Edited version of your private ruling

Authorisation Number: 1012588323711

Ruling

Subject: Goods and services tax (GST) and travel insurance

Question 1

Is GST payable on the access fee you charge members for international travel insurance?

Answer

No

Question 2

Is GST payable on the access fee you charge non-residents who are outside Australia?

Answer

No.

Relevant facts and circumstances

You are registered for GST.

You operate as a central forum for member clubs in the region.

You have a number of affiliated clubs predominantly throughout Australia, with some in other countries. These individual clubs in Australia comprise a certain number of members.

Your role is to provide ongoing administrative and management support to the relevant clubs and its membership.

One of the key member benefits provided to members is travel insurance.

The travel insurance policy can only be accessed by a member or a guest travelling with the members.

You are the policyholder of the policy issued by the insurance company.

Members and their guests can access cover under that policy subject to certain access conditions, as well as terms, conditions and exclusions from the policy.

In order to access travel insurance cover under the master policy, the members pay an access fee to you, which is determined using a matrix which considers the age of the applicant, the duration of their travel and their travel destinations.

The insurance cover may be for international travel or travel within Australia.

The covered member may be a resident or a non-resident who is outside Australia.

Assumption(s)

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-355(1)

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)

Reasons for decisions

Question 1

Summary

GST is not payable on the access fee charged for international travel insurance because it is consideration for a supply of the service of arranging international travel insurance.

Detailed reasoning

GST is payable by you where you make a taxable supply.

You make a taxable supply where you satisfy the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which states:

You make a taxable supply if:

(a) you make the supply for *consideration; and

(b) the supply is made in the course or furtherance of an *enterprise that

you *carry on; and

(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.

(* Denotes a term defined in section 195-1 of the GST Act)

Item 1 in the table in subsection 38-355(1) of the GST Act provides that the transport of a passenger:

(a) from the last place of departure in Australia to a destination outside Australia; or

(b) from a place outside Australia to the first place of arrival in Australia; or

(c) from a place outside Australia to the same or another place outside Australia is GST-free.

In accordance with item 6 in the table in subsection 38-355(1) of the GST Act, insuring transport covered by item 1 in the table in subsection 38-355(1) of the GST Act is GST-free.

In accordance with paragraph (c) of item 7 in the table in subsection 38-355(1) of the GST Act, arranging insurance covered by item 6 in the table in subsection 38-355(1) of the GST Act is GST-free.

Paragraph 13 of Goods and Services tax Ruling GSTR 2000/33 provides that insuring transport under item 6 in the table in subsection 38-355(1) of the GST Act applies to the transport of passengers from and to their place of departure, including the period when the insured is travelling overseas.

Paragraph 34 of GSTR 2000/33 provides that a supply of services for which a commission may be charged by travel agents, brokers and other administrators for arranging insurance for overseas travel is GST-free. The commission is payable for a GST-free supply of arranging insurance that is covered by item 6 in the table in subsection 38-355(1) of the GST Act. Therefore, the commission is covered by paragraph (c) of item 7 in subsection 38-355(1) of the GST Act.

The GST Act does not restrict this exemption to supplies made by travel agents and entities that are solely insurance brokers.

The access fee you charge for international travel insurance is consideration for a supply of the service of arranging international travel insurance. Therefore, this fee is consideration for a GST-free supply under paragraph (c) of item 7 in the table in subsection 38-355(1) of the GST Act.

Hence, GST is not payable on the access fee for international travel insurance, as it is consideration for a non-taxable supply.

Question 2

Summary

GST is not payable on the access fee you charge non-resident members who are outside Australia because the access fee is consideration for a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act (item 2).

Detailed reasoning

Item 2 provides that a supply of something other than goods or real property to a non-resident who is not in Australia when the thing supplied is done is GST-free if:

(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-resident's enterprise, but is not registered or required to be registered for GST.

Subsection 38-190(2) of the GST Act states:

However, a supply covered by any of items 1 to 5 in the table in subsection (1) 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.

You are supplying a travel insurance arranging service to non-residents in some cases. Services are not goods or real property.

These non-residents would not in Australia when you perform this service.

Your supply of this service 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.

Your supply of this service is not a supply of a right.

Therefore, where the member is a non-resident outside Australia, you make a GST-free supply to them under item 2.

The access fee you charge these members is consideration for this GST-free supply.

Hence, GST is not payable on the access fee you charge non-resident members who are outside Australia, as it is consideration for a non-taxable supply.