Edited version of your private ruling

Authorisation Number: 1012613741725

Ruling

Subject: GST and migration services

Question 1

Is GST payable on the supply of your migration services to a visa applicant who is not in Australia when the services are performed?

Answer

No. The supply of the migration services is GST-free where the visa applicant is not in Australia when the services are performed.

Question 2

Is GST payable on the supply of your migration services to a visa applicant who is in Australia when the services are performed?

Answer

Yes. The supply of the migration services is taxable where the visa applicant is in Australia when the services are performed.

Question 3

Is GST payable on the supply of your migration services to an Australian-based company where the work is done in Australia?

Answer

Yes. The supply of the migration services is taxable.

Relevant facts and circumstances

You provide immigration advice and are registered for GST.

You also prepare visa application forms and prepare submissions in support of applications on behalf of businesses and individual visa applicants. The process generally is as follows:

• initial consultation with client

• service agreement sent out to client

• initiate work on payment of your invoice - for example - preparation of forms, collating relevant documents in support of application and submission in support of application

• lodgement with the Department of Immigration and Boarder Protection (DIBP)

• liaising with DIBP until a decision is reached.

You act for and on behalf of both companies and individuals. You provide services to both national and international companies who seek advice in relation to their legal obligations for business sponsorship. You also advise individuals onshore and offshore in respect of their eligibility for visas and their obligations. In the majority of cases the visa applicant is offshore during the processing of the visa application.

Your agreements with overseas based companies and/or individuals are signed overseas.

If your client is an Australian-based entity, you bill the Australian-based entity and charge GST accordingly.

If requested you can enter into legal relations with an Australian law firm or accountant that act for the overseas entity. If this is the case then you contract direct with the local entity and charge GST accordingly.

Your employees undertake the preparation in Australia and then an application is lodged overseas to be processed by an overseas post. In some cases the application may be lodged and processed in Australia.

Your involvement with any overseas company is limited to the capacity of offering immigration advice to them and their employees, and in preparing and lodging business sponsorship and visa applications.

The nature of your services does not vary toward your clients regardless of whether they are onshore or offshore. You do not use other service providers overseas.

The use of your services, being immigration advice and visa facilitation, is intended to be utilised and enjoyed in Australia.

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 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 Subsection 38-190(4).

Reasons for decision

Questions 1 and 2

Summary

The supply of your migration services to a visa applicant who is not in Australia when the services are performed is GST-free. Hence, GST is not payable on this supply.

The supply of your migration services to a visa applicant who is in Australia when the services are performed is a taxable supply. Hence, GST is payable on this supply.

Detailed reasoning

GST is payable on the supply of your migration services if you are making a taxable supply.

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provided that you make a taxable supply 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 for GST.

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

Based on the information provided, you satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act because:

(a) you supply your migration services for consideration

(b) the supply of your migration services is in the course or furtherance of your enterprise

(c) the supply of your migration services is connected with Australia as the services are either done in Australia or made through an enterprise that you carry on in Australia, and

(d) you are registered for GST.

The supply of your migration services is not input taxed under the GST Act or any other Act. It remains to be determined whether the supply is GST-free.

The supply of your migration services is not considered to be a supply of goods or real property. Hence, the GST status of this supply is appropriately considered under section 38-190 of the GST Act, which provides that certain supplies of things other than goods or real property, for consumption outside Australia, are GST-free. Of relevance is Item 2 in the table in subsection 38-190(1) of the GST Act (Item 2).

Item 2

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

(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.

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

Goods and Services Tax Ruling GSTR 2004/7 provides guidance on when a supply is made to a non-resident who is not in Australia for the purposes of Item 2.

'Not in Australia'

In the case of supplies made to an individual, we consider that the physical location of the individual establishes whether that individual is in Australia when the thing supplied is done. If a supply is made to a non-resident individual who is physically in Australia when the thing supplied is done, the individual is in Australia.

A non-resident individual may be physically in Australia when the thing supplied is done, but that presence may be unrelated to the supply. For example the non-resident individual is in Australia on holidays only. Thus, if the non-resident individual is in Australia and has no contact with the supplier, we consider that the presence of the non-resident individual in Australia when the thing supplied is done is not in relation to the supply.

If a non-resident individual recipient of a supply is physically in Australia and in contact with the supplier (other than contact which is only of a minor nature) we consider that presence is in relation to the supply.

Contact is minor if it is limited to contact of a simple administrative nature, such as checking on the progress of the supply or a courtesy call to the supplier. If this is the only contact between the non-resident individual and the supplier we consider that the individual is not in Australia in relation to the supply.

Based on the information you provided, you advise individuals onshore and offshore in respect of their eligibility for visas and their obligations. In the majority of cases the visa applicant is not in Australia for the entire duration of your supply of migration services. Hence, in this instance, the 'not in Australia' requirement is satisfied.

The supply of your migration services must also satisfy the requirements of either paragraph (a) or paragraph (b) of Item 2 for the supply to be GST-free.

Paragraph (a) of Item 2

Goods and Services Tax Ruling GSTR 2003/7 examines the meaning of the expressions 'directly connected with goods or real property' and 'a supply of work physically performed on goods' as used in subsection 38-190(1) of the GST Act.

On the information provided, the supply of your migration services 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. As such, the supply of your migration services to the overseas entity satisfies the requirements of paragraph (a) of Item 2.

As paragraph (a) of Item 2 is satisfied, it is not necessary to consider whether the requirements of paragraph (b) of Item 2 are satisfied.

