Edited version of your written advice

Authorisation Number: 1012809056002

Ruling

Subject: GST and supplies related to overseas trade missions

Question 1

Is the supply by T, in relation to an overseas trade mission, of:

Advice on visas required for travel to the overseas country;

Company and delegate profiles in mission delegates booklet;

In-market transfers to and from airport(s);

On the ground transport to all group meetings in the overseas country listed in the business delegates program;

Hosting networking events attended by delegates in each overseas city;

Hosting a guest nominated by a delegate at networking events in each overseas city;

Hosting informal delegates' lunches and dinners in the overseas country; and

Arranging delegates' attendance at other events (e.g. events hosted by an ambassador or Chamber of Commerce) in the overseas country

a GST-free supply?

Answer 1

Yes, the supply by T, in relation to an overseas trade mission, of:

Advice on visas required for travel to the overseas country;

Company and delegate profiles in mission delegates booklet;

In-market transfers to and from airport(s);

On the ground transport to all group meetings in the overseas country listed in the business delegates program;

Hosting networking events attended by delegates in each overseas city;

Hosting a guest nominated by a delegate at networking events in each overseas city;

Hosting informal delegates' lunches and dinners in the overseas country; and

Arranging delegates' attendance at other events (e.g. events hosted by an ambassador or Chamber of Commerce) in the overseas country

is a GST-free supply.

Question 2

If the supply in Question 1 is a GST-free supply, are activities undertaken by T in Australia in relation to that supply ancillary and incidental parts of a composite supply, the dominant part of which is GST-free?

Answer 2

Yes, activities undertaken by T in Australia in relation to that supply are ancillary and incidental parts of a composite supply, the dominant part of which is GST-free.

Relevant facts and circumstances

T was established by State legislation which states that the object of the legislation is to achieve economic and social benefits for the State by facilitating, supporting and encouraging trade, investment and other commercial opportunities for the State, including between the State and foreign countries.

In the ruling request it was stated that one of T's activities is to organise and co-ordinate with companies which carry on business in the State overseas trade missions to promote investment opportunities in the State. As part of that activity a company which carries on business in the State (company) nominates a representative/delegate who travels to an overseas country with an officer employed by T. The company completes an Indemnity and Registration Form accepting T's invitation to be a Participant in the trade mission and pays a Participation Fee to T.

The Indemnity and Registration Form attached to the ruling request contains the following Parts:

Part 1 - Participant Details;

Part 2 - Terms and Conditions of Participation;

Part 3 - Registration;

Part 4 - Payment Process

Part 2 contains an indemnity whereby the company releases, discharges and indemnifies T against all loss, damage or expense however caused, including any cancellation of the trade mission, the termination of the company's participation in the trade mission and any business dealings or arrangements entered into as a result of participation in the trade mission.

Part 3 requires the Participant to confirm whether the Participant wishes to join the official mission and travel to one, two or three overseas cities and includes the following:

PLEASE NOTE THE FOLLOWING

The Participation Fee will assist to deliver an in-market business briefing, business matching services, nominated functions, venues, catering, ground transport, and a mission delegate booklet profiling each delegate.

The Participation Fee does not cover international or internal flights, private meals or accommodation. Bookings and payment for flights, travel insurance and accommodation will be the responsibility of the mission delegate.

Part 3 also includes a declaration to be signed by an authorised officer of the Participant confirming that he or she has read the Terms and Conditions and accepts and agrees to the Terms and Conditions on behalf of the Participant.

Part 4 deals with payment process and obliges the Participant to pay the appropriate Participation Fee (including GST) for either one, two, or three cities by credit card via an online link.

An Invitation to Participate in an overseas trade mission attached to the ruling request sets out the Participation Fees (including GST) for one, two or three cities and provides the following further information:

What is included in the fee:

Advice on visa required for travel to.

Company and delegate profile in mission delegates booklet.

In-market transfers to and from airports when the delegate is travelling on the same flight and is staying at the same hotel as the Premier.

On the ground transport to all group meetings listed in the business delegates program…

Attendance at all State Government hosted networking events in the city the delegate has paid for.

