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Ruling:

Subject: Supply of job assistance services a taxable supply

Question 1

Is a supply of job assistance services by an Australian entity (you) to Australian resident applicants in Australia a taxable supply?

Answer 1

Yes, the supply of job assistance services by you to Australian resident applicants in Australia is a taxable supply.

Question 2

Is the supply of job assistance services by you to non-resident applicants outside Australia a taxable supply?

Answer 2

No. The supply of job assistance services by you to non-resident applicants outside Australia is GST-free.

Question 3

Is the supply of job assistance services by you to non-resident applicants in Australia a taxable supply?

Answer 3

Yes, the supply of job assistance services by you to non-resident applicants in Australia is a taxable supply.

Relevant facts and circumstances

You are an Australian entity which is registered for goods and services tax (GST).

You supply job assistance services for job placement outside Australia to Australian resident applicants and non-resident applicants.

Your job assistance services include the following:-

· Provide assistance and placement to find jobs outside Australia;

· assist the applicants to find accommodation outside Australia;

· refer the applicants to an overseas company for opening overseas bank accounts, overseas mobile phone SIM Card and an overseas tax file number (OSTFN); and

· assist the applicants with any problems after they arrive in the other country outside Australia.

These jobs are both with and without accommodation depending on the applicants needs.

You only provide your job assistance services to assist applicants to find jobs outside Australia. You do not provide any job assistance services to the applicants to find jobs in Australia.

You operate an internet website that anyone around the world can access. The applicants apply via the web-site or through a variety of different agents. All application fees are paid directly into your Australian account or by credit card though PayPal which is then paid into your Australian bank account.

You receive applications from the following locations:

· Australian applicants looking to live and work outside Australia;

· non-resident applicants looking to live and work overseas;

· non-residents who are in Australia and looking to live and work outside Australia; and

· a variety of Australian and other agents.

You accept an application from any applicant in any country as long as they can legally work outside Australia. You also have the right to turn down any applicant you deem as unsuitable.

You do not accept an application from anyone other than the individual applying for the program. You do not accept an application from a minor or an application on behalf of someone else. Therefore a parent cannot apply on behalf of their son or daughter.

If the applicant cancels their application after being interviewed then a 100% refund is paid, if all the work has been completed, the contract is signed and the file has been added to the data base and handed over to your overseas office then a 50% refund is paid, if a job has been offered to the applicant then no refund is applicable.

You have several offices outside Australia. All costs for these offices are paid by you.

One of your overseas office's (Office A) deals with the various company managers overseas on a day-to-day basis. Office A is responsible for maintaining the contacts and relationships with the managers and periodically attends managers meetings. They also liaise with other overseas companies in relation to bank accounts, the overseas SIM cards, the OSTFN and accommodation. Office A also assists applicants with any problems after they arrive in the other country and also sources new jobs if requested by the applicants for a small fee.

The original services are arranged by the respective office. It is the location of the applicant that determines the office that will handle the initial interview of the applicants. Each office interviews their applicants, collects the fees and adds the applicants onto your data base for your overseas office to arrange the job.

The respective office also registers the applicants onto the overseas company's on-line registration who is responsible for opening the overseas bank accounts, the overseas SIM cards, assisting with the OSTFN, any accommodation and some discounts for tours etc. The overseas company service is provided as part of the package but is fully implemented by the overseas company. The applicants deal directly with the overseas company for the above services. The overseas company charges separately for its services to the applicants. You do not charge any extra fee to register the applicants with the overseas company.

The respective office also advises the applicant how to obtain an overseas visa if required. These services are not supplied to agent's applicants as these companies provide their own service.

Once the applicants are on the program and their applications with resume and photos are forwarded to the Office A, then the Office A sends the applicant's details to various companies outside Australia according to the information provided in the interview. The job offers are made by the individual manager through the office A. The office A then advises the applicants and provides the terms and conditions of the offer. The updates to applicants on their application are provided by the staff in the respective countries.

Once the applicant has accepted the offer they just need to turn up on the due date and they start work two days later. All jobs are sourced, offered and confirmed before the applicant arrives in the overseas country. The majority of applicants have a job before they arrive in the other country. All pubs jobs are provided with accommodation.

After the on-line registration with the overseas company, the overseas company directly contacts the applicants to find out details of the services required and the date they will arrive in the overseas country. Then the overseas company arranges an orientation at its office. The overseas company also makes an appointment with the bank manager. The applicant signs up his/her bank account application form directly in front of the bank manager after their arrival in the overseas country and they receive the details of the bank account. The applicants also receive the overseas SIM card and the OSTFN assistance after their arrival in other country.

