to its clients.
The entity is supplying the domain name to a non-resident recipient who is outside Australia.
The non-resident recipient acquires the domain name to carry on its overseas enterprise. The non-resident recipient is neither registered nor required to be registered for goods and services tax (GST).
There is no agreement between the two parties to provide the supply to another entity within Australia. The non-resident recipient may use the domain name to conduct its business with customers throughout the world, including those in Australia.
The entity is registered for GST.
Reasons for Decision
Subsection 38-190(1) of the GST Act specifies circumstances where the supply of things other than goods or real property, for consumption outside of Australia, is GST-free. Domain names are intangible products and are neither goods nor real property. As such, the supply of a domain name is appropriately considered under subsection 38-190(1) of the GST Act.
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 where:
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- 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
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- the non-resident acquires the thing in carrying on the non-resident's enterprise, but is not registered or required to be registered.
The supply of the domain name to a non resident overseas recipient is not work physically performed on goods situated in Australia nor directly related to real property in Australia. Therefore, the supply satisfies the requirements of item 2(a) in the table in subsection 38-190(1) of the GST Act.
The non-resident recipient acquires the domain name in carrying on its enterprise overseas and is neither registered nor required to be registered for GST. Therefore, the supply satisfies the requirements of item 2(b) in the table in subsection 38-190(1) of the GST Act
Item 2 in the table in subsection 38-190(1) of the GST Act is limited by subsection 38-190(3) of the GST Act which provides that a supply covered by item 2 in that table is not GST-free if:
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- it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and
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- the supply is provided, or the agreement requires it to be provided, to another entity in Australia.
In this case, there is no agreement between the entity and the non-resident recipient to provide the supply to another entity within Australia. Therefore, the supply is not excluded by subsection 38-190(3) of the GST Act from being GST-free.
As the supply satisfies the requirements in item 2 in the table in subsection 38-190(1) of the GST Act and is not excluded from being GST-free by subsection 38-190(3) of the GST Act, the entity is making a GST-free supply when it supplies the domain names to a non-resident recipient outside Australia.
Date of decision: 12 October 2000
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
subsection 38-190 (1)
subsection 38-190 (1) table item 2
subsection 38-190 (3)
ATO ID 2001/574
Keywords
Goods & services tax
Consumption outside Australia
GST-free
ISSN: 1445-2782