Invitation for one nominated guest at State Government hosted networking events in each city the delegate has paid for.

Informal delegates lunch or dinner with Premier (where time in the program permits).

Attendance at other events in the business delegates program, e.g. Ambassador or Chamber of Commerce hosted events

What is not included in the fee:

Processing of delegate visas or any fees incurred for required visas.

Accommodation.

In-market transfers to and from airports when flights are not the same as the Premier's flights.

Airfares.

Meals (unless otherwise specified).

Travel insurance.

Individual (one-on-one or tailored) meetings or business matching programs.

Submissions in the ruling request:

In relation to Question 1 it was submitted that the supply made by T is covered by item 3 in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

In relation to the requirement in paragraph (a) of item 3 that the supply is made to a recipient that is not in Australia when the thing supplied is done it was submitted that the recipient of the supply made by T is the company that pays the Participation Fee and completes the indemnity and registration form. The ruling request referred to paragraph 339 in Goods and Services Tax Ruling GSTR 2004/7, i.e.

a company that is incorporated in Australia is in Australia by virtue of its incorporation in Australia

and it was submitted that the company is therefore 'in Australia'. The ruling request referred to paragraphs 349 to 351 of GSTR 2004/7 and it was submitted that the supply of services by T in relation to an overseas mission is solely or partly for the purpose of the company's presence in Australia. It was submitted that subsection 38-190(4) of the GST Act provides a special rule which allows T to satisfy paragraph (a) of item 3. The ruling request referred to paragraphs 194 to 195 and Examples 1 and 41 in GSTR 2004/7. It was submitted:

In this case, we consider the guidance from the abovementioned paragraphs and examples in GSTR 2004/7 can be applied to T's circumstances such that the requirements of section 38-190(4) are satisfied. In other words, T enters into an agreement with a company (being the Australian resident), but the supply of services is provided to the representative /delegate from the company who travels overseas to attend the overseas trade mission (being the entity outside Australia).

In relation to paragraph (b) in item 3 (i.e. the effective use and enjoyment of the supply takes place outside Australia), the ruling request referred to an example in paragraph 72 of Goods and Services Tax Ruling GSTR 2007/2:

In each of the following examples, the supply is made to the employer but is, in our view, provided to the employee…

The employer contracts with an entity to provide training to its employees…

It was submitted:

We consider that the example above is analogous to T's circumstances (i.e. T's supply of services is made to the company, but the supply is provided to the representative /delegate of the company who travels overseas to attend the overseas trade missions). As such, whether the effective use or enjoyment of the supply takes place outside Australia needs to be determined with reference to the representative /delegate, not the company itself.

The ruling request referred to paragraph 95 of GSTR 2007/2:

95. If a supply is provided (or is required to be provided) to a resident individual who is not physically in Australia when the thing supplied is done, it is necessary to determine whether the presence of the resident individual outside Australia is integral to, as distinct from being merely coincidental with, the provision of the supply.

and to the indicators in paragraph 107 of GSTR 2007/2 as to whether an individual's presence at a location is integral to the provision of the supply. It was submitted:

Applying the above guidance, we note the presence of the company's representative/delegate at the relevant overseas location of the overseas trade mission is integral to T's performance of the overseas trade mission activities (e.g. networking events, travel etc.). On this basis, it is our submission that requirement (b) is satisfied (i.e. the effective use or enjoyment of T's supply of services takes place outside Australia).

It was further submitted that the supply made by T satisfies the requirement in item 3 that the supply is 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.

In relation to Question 2 it was submitted that T makes a composite supply, the dominant part of which comprises the services provided to the representative/delegate outside Australia to which services supplied by T to the company in Australia (i.e. local client briefings, client support meetings and other tasks preparatory to overseas travel) are ancillary or incidental.

The ruling request referred to the factors listed in paragraph 59 of Goods and Services Tax Ruling GSTR 2001/8 as indicating that part of a supply is ancillary or incidental. It was submitted:

In these circumstances, we consider the activities conducted in Australia are necessary and contribute to the dominant supply which is the events/activities/travel in overseas cities. Further, these briefings and meetings contribute to the proper performance of the supply of the dominant part as T will provide the representatives/ delegates of the companies important information regarding the overseas trade missions in these briefings and meetings (e.g. logistics, proposed itinerary and visa requirements etc.).

