Edited version of private ruling

Authorisation Number: 1011894415523

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: GST and supply of access rights

Question

Is the supply of the access rights by the entity to the non-resident a taxable supply of real property?

Answer

Yes. The supply of the access rights by the entity to the non-resident is a taxable supply of real property.

Relevant facts and circumstances

The entity is a governing body of a recreational association in Australia. Its principal activities involve the promotion, development and general control of the recreation in Australia and overseas.

The entity is registered for goods and services tax (GST).

In 20XX, the entity entered into an agreement with a non-resident for the grant of access rights in relation to international and domestic events.

Under the agreement, the entity grants the non-resident rights in respect of the events held in Australia.

'Rights' is defined in the agreement is defined as:

· access rights which refer to the sole and exclusive right of access to the venues at which the events are held for the purpose of producing and distributing live audio-visual signals and non-live audio-visual recordings; and

· other rights which refer to the right to use, publish and transmit in all forms of media all official names and logos of the associations, all names, images and logos of the participating teams and players for the purpose of promoting the non-resident's exercise of its rights.

The access rights include access to, amongst other things:

· all venues at which the events are held and when they are played

· first class camera and commentary positions to enable the non-resident to provide first class coverage of the events and other activities incidental to such events

· dressing rooms, players, coaches, referees and other officials

· any part of the venue including a room for a presentation studio or an acceptable alternative

· a suitable gantry for the non-resident to make and record its transmission.

· where there is no suitable gantry available, the most advantageous part of the venue.

The fee in respect of the access rights and other rights is specified in the agreement.

The non-resident is a provider of pay-television coverage overseas. It is a company incorporated overseas and is not registered for GST or other purposes in Australia.

From time to time, the non-resident may have employees in Australia for the purposes of producing commentary and reporting of the events played in Australia. However, the non-resident does not have a fixed place of business or similar presence in Australia.

Reasons for decision

Supply of real property

'Real property' is defined in section 195-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to include:

d. any interest in or right over land; or

e. a personal right to call for or be granted any interest in or right over land; or

f. a licence to occupy land or any other contractual right exercisable over or in relation to land

Goods and Services Tax Ruling GSTR 2003/7 looks at the meaning of goods and real property as defined in the GST Act.

Paragraph 89 of GSTR 2003/7 provides that the expression 'interest in or right over land' is not intended cover all rights relating to land. Its interpretation is restricted to a legal or equitable interest in or right over the land. The definition in paragraph (a) above encompasses many interests in or rights over land such as, legal estates in fee simple, leasehold interests, restrictive covenants, easements and profits a prendre. A mere licence to occupy land falls short of creating legal or equitable interest in land; and such would not be real property as defined in paragraph (a).

Paragraph (b) of the definition of real property refers to a personal right to call for or be granted any interest in or right over land. It only covers a personal right to call for or be granted the class of real property described in paragraph (a).

The definition of real property in paragraph (c), however, includes a licence to occupy land or any other contractual right exercisable over or in relation to land. According to paragraph 91 of GSTR 2003/7, the phrase 'any other contractual right exercisable over or in relation to land' is to be read narrowly having regard to the preceding words 'a licence to occupy land'. Therefore, the phrase is limited to contractual rights that do not create an estate or interest in land but are recognised at law as exercisable over land.

GSTR 2003/7 gave hotel accommodation as an example of a licence to occupy land. Paragraph 94 of GSTR 2003/7 explains that a person who takes a room at a hotel is conferred with a licence to enter the land of another and occupy it for a particular purpose.

In the context of characterising a supply, paragraphs 103 to 109 of GSTR 2003/7 provided other examples of supplies that can and cannot be a supply of real property. The examples included provision of car parking facilities, storage space, function room, market stall and serviced office.

In determining whether a supply is properly characterised as a supply of goods or real property, or something else, it is essential to consider all the circumstances of the transaction to ascertain its essential character.

Under the agreement, the entity will give the non-resident sole and exclusive right of access to the venues at which the events are held so that the non-resident can produce and distribute live audio-visual signals and non-live recordings of the events. As such, the entity is conferring upon the non-resident a licence to enter the land for a particular purpose. The supply of the access rights is a supply of contractual right that does not create an estate or interest in the land but is exercisable over or in relation to land. Accordingly, the entity is making a supply of real property.

Taxable supply

Section 9-5 of the GST Act states:

You make a taxable supply if:

e) you make the supply for *consideration; and

f) the supply is made in the course or furtherance of an *enterprise that you *carry on; and

g) the supply is *connected with Australia; and

h) 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.

The supply of the access rights is made for consideration and in the course of an enterprise that the entity carries on. The supply is connected with Australia. Furthermore, the entity is registered for GST. As such, all the requirements in section 9-5 of the GST Act are satisfied. Therefore, the supply of the access rights is a taxable supply of real property.

We considered the provisions of section 38-190 of the GST Act which deal with supplies of things, other than goods or real property, for consumption outside Australia. However, as it is our view that the supply of the access rights is a supply of real property, section 38-190 of the GST Act would not apply. Therefore, the supply of the access rights is not GST-free under section 38-190 or any other section of the GST Act.

The supply of the access rights, being a supply of real property, is not input taxed under Division 40 of the GST Act.