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Edited version of private ruling
Authorisation Number: 1011677131268
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Ruling
Subject: goods and services tax and supplies of services to Australian companies
Questions
1. Is GST payable on your supplies of the services to Australian clients where you do not supply the services through an Australian operation and you perform the services onsite at your client's premises in Australia?
Answer: Yes.
2. Is GST payable on your supplies of the services to Australian clients where you do not supply the services through an Australian operation and you perform the services in an overseas country?
Answer: No
3. Will GST be payable on your supplies of the services to Australian clients where you supply the services through your Australian operation and you perform the services onsite at your clients' premises in Australia?
Answer: Yes.
4. Will GST be payable on your supplies of the services to Australian clients where you supply the services through your Australian operation and you perform the services in an overseas country?
Answer: Yes.
5. If GST is not payable on your supplies of the services to Australian clients where you perform the services in an overseas country, do you require a letter from the Australian Taxation Office (Tax Office) to provide to your clients to explain why some invoicing is subject to GST and why some invoicing is not subject to GST?
Answer: No.
Relevant facts and circumstances
You are registered for GST.
You supply IT consulting and support services (the services) to Australian clients under agreements you enter into with these clients.
You charge for the services.
When you perform the services, your client is a company incorporated in Australia and your supplies of the services are for the purposes of the client's presence in Australia.
You do not have an Australian operation, but you will have an Australian operation at some time in the future.
When you have an Australian operation, you will supply the services through the Australian operation.
You perform the services onsite at your client's premises in Australia or in an overseas country.
Where you enter into an agreement to make a supply of services to an Australian client, the supply is not provided to another entity outside Australia and the agreement does not require that the supply be provided to another entity outside Australia.
Reasons for decisions
Question 1
Summary
GST is payable on your supplies of the services to Australian clients under the circumstances relating to question 1, because these supplies satisfy all of the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) under these circumstances.
Detailed reasoning
GST is payable by you where you make taxable supplies.
You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which states:
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
(c) you *carry on; and
(d) the supply is *connected with Australia; and
(e) 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 in section 195-1 of the GST Act)
Under the circumstances relating to question 1, you satisfy the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act. That is, you make the supplies of the services for consideration and in the course or furtherance of an enterprise that you carry on. Additionally, you are registered for GST.
There are no provisions in the GST Act under which your supplies of the services under the circumstances relating to question 1 are GST-free or input taxed.
Therefore, what remains to be determined is whether your supplies of the services under the circumstances relating to question 1 are connected with Australia.
Subsection 9-25(5) of the GST Act specifies when a supply of anything other than goods or real property is connected with Australia. There are three paragraphs in this subsection. Subsection 9-25(5) of the GST Act is relevant to your circumstances as you supply services and services are something other than goods or real property.
Paragraph 9-25(5)(a) of the GST Act provides that a supply of anything other than goods or real property is connected with Australia if the thing is done in Australia.
Paragraph 9-25(5)(b) of the GST Act provides that a supply of anything other than goods or real property is connected with Australia if the supply is made through an enterprise that the supplier carries on in Australia.
Paragraph 173 of Goods and Services Tax Ruling GSTR 2000/31 discusses paragraph 9-25(5)(b) of the GST Act. It states:
173. Paragraph 9-25(5)(b) is examined in more detail at paragraphs 213 to 224 below. However, broadly speaking, the paragraph has the effect that if the supply is part and parcel of an Australian based operation of the supplier, the supply of that thing is connected with Australia. If the Australian operation does the thing outside Australia, the supply of the thing is connected with Australia, if the supply is made by the Australian based operation.
Paragraph 9-25(5)(c) of the GST Act deals with supplies of rights or options to acquire things.
Under the circumstances relating to question 1, the thing supplied is done in Australia, because you perform the services in Australia. Therefore, the requirement of paragraph 9-25(5)(a) of the GST Act is satisfied under these circumstances. Consequently, your supplies of the services under these circumstances are connected with Australia, and therefore, the requirement of paragraph 9-5(c) of the GST Act is satisfied under these circumstances.
As you satisfy all of the requirements of section 9-5 of the GST Act under the circumstances relating to question 1, you make taxable supplies of the services under these circumstances, and therefore, GST is payable on your supplies of these services under these circumstances.
Question 2
Summary
GST is not payable on your supplies of the services to Australian clients under the circumstances relating to question 2, because these supplies are not connected with Australia under these circumstances.