You supply the job assistance services to the travel agents at a discount price. The travel agents put their mark up and sell the job assistance services as part of a package with airfares.

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 Section 9-25

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(3)

A New Tax System (Goods and Services Tax) Act 1999 section 38-360

Reasons for decisions

Issue 1

Before we consider the GST status of the supply of job assistance services by you to the Australian resident applicants, we first need to consider the character of the supply.

When a supply has two or more parts it is necessary to determine if the supply is a mixed supply of separately identifiable parts, or a composite supply of a dominant part and something that is integral, incidental or ancillary to the dominant part.

A composite supply is treated as a supply of a single thing, being the dominant part and there is no need for apportionment.

We consider that a part of a supply will be integral, ancillary or incidental where it is insignificant in value or function, or merely contributes to or complements the use or enjoyment of the dominant part of the supply. It is a question of fact and degree whether a supply is mixed or composite.

For further guidance on mixed and composite supplies, refer to Goods and Services Tax Ruling GSTR 2001/8.

We therefore need to consider all of the facts to determine the character of this supply since it contains several parts while being performed.

Characterisation of supply

From the facts received, the process of providing job assistance services is as follows:

· provide the client with details of the job;

· the client purchases the service if they want to proceed with this service and makes payments to you;

· your Australian office enters the client's details on the program and conducts interview in Australia;

· your Australian office refers the client's details to Office A;

· Office A then sends the clients details to various companies outside Australia;

· the offers are made by the individual manager of the companies through the office A and then onto the individual applicant. The majority of applicants have a job before they arrive in the other country;

· Office A assists the applicants if they have any problems after arriving in the other country.

After considering all the information given, we consider that your services of job assistance for organising the job placement outside Australia (includes lodging job application and receiving offer for the job with the overseas companies) is the dominant part of your supply. Office A's role of forwarding the job applications to various overseas companies and advising the job offer to the applicant, is integral to your job assistance services. Whilst Office A may source jobs and provide terms and conditions of offers to applicants, they do so on behalf of you. Office A does not invoice or make a supply directly to the applicant. Furthermore, the assistance by Office A to the applicant upon arrival in the other country is incidental to your job assistance services of organising the Job placement in the other country, as it contributes to the proper performance of the supply of job assistance services and complements the use or enjoyment of that supply.

Hence, your supply of job assistance services for the job placement outside Australia and assisting the applicant when he/she arrives in the other country is a single composite supply of the services of organising the job placement outside Australia.

The next step is to determine whether the supply of the job assistance services of organising the job placement outside Australia to Australian resident applicants in Australia is GST-free under the GST Act.

GST status of the supply

Taxable supply

GST is payable on a taxable supply.

Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) you make a taxable supply if:

· you make the supply for consideration;

· the supply is made in the course or furtherance of an enterprise that you carry on;

· the supply is connected with Australia; and

· you are registered or required to be registered.

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

From the facts provided, you satisfy the requirements of the taxable supply under paragraphs 9-5(a) to 9-5(d) of the GST Act as follows:

· you supply the services in return for consideration by way of payments;

· the supply is made in the course of an enterprise (business) that you carry on;

· the supply is connected with Australia as you are carrying on your enterprise (business) in Australia; and

· you are registered for GST.

The supply of job assistance services by you to the Australian applicants in Australia is not input taxed under any provisions of the GST Act or any other legislation.

The next step is to determine whether the supply is GST-free.

GST-free

Section 38-190 of the GST Act specifies when supplies of things, other than goods or real property, for consumption outside Australia are GST-free. As the supply of job assistance services to the applicants are not considered to be a supply of goods or real property, their GST status is appropriately considered under this section.

Of relevance to the facts provided is item 3 in the table in subsection 38-190(1) of the GST Act (Item 3).

Item 3 is stated below:

From the information provided, the job assistance services for the Australian resident applicants are provided to the individual who is in Australia when the dominant part of the supply of the services is done.

Hence, when your perform the supply of job assistance services for an Australian resident applicant, this supply will not be GST-free under Item 3 as the individual is in Australia when the service is performed.

The fact that the outcome of the supply (having a job offer outside Australia) is later used outside Australia does not alter the outcome that effective use or enjoyment of the supply (organising the job placement outside Australia) takes place in Australia since the individual is in Australia at the time the dominant part of the supply of the services of job assistance is done.

Further subsection 38-190(4) of the GST Act is not applicable as there is no indication that the Australian resident applicant has requested that you provide your services to another entity outside Australia.

Accordingly, the supply of job assistance services by you to the Australian resident applicants will not be GST-free under section 38-190 of the GST Act.

Section 38-360 of the GST Act

You asked us to consider whether the supply of job assistance services by you to the Australian resident applicants in Australia is GST free under section 38-360 of the GST Act.

