Edited version of private ruling

Authorisation Number: 1011730903933

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Ruling

Subject: GST on exports and provision of services

Question 1

Are you required to pay GST on goods exported by ship or aircraft?

Answer

Providing you ship the goods outside of Australia within 60 days of invoicing or receiving payment for the goods, your supplies of goods to locations outside of Australia satisfy the requirements of Item 1 of subsection 38-185(1) of the GST Act, they are not subject to GST but are GST-free as exports.

Question 2

Are you required to charge GST on program notes purchased and downloaded by overseas customers?

Answer

Providing you are able to obtain sufficient information from the recipient of the supply to determine that the supply is for consumption outside of Australia, then the program notes will be GST-free.

Question 3

Are you required to charge GST when you provide services of arranging visas, travel and accommodation to overseas purchasers?

Answer

If the requirements of one of those items in subsection 38-190(1) of the GST Act are met, the supply is GST-free under that item provided subsection 38-190(2), 38-190(2A) or 38-190(3) of the GST Act does not negate that GST-free status.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are a company who supplies products and services to companies and individuals both in Australia and overseas.

You plan to produce products overseas and import them to Australia for resale here and overseas.

Your ruling question about your sale of products is specific to those products that you will supply by shipping the product directly overseas.

You sell electronic products via your website that are downloaded by overseas purchasers.

Your ruling question is specific to those electronic products purchased by overseas purchasers and downloaded from the net overseas.

You provide administrative services for activity co-ordination within Australia.

You charge your clients a service fee of a set amount for providing administrative services which may include assisting with visa applications, car rentals, travel, accommodation and arranging travel insurance.

Your ruling question about your supply of services is specific to the component of services you provide to purchasers who are overseas at the time of supply.

You do not sell the actual air tickets and accommodation but instead provide services to locate appropriate products for your clients and then charge a service fee for finding and making bookings.

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 Subsection 38-185(1).

A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-185(3).

A New Tax System (Goods and Services Tax) Act 1999 Section 38-190.

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).

A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-190(4).

A New Tax System (Goods and Services Tax) Act 1999 Section 195-1.

Question 1

Summary

Providing you ship the goods outside of Australia within 60 days of invoicing or receiving payment for the goods, your supplies of goods to locations outside of Australia satisfy the requirements of Item 1 of subsection 38-185(1) of the GST Act, they are not subject to GST but are GST-free as exports.

Detailed reasoning

Are you required to pay GST on goods exported by ship or aircraft?

Goods and Services Tax Ruling GSTR 2002/6 is about the operation of section 38-185 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) which sets out when supplies of goods that are GST-free exports.

Item 1 in the table in subsection 38-185(1) of the GST Act provides that a supply of goods is GST-free if the supplier exports them from Australia before, or within 60 days (or such further period that the Commissioner allows) after:

§ the day on which the supplier receives any of the consideration for the supply; or

§ if, on an earlier day, the supplier gives an invoice for the supply the day on which the supplier gives the invoice.

According to paragraph 22 of GSTR 2002/6, the requirement that the supplier exports the goods is satisfied where either:

§ the supplier contracts at the suppliers own expense with an international carrier for the transportation of the goods to a destination outside Australia; or

§ the supplier is responsible for delivering the goods to the operator of a ship or aircraft who, or that, has been engaged by another party to transport those goods to a destination outside Australia; or

§ the requirements of subsection 38-153 (3) of the GST Act are met.

In your case, you have customers based outside of Australia who purchase your goods and they require you to post the goods to locations outside Australia. You arrange postage of the goods to locations outside Australia via either ship or aircraft.

Item 1 requires not only that there is an export of goods, but that the supplier is the entity that exports them. The supplier is considered to be the exporter when the supplier organises the delivery of the goods on board a ship or to the aircraft operator even if the supplier arranges for another party such as a freight forwarder, postal agency or similar international transport provider to deliver the goods on behalf of the supplier.

Please note that to demonstrate that a supply is a GST-free export, you must have sufficient documentary evidence to show that all the requirements of item 1 are met.

We consider that a supplier has sufficient documentary evidence when the supplier has sufficient documentation for a person independent of the transaction to reasonably conclude that:

§ there was a supply of goods;

§ the supplier was the entity that exported the goods; and

§ the goods were exported from Australia and within the 60 days specified time limits.

You must obtain such documentary evidence during the process of exporting the goods, or within a reasonable period of time after the goods have been exported.