It was further submitted that the activities undertaken by T in Australia are not separately identifiable and do not retain their own identity when compared to T's activities overseas. The ruling request referred to paragraph 52 of GSTR 2001/8:

The Commissioner's view is that a supply has separately identifiable parts where the parts require individual recognition and retention as separate parts, due to their relative significance in the supply…

It was submitted that the activities conducted by T in Australia are relatively insignificant when viewed in light of the overall overseas trade mission services performed by T and do no warrant individual recognition and retention as separate parts of the supply.

Relevant legislative provisions:

A New Tax System (Goods and Services Tax) Act 1999, section 9-5; item 3 in subsection 38-190(1); subsection 38-190(4)

Reasons for decision - Question 1

Summary

The supply made by T to a company is taxable unless that supply is input taxed or GST-free. Apart from the advice on visas and profiles of the company and the representative/delegate in the mission delegates booklet, the supply by T of the items referred to under the heading 'what is included in the fee' in the Invitation to Participate is GST-free as that supply:

• meets the requirements of subsection 38-190(4) of the GST Act and is therefore taken to be supplied to a recipient who is not is Australia for the purposes of paragraph (a) of item 3 in the table in subsection 38-190(1);

• satisfies paragraph (b) of item 3 as the effective use and enjoyment of those items takes place outside Australia; and

• is 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 in Australia.

To the extent that the supply by T comprises advice on visas and profiles of the company and the representative/delegate in the mission delegates booklet, apportionment of the Participation Fee between a taxable and a GST-free supply normally would be required. However, as we have ruled in Question 2 that the supply made by T is a single composite supply which is GST-free under item 3, no apportionment is necessary.

Detailed reasoning

Taxable supply:

Section 9-5 of the GST Act states that an entity (you) makes 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.

'Supply' is defined in subsection 9-10(1) of the GST Act as any form of supply whatsoever and paragraph 9-10(2)(b) states that, without limiting subsection 9-10(1), 'supply' includes a supply of services. In the ruling request it was submitted that T makes a supply of services to a company comprising 'organising and co-ordinating overseas trade missions to promote investment opportunities in [the State]'. In our view the Invitation to Participate sets out beneath the heading 'What is included in the fee' the supply made by T to the company in return for the Participation Fee. Our view is also supported by Part 3 of the Indemnity and Registration Form which states:

The Participation Fee will assist to deliver an in-market business briefing, business matching services, nominated functions, venues, catering, ground transport, and a mission delegate booklet profiling each delegate

We also consider that the supply is made for consideration. The State legislation states that T may charge a fee for services and other facilities that T supplies and the heading 'What is included in the Fee' in the Invitation to Participate indicates that there is a nexus between the supply and the Participation Fee.

'Enterprise' is defined in subsection 9-20(1) of the GST Act to include an activity, or series of activities, done:

…

(g) by the Commonwealth, a State, or a Territory, or by a body corporate, or corporation sole, for a public purpose by or under a law of the Commonwealth, a State or a Territory.

The State legislation states that T is a body corporate, that T represents the State, and that T has the status, privileges and immunities of the State. We therefore consider T's activities to be activities done by a body corporate for a public purpose under a law of a State for the purposes of paragraph 9-20(1)(g) of the GST Act and that T is carrying on an enterprise. We are satisfied that the supply made by T is made 'in the course or furtherance' of the enterprise carried on by T.