Section 38-360 of the GST Act provides:

Travel Agents arranging overseas supplies

A supply is GST-free if:

(a) the supplier makes it in the course of carrying on an enterprise as a travel agent; and

(b) it consists of arranging for the making of a supply, the effective use or enjoyment of which is to take place outside Australia.

Paragraph (a) of section 38-360 of the GST Act

The term travel agent is not defined in the GST Act. However we consider, as expressed in the fact sheet, 'GST Travel agents and commissions' that a travel agent is not limited to registered travel agents but can cover other tourism enterprises, such as airlines, hotels and professional conference organisers, who arrange domestic and overseas travel on behalf of another person or persons.

The arranging of the land content for international travel is GST-free if your entity, in the course of carrying on its enterprise as a travel agent, makes a sale, which will be used or enjoyed outside Australia.

Paragraphs 1.11 and 1.12 of the Explanatory Memorandum to the Taxation Laws Amendment Bill (No. 8) 2000 under the heading 'International Travel Provisions - commission' provides further guidance. It states:

1.11 The GST Act generally treats commissions paid to travel agents for agency services the same way as the GST treatment of the travel. Under the current GST legislation, travel agent fees that relate to overseas air transport are GST-free while those that relate to other overseas supplies such as accommodation, rail transport, car hire, meals, entertainment and sight-seeing tours are taxable.

1.12 Item 4 inserts new section 38-360 into the GST Act. This new section allows for the supply of arranging overseas supplies to be GST-free where the effective use or enjoyment of the supply is to take place outside Australia. New section 38-360 only applies to the arranging of overseas supplies made by a supplier in the course of carrying on an enterprise as a travel agent.

Example 1.2

Dale and her cousin Lauren are planning an overseas trip. They booked a holiday package through their local travel agent. The package includes return air fares (Sydney, London, Sydney), accommodation and car hire in London and a European tour which includes dinner and a show at a night club in Paris. The travel agent fees relating to all the components of the overseas trip are GST-free, that is, the overseas air transport and the overseas supplies.

After arranging their tour package, Dale and Lauren hear that a particular travel agent in Sydney can arrange for them to bungy jump off the le Tour Lansperie while they are in Paris. Dale and Lauren decide to take up this opportunity and make a booking. The travel agent fee charged for booking the bungy jump is also GST-free as the fee relates to a separate supply, the effective use or enjoyment of which takes place outside Australia.

Based on the facts provided, you are not a registered travel agent. You also do not provide any domestic or international travel reservations or booking services. The job assistance services that you provide, does not qualify you to be considered as a travel agent. Therefore, you are not a tourism enterprise 'carrying on an enterprise of a travel agent' and the supply of services by you does not satisfy subsection 38-360(a) of the GST Act.

Paragraph (b) of section 38-360 of the GST Act

Paragraph (b) of section 38-360 of the GST Act requires that the place of effective use or enjoyment of a supply to be determined (that is, whether the place is outside Australia).

Firstly, we determine the entity to which the supply is provided (the providee entity). We then determine whether provision of the supply to the providee entity is outside Australia.

In this case, the providee entity will be the individual applicants to whom you provide the services to.

A supply is provided as and when the thing supplied is done. This is the relevant time for determining whether a supply is provided to the individual in Australia or outside Australia and thus whether effective use or enjoyment takes place in Australia or outside Australia.

Resident individual

A supply is provided to a resident individual in Australia if that individual:

· is physically in Australia when the thing supplied is done; or

· is physically outside Australia when the thing supplied is done but that presence outside Australia is not integral to, but is merely coincidental with, the provision of the supply.

A supply is provided to a resident individual outside Australia if that individual:

· is physically outside Australia when the thing supplied is done; and

· that presence outside Australia is integral to, as distinct from being merely coincidental with, the provision of the supply.

To the extent that the supply is provided to a resident individual in Australia, the effective use or enjoyment of the supply does not take place outside Australia and the supply is not GST-free.

If the supply is provided to an individual in Australia and that supply is later used outside Australia, that later use does not alter that fact that the supply is provided to that entity in Australia and thus effective use or enjoyment of the supply does not take place outside Australia.

From the facts provided, you supply your job assistance services to the Australian applicants who are in Australia and effective use and enjoyment of the supply takes place in Australia. Therefore, paragraph (b) of section 38-360 is not applicable.

Accordingly, the supply of job assistance services by you to Australian resident applicants in Australia is not GST-free under section 38-360 of the GST Act.

Furthermore, the supply of job assistance services by you to the Australian applicants in Australia does not satisfy any other GST-free provisions.