Table 1 of Appendix B in GSTR 2002/6 lists the types of transport documentation that a supplier may have depending on the mode of transport used to export the goods.

Question 2

Summary

Providing you are able to obtain sufficient information from the recipient of the supply to determine that the supply is for consumption outside of Australia, then the program notes will be GST-free.

Detailed reasoning

Are you required to charge GST on program notes purchased and downloaded by overseas customers?

Under section 9-5 of the GST Act you make a taxable supply if:

(a)     you make the supply for consideration,

(b)    the supply is made in the course or furtherance of an enterprise that you carry on,

(c)     the supply is connected with Australia; and

(d)    you are registered or required to be registered for GST.

(d)  However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

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

Under Item 2 in subsection 38-190(1) of the GST Act a supply, other than a supply of goods or real property, to a non-resident outside Australia is GST-free if the following conditions are satisfied:

(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- residents enterprise, but is not registered or required to be registered.

Subsection 38-190(3) of the GST Act negates, in certain circumstances, the GST-free status that would otherwise apply to the supply of a thing covered by Item 2 in subsection 38-190(1) of the GST Act.

Subsection 38-190(3) of the GST Act provides that a supply covered by Item 2 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.

To work out whether the supplies provided are for consumption outside of Australia and therefore GST-free, a supplier needs to ascertain certain information at the time the thing supplied is done.

Chapter 1 of the ATO's Electronic Commerce Industry Partnership - issues register provides guidance on what information the supplier must obtain about the recipient of the supply to determine whether the supply is for consumption outside of Australia.

For further information the following link is for the ATO's Electronic Commerce Industry Partnership - issues register page. http://ato.gov.au/businesses/content.asp?doc=/content/18428.htm

Question 3

Summary

If the requirements of one of those items in subsection 38-190(1) of the GST Act are met, the supply is GST-free under that item provided subsection 38-190(2), 38-190(2A) or 38-190(3) of the GST Act does not negate that GST-free status.

Detailed reasoning

Are you required to charge GST when you provide services of arranging visas, travel and accommodation to overseas purchasers?

Subsection 38-190(1) of the GST Act specifies the circumstances where the supply of things other than goods or real property, for consumption outside Australia is GST-free.

Subsection 38-190(1) of the GST Act comprises five items which set out supplies of things other than goods or real property that are GST-free and appear as follows.

Supplies of things, other than goods or real property, for consumption outside Australia
Item	Topic	These supplies are GST-free (except to the extent that they are supplies of goods or *real property)...
1	Supply connected with property outside Australia	a supply that is directly connected with goods or real property situated outside Australia.
2	Supply to *non-resident outside Australia.	a supply that 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-residents *enterprise, but is not *registered or *required to be registered.
3	Supplies used or enjoyed outside Australia	a supply: (a) that is made to a *recipient who is not in Australia when the thing supplied is done; and (b) the effective use or enjoyment of which takes place outside Australia; other than a supply of work physically performed on goods situated in Australia when the thing supplied is done, or a supply directly connected with *real property situated in Australia.
4	Rights	a supply that is made in relation to rights if: (a) the rights are for use outside 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.
5	Export of services used to repair etc. imported goods	a supply that is constituted by the repair, renovation, modification or treatment of goods from outside Australia whose destination is outside Australia.

(*denotes a defined term under section 195-1 of the GST Act

If the requirements of one of those items in subsection 38-190(1) of the GST Act are met, the supply is GST-free under that item provided subsection 38-190(2), 38-190(2A) or 38-190(3) of the GST Act does not negate that GST-free status.

Item 1

Under item 1, a supply of a thing is GST-free if that supply is directly connected with goods or real property situated outside Australia.

Where a supply has a direct connection with goods or real property, or is a supply of work physically performed on goods, the location of goods or real property is the basis upon which the GST treatment of the supply is determined under item 1. The place of consumption is in effect determined by the location of the goods or real property. If the goods or real property are located outside Australia, the supply of a thing is GST-free under item 1.

For more information on item 1 please refer to Goods and Services Tax Ruling GSTR 2003/7 which is available at www.ato.gov.au

Item 2

Item 2 provides that a supply is GST-free if 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 nor a supply directly connected with real property situated in Australia; or

(b)   the non-resident acquires the thing in carrying on their enterprise but is not registered or required to be registered for GST.

