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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1012745277418

Ruling

Subject: Goods and services tax (GST) and sponsorship

Question

Is GST payable on the fee you charge X?

Answer

No.

Relevant facts and circumstances

You are an Australian company.

You are registered for GST.

You have an overseas sponsor - a company (X). You will provide a package of services that will promote opportunities for their overseas based online shopping business.

X does not operate in Australia.

You set out the package inclusions. The package advertises and promotes X. These services will take place in Australia.

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 section 38-190

Reasons for decision

Summary

GST will not be payable on the fee because consumption of the supplies will take place outside Australia.

Detailed reasoning

GST is payable on taxable supplies.

An entity makes a taxable supply if it meets 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)

You will supply a package of advertising and promotional services to X.

You meet the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because:

    • you will supply the services for consideration; and

    • you will supply these services in the course or furtherance of an enterprise that you carry on; and

    • the services will be performed in Australia; and

    • you are registered for GST.

There are no provisions of the GST Act under which your supplies of the services are input taxed.

Therefore, what remains to be determined is whether you will make GST-free supplies.

Item 2 in the table in subsection 38-190(1) of the GST Act (item 2) provides that a supply of something other than goods or real property is GST-free if the supply 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.

There are a number of exclusions that may apply to this exemption.

Goods and Services Tax Ruling GSTR 2004/7 provides guidance on determining whether the recipient of a supply is in Australia for the purposes of item 2.

Paragraph 31 of GSTR 2004/7 discusses the meaning of 'not in Australia'. It states:

    31. The requirement that the non-resident in item 2, or the recipient in item 3, is not in Australia when the thing supplied is done is a requirement, in our view, that the non-resident or recipient is not in Australia in relation to the supply when the thing supplied is done.

Paragraphs 37 and 41 of GSTR 2004/7 discuss the situation where the recipient is a non-resident company. They state:

    37. A non-resident company is in Australia if that company carries on business (or in the case of a company that does not carry on business, carries on its activities) in Australia:

      (a) at or through a fixed and definite place of its own for a sufficiently substantial period of time; or

      (b) through an agent at a fixed and definite place for a sufficiently substantial period of time.

    41. A non-resident company is in Australia in relation to the supply if the supply is solely or partly for the purposes of the Australian presence, for example, its Australian branch. If the supply is not for the purposes of the Australian presence but that Australian presence is involved in the supply, the company is in Australia in relation to the supply, except where the only involvement is minor.

You will supply a package of advertising and promotional services.

Therefore, you will supply something other than goods or real property.

You will supply the services to a non-resident company with no presence in Australia. Therefore, the recipient will not be in Australia in relation to the supplies when the things supplied are done.

The supplies you make will not be supplies of work physically performed on goods situated in Australia when the work is done nor supplies directly connected with real property situated in Australia.

None of the exclusions relating to item 2 apply.

Therefore, you will make GST-free supplies under item 2.

Hence, GST will not be payable on the fee you charge X


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