We are satisfied that T carries on an enterprise in Australia within the meaning of subsection 9-25(6) of the GST Act, i.e. where the enterprise is carried on through a permanent establishment as defined in subsection 6(1) of the Income Tax Assessment Act 1936 (as modified by paragraph 9-25(6)(b) of the GST Act) as paragraph 88 of Goods and Services Tax Ruling GSTR 2000/31 states:

88. Thus, permanent establishment for the purposes of subsection 9-25(6) means a place at or through which a person carries on any business and, without limiting the generality of the foregoing, includes:

a place where the person is carrying on business through an agent;

a place where the person has, is using or is installing substantial equipment or substantial machinery…

T's Annual Report states that TIQ has its head office and regional offices across Australia. Paragraph 86 of GSTR 2000/31 states:

86. There is no specific set of circumstances which must be satisfied before a supply is connected with a permanent establishment. Rather, each case will be determined on the basis of the individual facts and circumstances. However, some factors that will usually indicate that the supply is made through a permanent establishment include:

the permanent establishment has the authority to sign contracts or accept purchase orders for the supply;

the permanent establishment has the authority to make important decisions in respect of the supply;

…

if the supply is a service, the service is provided by the permanent establishment…

We assume that a company completes the Participant Details in Part 1 of the Indemnity and Registration Form and forwards the Form to T's head office in Australia. By doing so the company accepts T's invitation to participate in the trade mission on the terms set out in Part 2 which includes clause 14(b):

These Terms and Conditions represent the entire agreement between [T] and the Participant in relation to the Trade Mission.

On that basis the supplies of services made by T to the company are connected with Australia pursuant to subsection 9-25(5) of the GST Act.

We have confirmed that T is currently registered for GST.

As all of the requirements in section 9-5 of the GST Act are satisfied, the supply made by T is a taxable supply unless that supply is input taxed or GST-free.

Paragraph (a) of item 3 in subsection 38-190(1):

In the ruling request it was submitted that T makes a GST-free supply which is covered by item 3 in the table in subsection 38-190(1) of the GST Act. Paragraph (a) of item 3 refers to:

A supply:

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

In the ruling request it was submitted that the company is the recipient.

'Recipient' is defined in section 195 of the GST Act, in relation to a supply, as the entity to which the supply is made and 'entity' is defined in section 184 of the GST Act to mean, inter alia, an individual and a body corporate. Paragraph 178 of Goods and Services Tax Ruling GSTR 2004/7 states that item 3 applies to a supply made to an individual, a company, a partnership, a corporate limited partnership or a trust. Paragraph 195 of GSTR 2004/7 refers to the Example in paragraph 3.27 of the Explanatory Memorandum to the Indirect Tax Legislation Amendment Bill 2000, i.e.

A supply to an Australian business of a training course to be conducted overseas

as an example of a supply of 'a supply of training services made to an Australian employer but provided to employees attending a training course conducted outside Australia'. The use of 'made' in contrast with 'provided' in the context of subsection 38-190(3) is discussed in relation to a similar example in paragraph 1.108 of the Supplementary Explanatory Memorandum to the A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2) 1999:

A school in Australia provides tuition to overseas students in Australia. However, it bills the overseas parents of the students directly.

in paragraphs 59 to 61 of Goods and Services Tax Ruling GSTR 2005/6:

59. The word 'provided' is used in subsection 38-190(3) to contrast with the term 'made' in item 2. In the context of section 38-190, the contrasting words indicate that if a non-resident contracts for a supply to be provided to another entity, the place of consumption should be determined with regard to the entity to which the supply is provided, not the entity to which the supply is made.

60. The example in the Explanatory Memorandum accompanying the Bill that introduced subsection 38-190(3) illustrates this. In that example, non-resident parents contract for the supply of education services to be provided to their children in Australia. The contractual flow of the services is to the parents, while the actual flow of the services is to the children. The supply is made to the parents (non-residents) and provided to another entity, each child, in Australia.

61. Thus the expression 'provided to another entity' means, in our view, that in the performance of a service (or in the doing of some-thing), the actual flow of that supply is, in whole or part, to an entity that is not the non-resident entity with which the supplier made the agreement for the supply. The contractual flow is to one entity (the non-resident recipient) and the actual flow of the supply is to another entity.

Based on this analysis 'made' in paragraph (a) of item 3 refers to the contractual flow of the supply and it is clear from the Indemnity and Registration Form that the supplies by T are made to the company.