However, the scope of item 2 is limited by subsection 38-190(3) of the GST Act which provides that a supply covered by item 2 is not GST-free if:

§ it is a supply under an agreement entered into, whether directly or indirectly with a non-resident; and

§ the supply is provided or the agreement requires it to be provided, to another entity in Australia.

For more information on subsection 38-190(3) of the GST Act please refer to Goods and Services Tax Ruling GSTR 2005/6 (available at www.ato.gov.,au).

A non-resident is defined in section 195-1 of the GST Act to mean an entity that is not an Australian resident for income tax purposes.

For a supply to be within the scope of item 2, the supply must be made to a non-resident who is not in Australia when the thing is done. The expression not in Australia required that the non-resident is not in Australia in relation to the supply.

A non-resident company is not in Australia when the thing supplied is done

Goods and Services Tax Ruling GSTR 2004/7 (available at www.ato.gov.au) provides guidance on when a non-resident is not in Australia in relation to the supply.

A non-resident company is present in Australia if:

§ it carries on a business or its activities in Australia through a place of its own or through an agent acting on its behalf; and

§ that place of business or agent has a fixed and definite place in Australia; and

§ the business has continued for a substantial period of time.

Even if a company is in Australia, it may not be in Australia in relation to the supply and so can still satisfy the not in Australia requirement. To work out whether a company is in Australia in relation to the supply, it is necessary to examine the role the presence of the company in Australia plays in relation to the supply.

A non-resident is in Australia in relation to the supply if:

§ the supply is for the purposes of the Australian presence of the company; or

§ the presence of the company in Australia is involved in the supply unless the only involvement is minor.

If the involvement of the Australian presence is limited to the carrying out of simple administrative tasks on behalf of the company, as a matter of administrative convenience, that involvement is minor. The connection between the supply and the presence is so minor in nature that it is reasonable to conclude that the presence of the company in Australia is not in relation to the supply.

Tasks of a simple administrative nature include:

§ payment of, or arranging for payment of, the suppliers invoice on behalf of the company;

§ passing on an e-mail to the company;

§ being a point of telephone contact to pass on messages to the company;

§ being a mailing address or delivery contact on behalf of the company;

§ being a point of contact for a visiting representative of the company; and

§ on-forwarding information to the company.

Where a non-resident is not in Australia when the supply is done, the supply must still meet the requirements of paragraph (a) or paragraph (b) in item 2 to be GST-free.

Paragraph (a)

Paragraph (a) in item 2 requires that the supply must not be a supply of work physically performed on goods situated in Australia or directly connected with real property in Australia.

Where the requirements of paragraph (a) are met, the supply will be GST-free under item 2.

For more information on the meaning directly connected with goods or real property and a supply of work physically performed on goods please refer to Goods and Services Tax Ruling GSTR 2003/7.

Paragraph (b)

In order to meet the requirements of paragraph (b) in item 2, the non-resident recipient of the supply must acquire the thing in carrying on their enterprise but must not be registered or required to be registered for GST.

You are required to be registered for GST where your GST annual turnover for supplies connected with Australia is $75,000 or more ($150,000 if you are non-profit organisation).

Accordingly, where the requirements of paragraph (b) are not met, the supply will not be GST-free under item 2.

In summary, a supply of services to a non-resident company who is not in Australia in relation to the supply will be GST-free where the requirements in either paragraph (a) or (b) of item 2 are satisfied and the supplier is not required to provide the supply to another entity in Australia.

Item 3

Item 3 applies to supplies used or enjoyed outside Australia. Item 3 provides that a supply of a thing other than goods or real property is GST-free if:

(a)   the supply is made to a recipient who is not in Australia when the thing supplied is done; and

(b)   the effective use or enjoyment of the supply takes place outside Australia; and

the supply is not a supply of work physically performed on goods situated in Australia when the thing supplied is done or a supply directly connected with real property situated in Australia.

For a supply of services to be GST-free all the requirements in item 3 must be satisfied.

Goods and Services Tax Rulings GSTR 2003/7, GSTR 2004/7 and 2007/2 (available at www.ato.gov.au) provide the Tax Offices view on the application of item 3.

Paragraph (a) of item 3 - recipient not in Australia

For a supply to be within the scope of item 3, the recipient must not be in Australia in relation to the supply when the thing supplied is done. A recipient, in relation to a supply, is the entity to whom the supply is made. It is not a requirement of item 3 that the recipient is a non-resident entity.

Accordingly, where an Australian resident is the recipient of the supply of services, and in Australia at the time of supply, the not in Australia requirement in item 3 is not met.