You should note that if at any time the visa applicant is in Australia and their contact with you is not minor, that part of the supply is no longer GST-free under paragraph (a) of Item 2. This is because the visa applicant is considered to be in Australia at the time of the supply and Item 2 is not applicable.

Accordingly if the visa applicant is partly outside Australia and partly in Australia when you provide your migration services, your supply will be a mixed supply and you will need to apportion the consideration between the taxable and GST-free parts.

For further information on apportionment refer to Goods and Services Tax GSTR 2001/8 which provides guidance on apportioning the consideration for a supply that includes taxable and non-taxable parts.

Subsection 38-190(3) of the GST Act

However, the scope of Item 2 is limited by subsection 38-190(3) of the GST Act which provides that a supply covered by Item 2 is not GST-free if:

• it is a supply under an agreement entered into, whether directly or indirectly with a non-resident, and

• the supply is provided or the agreement requires it to be provided, to another entity in Australia.

Goods and Services Tax Ruling GSTR 2005/6 provides the ATO's view on the scope of subsection 38-190(3) of the GST Act and its application to supplies of things (other than goods or real property) made to non-residents that are GST-free under Item 2.

For the purposes of subsection 38-190(3) of the GST Act, 'another entity' is an entity other than the non-resident entity to which the supply is made.

The term 'provided' is used in subsection 38-190(3) of the GST Act to differentiate from the term 'made' in Item 2. The word 'provided' focuses on the doing of the thing to be supplied and the flow of the actual services or thing required to be supplied under the contractual arrangements.

Subsection 38-190(3) of the GST Act only applies to a supply covered under Item 2. Where the agreement between the supplier and the non-resident requires the supply to be provided to another entity in Australia, subsection 38-190(3) clearly applies and the supply will not be GST-free under Item 2.

Where the agreement between the non-resident and the supplier does not explicitly so require, it is necessary to determine if the supply is actually provided to another entity in Australia. If the supply is provided to another entity this is not in itself sufficient for subsection 38-190(3) of the GST Act to negate the GST-free status of a supply covered by Item 2. The supply must be provided to that other entity in Australia. It is therefore relevant to determine when the provision of the supply occurs and whether that provision is to that other entity in Australia.

However, if the nature of the supply is such that the supply is only provided to an entity outside Australia, subsection 38-190(3) of the GST Act does not apply.

From the information provided, subsection 38-190(3) of the GST Act does not apply to deny the GST-free status in paragraph (a) of Item 2 where the supply of migration services is made and provided to the visa applicant outside Australia and you are not required to provide the services to another entity in Australia.

You should note that if at any time the visa applicant requests you to provide your migration services to another entity located in Australia your supply will no longer be GST-free under subsection 38-190(3) of the GST Act.

Question 3

Summary

The supply of your migration services to an Australian-based company where the work is done in Australia is a taxable supply. Hence, GST is payable on the supply.

Detailed reasoning

You also enter into agreement in Australia with an Australian-based entity for the provision of migration services. The agreement is for the purpose of obtaining a business sponsorship visa for the entity.

As discussed in question 1 your supply of migration services satisfies paragraphs 9-5(a) to 9-5(d)of the GST Act and is not considered to be an input taxed supply under the GST Act. The next step is to determine whether your supply of migration services to the Australian-based entity (company or individual) is GST-free under section 38-190 of the GST Act.

Relevant to this supply of migration services to the Australian-based entity is Item 3 in the table in subsection 38-190(1) of the GST Act (Item 3).

Item 3 provides that a supply of a thing (other than goods or real property) is GST-free if it is a supply:

(a) that is made to a *recipient who is not in Australia when the thing supplied is done; and

(b) the effective use or enjoyment of which takes place outside Australia;

other than a supply of work physically performed on goods situated in Australia when the thing supplied is done, or a supply directly connected with *real property situated in Australia.

Item 3 applies to a supply of a thing, other than a supply of goods or real property, and requires that the recipient is not in Australia when the thing supplied is done.

A recipient, in relation to a supply, is the entity to which the supply was made. It is not a requirement of Item 3 that the recipient is a non-resident.

If a supply is made to a recipient who fails the 'not in Australia' requirement in paragraph (a) of Item 3, it is necessary to consider whether subsection 38-190(4) of the GST Act applies.

Subsection 38-190(4) extends the scope of Item 3. The subsection provides that a supply is taken for the purposes of Item 3, to be a supply made to a recipient who is not in Australia if:

(a) it is a supply under an agreement entered into, whether directly or indirectly, with an *Australian resident; and

(b) the supply is provided, or the agreement requires it to be provided, to another entity outside Australia.

Accordingly, if the supply is made under an agreement with an Australian resident recipient but the thing supplied is provided, or the agreement requires it to be provided to another entity located outside Australia, subsection 38-190(4) applies and the 'not in Australia' requirement in Item 3 is satisfied.

From the information provided, the Australia-based entity contracts you to provide your migration services to them to enable them to obtain the business sponsorship for themselves. In this case your supply of migration services to the Australian-based entity is not GST-free under Item 3 by virtue of subsection 38-190(4) of the GST Act because:

• you have an agreement with an Australian resident and the agreement does not require you to provide your migration services to another entity outside Australia and

• your supply is made to the Australian-based entity who is in Australia when the thing supplied is done

The supply of your migration services in this instance is not GST-free under any other provision of the GST Act. Therefore, the supply of your migration services to the Australian-based entity is a taxable supply. Hence, GST is payable.