Paragraph (a) in item 3 requires that the supply is made to a recipient 'who is not in Australia when the thing supplied is done'. Paragraph 31 in the Ruling section of GSTR 2004/7 states:

The requirement that the…recipient in item 3, is not in Australia when the thing supplied is done is a requirement, in our view, that the recipient is not in Australia in relation to the supply when the thing supplied is done.

Paragraphs 181, 183 and 184 in the Explanation section of GSTR 2004/7 explain that this requirement is a proxy test for determining where the supply made by T is consumed, that under a literal interpretation of this requirement a supply made to a company which is incorporated in Australia is made to a recipient which is 'in Australia' even where that supply is provided to that company's offshore branch and that 'not in Australia' should therefore be interpreted as 'not in Australia in relation to the supply' in order to operate as a test for where the supply is consumed:

181. The requirement that a supply is made to a non-resident (item 2), or recipient (item 3), who is 'not in Australia' 'when the thing supplied is done' is in effect a proxy test for determining where the supply to that entity is consumed. The presumption is that if the non-resident or other recipient of the supply is 'not in Australia' when the thing supplied is done, the supply of that thing is for consumption outside Australia and is GST-free, provided the other requirements of the item are met.

…

183. A literal approach would also mean, for example, that a supply provided to the offshore branch of an Australian resident company would not be GST-free under item 3 due to the presence of the Australian resident company in Australia. Subsection 38-190(4) could not apply to treat the supply as made to a recipient that is not in Australia as paragraph 38-190(4)(b) requires the supply to be provided to another entity, which a branch is not. A literal approach, therefore, does not give effect to the policy intent to only tax supplies consumed in Australia.

184. As the Australian location of the entity to which the supply is made at the relevant time is a proxy test for identifying when consumption occurs in Australia, we consider that the expression 'not in Australia' should be interpreted in the context of the supply in question. The expression 'not in Australia' requires, in our view, that the non-resident or other recipient is not in Australia in relation to the supply. This means that a non-resident or other recipient of a supply may satisfy the 'not in Australia' requirement if that entity is in Australia but not in relation to the supply…

In the ruling request it was accepted that a company is in Australia in relation to the supplies made by T based on the tests set out in paragraph 349 of GSTR 2004/7, i.e. the supplies made by T are solely or partly for the purposes of the company's Australian presence or there is a connection (other than a minor connection) between the supplies made by T and the company's Australian presence. It was submitted, however, that pursuant to subsection 38-190(4) the supply made by T should be taken to be a supply made to a recipient who is not in Australia for the purposes of item 3.

Subsection 38-190(4):

Subsection 38-190(4) states:

(4) A supply is taken, for the purposes of item 3 in that table, 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.

Paragraph 188 of GSTR 2004/7 explains the meaning of 'an agreement entered into…directly' with an Australian resident in subsection 38-190(4):

The agreement is entered into directly with an Australian resident if the parties to the agreement are an Australian resident and the supplier.

In the present case the Terms and Conditions indicates that where a company completes the Participants Details in Part 1 of the Indemnity and Registration Form, completes the registration and declaration in Part 3, pays using the appropriate Participation Fee pursuant to Part 4, and emails the Indemnity and Registration Form to T, T enters into an agreement directly with that company. We therefore agree with the submission in the ruling request that paragraph (a) of subsection 38-190(4) is satisfied.

In relation to the requirement in paragraph (b) in subsection 39-190(4) that the supply is provided to another entity outside Australia, we have already discussed above the meaning of 'provided' (in the context of subsection 38-190(3)) as set out in paragraphs 59 to 61 of GSTR 2005/6, i.e. the distinction between the 'contractual flow' of the supply (i.e. to the recipient) and the 'actual flow' of the supply (i.e. to the entity to which the supply is provided). Paragraph 193 of GSTR 2004/7 adopts the same approach in relation to paragraph (b) in subsection 38-190(4):

193. Subsection 38-190(4), by means of the expression 'provided', seeks to identify the entity to which the item 3 supply actually flows

It was submitted in the ruling request:

…T enters into an agreement with a company (being the Australian resident), but the supply of services is provided to the representative/delegate from the company who travels overseas to attend the overseas trade mission (being the entity outside Australia).