However, where a supply is made to a recipient who fails the not in Australia requirement, it is necessary to consider whether subsection 38-190(4) of the GST Act applies.

Subsection 38-190(4) of the GST Act

Subsection 38-190(4) of the GST Act extends the scope of item 3. The subsection provides that a supply to a recipient who is in Australia in relation to the supply is taken for the purposes of item 3, to be a supply made to a recipient who is not in Australia if:

(a)   the supply is made under an agreement entered into, whether directly or indirectly, with an Australian resident; and

(b)   the supply is provided or the agreement requires it to be provided, to another entity outside Australia.

The expression provided to another entity in subsection 38-190(4) of the GST Act seeks to identify the entity to which the item 3 actually flows. For example, if a supply of a service is made to an Australian resident recipient who is in Australia in relation to the service and that service is rendered to or received by another entity at the time it is performed, the supply is provided to that other entity. Subsection 38-190(4) of the GST Act treats the supply as being made to a recipient who is not in Australia.

For further information on subsection 38-190(4) of the GST Act please refer to Goods and Services Tax Ruling GSTR 2004/7.

Paragraph (b) of item 3 - place of effective use or enjoyment

Paragraph (b) of item 3 requires the place of effective use or enjoyment of a supply to be determined (that is, whether the place is outside Australia). It is therefore necessary to inquire as to the entity that has the actual use or enjoyment of the supply.

If a supply is made to one entity (that is the recipient) but is provided to another entity, that other entity is the providee entity. We determine whether effective use or enjoyment of the supply takes place outside Australia with reference to the providee entity and not the recipient entity.

Providee is a company

Where the providee is a company, effective use or enjoyment of the supply only takes place outside Australia if there is a provision of the supply to the company outside Australia.

To determine whether there is a provision of a supply to a company in Australia or outside Australia we consider whether that company has a presence in Australia. If the company does not have a presence in Australia (that is, it only has a presence outside Australia), the supply is provided to that company outside Australia and effective use or enjoyment of the supply takes place outside Australia. The supply is GST-free under item 3 if the other requirements of item 3 are satisfied.

If the company only has a presence in Australia (that is, it has no presence such as a branch office outside Australia), the supply is provided to that entity in Australia and effective use or enjoyment of the supply takes place in Australia. The supply is not GST-free under item 3 as all the requirements in the item are not met.

Summary

In summary, a supply of services to a recipient who is not in Australia when the thing supplied is done will be GST-free under item 3 if the effective use or enjoyment of the supply takes place outside Australia and the supply is not a supply of work physically performed on goods, or directly connected with real property in Australia.

Item 4

Under item 4, a supply that is made in relation to rights is GST-free if:

(a)   the rights are for use outside 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.

For more information on item 4 please refer to Goods and Services Tax Rulings GSTR 2003/8 and GSTR 2004/7.

Item 5

Item 5 provides for the GST-free supply of services constituting the repair, renovation, modification or treatment of goods from outside Australia whose destination is outside Australia.

However, the supply in item 5 is not GST-free if it is the supply of a right or option to acquire something the supply of which would be connected with Australia and would not be GST-free.

For more information on item 5 please refer to Goods and Services Tax Ruling GSTR 2005/2.

Subsections 38-190(2) and 38-190(2A) of the GST Act

Subsection 38-190(2) of the GST Act

Subsection 38-190(2) of the GST Act provides that a supply covered by any of items 1 to 5 in the table in subsection 38-190(1) of the GST Act is not GST-free if it is the supply of a right or option to acquire something the supply of which would be connected with Australia and would not be GST-free.

For more information on subsection 38-190(2) of the GST Act please refer to the Goods and Services Tax Ruling GSTR 2003/8.

Subsection 38-190(2A) of the GST Act

Subsection 38-190(2A) of the GST Act provides that a supply covered by any of items 2 to 4 in the table in subsection 38-190(1) of the GST Act is not GST if the acquisition of the supply relates (whether directly or indirectly, or wholly or partly) to the making of a supply of real property situated in Australia that would be, wholly or partly, input taxed under subdivision 40B or 40C of the GST Act.

Subdivision 40B of the GST Act deals with the supply of premises (including a berth at a marina) by way of lease, hire or licence. Subdivision 40C of the GST Act deals with the sale of residential premises and the supply of residential premises by way of long term lease.

For more information on subsection 38-190(2A) please refer to the Goods and Services Tax Determination GSTD 2007/3 which is available at www.ato.gov.au