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Ruling

Subject: GST and supply of services to non-resident

Question 1

Are you liable for goods and services tax (GST) on the supply of advice to non-residents?

Answer

No. You are not liable for GST on the supply of advice to the non-residents

Question 2

If you are not liable for GST, can you obtain a refund of the GST already remitted to the ATO?

Answer

Yes. You can obtain refunds, subject to time limits and restrictions.

Relevant facts and circumstances

You operate an enterprise in Australia which provides business advice.

You are registered for GST.

You provide advice to non-resident individuals on the operation and application of Australian taxation laws (the advice). This advice is provided on an ad-hoc basis.

The non-resident individuals are not registered for GST.

The non-resident individuals are not physically present in Australia.

The non-resident individuals do not have any representatives in Australia, at any time during the supply of the advice. Nor is there any other agreement by which you are required to provide the advice to another entity

The advice you provide is not directly or indirectly related to properties in Australia.

You have been charging GST to the non-resident individuals.

Reasons for decision

Question 1

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that a taxable supply is made 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.

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

In your situation, the supply of advice that you make to non-residents meets paragraphs 9-5(a) to 9-5(d) of the GST Act. The supply is not an input taxed supply, so it remains to consider whether it is a GST-free supply under any provisions of the GST Act.

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

Under item 2 in the table in subsection 38-190(1) of the GST Act, a supply that is made to a non-resident who is not in Australia when the thing supplied is done, is GST-free where:

o 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

o the *non-resident acquires the thing in *carrying on the non-resident's *enterprise, but is not registered or *required to be registered.

However, a supply covered by item 2 is not GST-free, pursuant to subsection 38-190(3) of the GST Act, 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.

Thus if the supply satisfies the requirements in item 2 and is not excluded from being GST-free by subsection 38-190(3) of the GST Act, then it is a GST-free supply.

In your situation, the non-residents are not in Australia when you provide the advice. Your supply of advice to the non-residents is not a supply of work on goods in Australia, or connected with real property in Australia. Further, the non-residents are not registered, or required to be registered for GST. Therefore, the supply of advice satisfies the requirements in item 2 in the table in subsection 38-190(1) of the GST Act.

Based on the facts of this case, you only provide the advice to the non-resident individuals who are not in Australia and not to any other entities as required by your agreement with the non-resident individuals. Therefore, the supply of advice is not excluded from being GST-free by subsection

38-190(3) of the GST Act .

Accordingly, you are not liable for GST on the supply of advice to the non-residents.

As you have treated your supply of advice to the non-residents as a taxable supply, we will now consider the provisions under which you may be entitled to a refund of the GST amounts incorrectly charged to non-residents.

Question 2

Where you made mistakes on an earlier activity statement that meant you paid too much GST, you may be able to make a correction on a later activity statement, subject to correction limits

These corrections may be needed where any of the following applies:

o you made clerical mistakes - for example, double counted your taxable sales

o you incorrectly recorded a GST-free sale as taxable on an earlier activity statement

o you mistakenly classified GST-free sales as taxable, that is, you incorrectly included GST in the price charged to a customer.

When you correct a mistake to decrease your GST to be paid, you are effectively claiming a refund of overpaid GST. As a result, the four-year time limit for claiming GST refunds will apply. Generally, this means that you will not be entitled to correct your mistake if more than four years has passed since the end of the tax period to which the mistake relates; unless, within the four year period, you have notified us of your entitlement to a refund of overpaid GST. Miscellaneous Tax Ruling MT 2009/1 (available from the ATO website at www.ato.gov.au) discusses the notification requirements in relation to entitlement to a GST refund.

Note that in accordance with subsection 105-65(1) of Schedule 1 to the Taxation Administration Act 1953, the Commissioner need not give you a GST refund if:

o you overpaid the amount because a supply was treated as a taxable supply to any extent; and

o the supply is not a taxable supply to that extent (for example, because it is GST-free); and

o either the following applies:

o the Commissioner is not satisfied that you have reimbursed a corresponding amount to the recipient of the supply;

o the recipient of the supply is registered or required to be registered.

For more information about the restriction on GST refunds that may apply if you mistakenly classify a GST-free supply as taxable, see Miscellaneous Taxation Ruling MT 2010/1, also available from the ATO website.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 38-190,

Taxation Administration Act 1953 section 105-55 and

Taxation Administration Act 1953 section 105-65.