Detailed reasoning
Under the circumstances relating to question 2, you satisfy the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act. That is, you make the supplies of the services for consideration and in the course or furtherance of an enterprise that you carry on. Additionally, you are registered for GST.
There are no provisions in the GST Act under which your supplies of the services under the circumstances relating to question 2 are GST-free or input taxed.
Therefore, what remains to be determined is whether your supplies of the services under the circumstances relating to question 2 are connected with Australia.
Subsection 9-25(5) of the GST Act is relevant to your circumstances as you supply services and services are something other than goods or real property.
Under the circumstances relating to question 2, you do not perform the services in Australia. Hence, the thing supplied is not done in Australia. Therefore, your supplies of the services under these circumstances are not connected with Australia under paragraph 9-25(5)(a) of the GST Act
Under the circumstances relating to question 2, your supplies of the services are not made by an Australian based operation of yours. Therefore, your supplies of the services under these circumstances are not connected with Australia under paragraph 9-25(5)(b) of the GST Act.
Paragraph 9-25(5)(c) of the GST Act is not relevant to your circumstances.
Consequently, under the circumstances relating to question 2, your supplies of the services are not connected with Australia, and therefore you do not satisfy the requirement of paragraph 9-5(c) of the GST Act under these circumstances.
As you do not satisfy all of the requirements of section 9-5 of the GST Act under the circumstances relating to question 2, you do not make taxable supplies of the services under these circumstances, and therefore, GST is not payable on your supplies of these services under these circumstances.
Question 3
Summary
GST will be payable on your supplies of the services to Australian clients under the circumstances relating to question 3, because all of the requirements of section 9-5 of the GST Act will be satisfied under these circumstances.
Detailed reasoning
Under the circumstances relating to question 3, you will satisfy the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act. That is, you will make the supplies of the services for consideration and in the course or furtherance of an enterprise that you carry on. Additionally, you are registered for GST.
There are no provisions in the GST Act under which your supplies of the services under the circumstances relating to question 3 will be GST-free or input taxed.
Therefore, what remains to be determined is whether your supplies of the services under the circumstances relating to question 3 will be connected with Australia.
Subsection 9-25(5) of the GST Act is relevant to your circumstances as you supply services and services are something other than goods or real property.
Under the circumstances relating to question 3, you will perform the services in Australia. Hence, the thing supplied will be done in Australia. Furthermore, under these circumstances, your Australian based operation will make the supplies. Consequently, your supplies of the services under these circumstances will be connected with Australia under paragraphs 9-25(5)(a) and 9-25(5)(b) of the GST Act, and therefore, you will satisfy the requirement of paragraph 9-5(c) of the GST Act under these circumstances.
As all of the requirements of section 9-5 of the GST Act will be satisfied under the circumstances relating to question 3, you will make taxable supplies of the services under these circumstances, and therefore, GST will be payable on your supplies of these services under these circumstances.
Question 4
Summary
GST will be payable on your supplies of the services to Australian clients under the circumstances relating to question 4, because all of the requirements of section 9-5 of the GST Act will be satisfied under these circumstances.
Detailed reasoning
Under the circumstances relating to question 4, you will satisfy the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act. That is, you will make the supplies of the services for consideration and in the course or furtherance of an enterprise that you carry on. Additionally, you are registered for GST.
There are no provisions in the GST Act under which your supplies of the services under the circumstances relating to question 4 will be GST-free or input taxed.
Therefore, what remains to be determined is whether your supplies of the services under the circumstances relating to question 4 will be connected with Australia.
Subsection 9-25(5) of the GST Act is relevant to your circumstances as you supply services and services are something other than goods or real property.
Under the circumstances relating to question 4, your Australian based operation will make the supplies of the services. Consequently, your supplies of the services under these circumstances will be connected with Australia under paragraph 9-25(5)(b) of the GST Act, and therefore, you will satisfy the requirement of paragraph 9-5(c) of the GST Act under these circumstances.
As all of the requirements of section 9-5 of the GST Act will be satisfied under the circumstances relating to question 4, you will make taxable supplies of the services under these circumstances, and therefore, GST will be payable on your supplies of these services under these circumstances.
Question 5
There is no requirement in the GST Act that if GST is not payable on your supplies of the services to Australia clients where you perform the services in an overseas country you require a letter from the Tax Office to provide to your clients to explain why some invoicing is subject to GST and why some invoicing is not subject to GST.
Additional information
If you make a supply that is partly taxable and partly non-taxable, you will make a mixed supply. In this case, GST will be payable on the taxable portion of the supply.