Therefore, the supply of job assistance services by you to the Australian resident applicant is a taxable supply under section 9-5 of the GST Act and you will be liable for GST on that supply.

Issue 2

As discussed in the reasons for decisions to issue 1, GST is payable on a taxable supply under section 9-5 of the GST Act.

You satisfy the requirements of the taxable supply under paragraphs 9-5(a) to 9-5(d) of the GST Act as you make the supply of job assistance services for consideration; the supply is made in the course or furtherance of your enterprise; the supply is connected with Australia and you are registered for GST.

There are no provisions under the GST legislation in which the supply of job assistance services by you to the non-resident applicants could have been input taxed. What remains to be determined is whether the supply is GST-free.

GST-free

As discussed in the reasons for decision to issue 1, the supply of job assistance services to the non-resident applicants will be GST-free if it satisfies all the requirements in subsection 38-190 (1) of the GST Act.

Of relevance to the facts provided is item 2 in the table in subsection 38-190(1) of the GST Act (Item 2).

Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident who 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-residents enterprise, but is not registered or required to be registered.

Non-resident not in Australia when the thing supplied is done

For the supply of job assistance services by you to be GST-free under Item 2, there is a precondition that the non-resident individual must not be in Australia in relation to the supply when it is provided/performed.

In circumstances where a non-resident entity is not in Australia in relation to the supply when the thing supplied is done, it is necessary to determine if the other requirements in either paragraph (a) or (b) of Item 2 are satisfied. You only need to satisfy either paragraph (a) or (b) of Item 2 for the supply to be GST-free.

Paragraphs (a) and/or (b) of Item 2

Based on the facts provided, you provide the job assistance services to the non-resident applicants outside Australia. The job assistance services are neither a supply of work physically performed on goods situated in Australia nor a supply directly connected with real property situated in Australia.

Accordingly, the supply of job assistance services by you to the non-resident applicants who are not in Australia in relation to the supply of job assistance services satisfies paragraph (a) of Item 2.

Note that item 2(b) would not apply in this circumstance, as the individual has not acquired your job assistance services in carrying on an enterprise (for example, a business).

Subsection 38-190(3) of the GST Act

Having met the requirements of Item 2 it is necessary to consider subsection 38-190(3) of the GST Act. Subsection 38-190(3) of the GST Act states:

Without limiting subsection (2), a supply covered by item 2 in that table 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.

From the facts given, the supply of your job assistance services are not provided, and you do not have any agreements with the non-resident applicants to provide your services to any other entity in Australia. Therefore, subsection 38-190(3) of the GST Act does not exclude the supply of your services to the non-resident applicants from being a GST-free supply under Item 2.

In summary, the supplies of job assistance services are made to the non-resident applicants, who are not in Australia in relation to your supply for the purposes of Item 2. The supply of job assistance services by you is neither a supply of work physically performed on goods situated in Australia nor a supply directly connected with real property situated in Australia. You do not provide, and have no agreement with the non-resident applicants, which requires your services to be provided, to another entity in Australia. Therefore, the supply of job assistance services by you to the non-resident applicants outside Australia is GST-free under paragraph (a) of Item 2.

Issue 3

From the facts provided, your supply of job assistance services satisfies all the requirements under paragraphs 9-5(a) to 9-5(d) of the GST Act as you make the supply for consideration; the supply is made in the course or furtherance of your enterprise; the supply is connected with Australia and you are registered for GST.

There are no provisions under the GST legislation in which the supply of job assistance services by you to the non-resident applicants could have been input taxed.

The next step is to determine whether the supply is GST-free.

As discussed in the reasons for decision to issue 1, a supply of job assistance services to non-resident applicants is GST-free if it satisfies all the requirements in subsection 38-190 (1) of the GST Act.

Of relevance to the facts provided is item 2 of the GST Act.

For the supply of job assistance services by you to be GST-free under Item 2, there is a precondition that the non-resident must not be in Australia in relation to the supply when it is provided/performed.

Based on the facts provided, the non-resident applicants acquire your job assistance services when he/she is in Australia. As the supply of job assistance services is made to the non-resident applicants that have been determined to be in Australia in relation to the supply, Item 2 does not apply.

Therefore, the supply of job assistance services by you to the non-resident applicants in Australia is not GST-free under item 2 of section 38-190(1) of the GST Act or any other GST-free provisions.

Furthermore, as discussed in the reasons for decisions to issue 1, the supply of job assistance services by you to the non-resident applicants in Australia is not GST-free under section 38-360 of the GST Act or any other GST-free provisions.

Accordingly, the supply of job assistance services by you to the non-resident applicants in Australia is a taxable supply under section 9-5 of the GST Act and you will be liable for GST on that supply.