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Ruling

Subject: GST and supply of visa application services

Question 1

Is your supply of visa application services to a non-resident individual who is not in Australia when the services are performed GST-free?

Answer

Yes.

Relevant facts and circumstances

You are a resident company and registered for GST.

You sell a tour product to international backpackers who are not residents of Australia for income tax purposes.

The tour product includes either an Australian Working Holiday Visa or Tourist Visa. The Australian visas are not subject to GST.

You provided a breakdown of the tour product sold to an international backpacker.

Except for the price of the Australian Working Visa all the other prices are GST inclusive.

The Working Holiday Visa costs $X. You charge $Y for arranging the processing of the visa application.

In 100% of the cases, the international backpackers are overseas when you arrange for the processing of the visa applications.

You do not arrange visa extensions while the international backpackers are in Australia.

You supply the land components of the tour product to the international backpackers as a principal.

You do not provide and your agreement does not require you to provide your services to another entity in Australia.

Relevant legislative provisions

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)

Summary

Your supply of the visa application services to a non-resident individual who is not in Australia when the services are performed is GST-free.

Detailed reasoning

Section 38-190 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that certain supplies of things other than goods or real property, for consumption outside of Australia are GST-free.

As your supply of visa application services is neither a supply of goods nor a supply of real property, section 38-190 of the GST Act is relevant for consideration.

Item 2 in the table in subsection 38-190(1) of the GST Act (Item 2) provides that a supply of a thing, other than goods or real property, made to a non-resident is GST-free if the non-resident is not in Australia when the thing supplied is done and:

· 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

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

Non-resident

A non-resident for GST purposes is an entity that is not an Australian resident for the purposes of the Income Tax Assessment Act 1936.

You advised that the international backpackers are not residents of Australia for income tax purposes. Therefore, the international backpackers are non-residents for GST purposes.

Not in Australia in relation to the supply

For the supply of your services to be GST-free under Item 2, there is a requirement that the non-resident must not be in Australia in relation to the supply when the thing supplied is done.

Goods and Services Tax Ruling GSTR 2004/7 discusses when an entity is not in Australia when the thing supplied is done.

GSTR 2004/7 provides that if a non-resident individual is not physically in Australia when thing supplied is done, then the individual is not in Australia for the purposes of Item 2.

As stated at paragraph 204 of GSTR 2004/7, the location of a representative (including an agent) of a non-resident individual is not relevant. It is the whereabouts of the individual to whom the supply is made that needs to be considered.

You advised that the non-resident backpackers are not physically in Australia when you supply your visa application services. Accordingly, the individuals are not in Australia for the purposes of Item 2.

Paragraphs (a) or (b) of Item 2

Where a non-resident individual is not in Australia in relation to the supply when the thing supplied is done, it is necessary to determine if the requirements of either paragraph (a) or (b) of Item 2 are satisfied.

In your case, the visa application services that you provide to the non-resident backpackers are neither a supply of work physically performed on goods situated in Australia nor a supply directly connected with real property situated in Australia. As such, your supply of visa application services satisfies paragraph (a) of Item 2 and therefore is covered by Item 2.

However, the scope of Item 2 is limited by subsection 38-190(3) of the GST Act.

Limitation of Item 2

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.

In your case, the requirements of subsection 38-190(3) of the GST Act are not satisfied as you do not provide, and your agreement with the non-resident backpackers does not require you to provide, your visa application services to another entity in Australia. Your supply of visa application services therefore is not excluded by subsection 38-190(3) of the GST Act from being GST-free under Item 2. Consequently, your supply of visa application services to the non-resident backpackers who are not in Australia when you provide your services is GST-free under Item 2.