Subject to one exception, we agree with the submission that the items supplied by T as listed in the Invitation to Participate beneath the heading 'What is included in the fee' are provided to the delegate/representative of the company. The exception is:

Company and delegate profile in mission delegates booklet

which is also referred to in Part 3 of the Indemnity and Registration Form:

The Participation Fee will assist to deliver…a mission delegate booklet profiling each delegate.

We consider that the supply of a profile of the company in the booklet is both made and provided to the company. The same applies to the profile of the representative/ delegate as he or she would be profiled in his or her capacity as a delegate/representative of the company.

Subject to that exception we consider that the items listed under 'what is included in the fee' in the Invitation to Participate are 'provided to another entity' for the purposes of paragraph (b) in subsection 38-190(4). Guidance is provided by GSTR 2005/6 which outlines a process for determining whether a supply is 'provided…to another entity' for the purposes of subsection 38-190(3). The first step in that process is characterising the supply, as described in paragraphs 66 and 67 in GSTR 2005/6:

66. Before it can be determined whether a supply is provided (or is required to be provided) to another entity, it is essential that the supply be properly characterised as the supply of a service, right or some other thing. It is only when the supply is properly characterised that it is possible to determine whether that supply is provided to another entity.

67. In characterising a supply it is necessary to consider all the circumstances of the transaction to ascertain its essential character.

In the present case we consider that there is a supply of a service.

The second step in the process outlined in GSTR 2005/6 is establishing the exact nature of the supply, as described in paragraphs 69 to 71 of GSTR 2005.6:

69. It is also necessary to establish the exact nature of the supply to determine to which entity that service or thing is provided. That is, it is necessary to establish what is really being supplied.

70. A clear understanding of the exact nature of the supply is essential to determining whether that supply is provided to another entity. It is only by having regard to what is in substance and reality being supplied that it is possible to identify to which entity that supply is provided.

71. The exact nature of a supply in any given situation depends on the facts and circumstances of the supply and the agreement made between the parties. In this regard, it is necessary to look at the whole arrangement for the supply (including the contractual arrangements) and the way in which the supply is carried out.

Paragraph 74 in GSTR 2005/6 supports the view that some services, by their very nature, are provided to a particular entity:

74. In some instances, it is inherent in the nature of the supply that the supply is provided to a particular entity. For example travel, training or entertainment services are, by their very nature, provided to the individual that travels, or is trained or entertained, respectively.

In the present case, apart from the exception referred to above, the items listed under 'what is included in the fee' in the Invitation to Participate relate to either travel (i.e. advice on visa required, transfers from airports and ground transport to meetings) or, by their nature, are provided to the representative/delegate (i.e. attendance at networking and other events in the program, lunch or dinner with Premier).

We consider that the representative/delegate is 'another entity' for the purposes of paragraph (b) of subsection 38-190(4). Paragraphs 54 to 58 of GSTR 2005/6 discuss the meaning of 'another entity' in the context of subsection 38-190(4):

The meaning of 'another entity'

54. 'Another entity' is an entity other than the non-resident entity to which the supply is made. The term 'entity' is defined in subsection 184-1(1) and includes an individual, company, partnership, corporate limited partnership or trust.

55. An employee is an individual and therefore an entity as defined. If a supply is made to a non-resident employer and that supply is provided, or required to be provided, to an employee, that supply is provided to another entity.

56. An agent that is, for example, an individual or company is also an entity as defined. However, the mere fact that the supply is made to an agent acting for a non-resident does not mean that the supply is provided (or is required to be provided) to another entity. It is a matter of determining to which entity the supply is provided. If all the agent does is to arrange on behalf of the non-resident for the supply to be made and provided to the non-resident, the supply is not provided to the agent.

57. A partner that is, for example, an individual or company is an entity as defined. If a supply is made to a non-resident partnership and the supply is provided, or required to be provided, to a partner, that supply is provided to another entity.

58. For further explanation about the provision of a supply to an employee, an agent, or a partner refer paragraphs 122 to 129.

The ruling request referred to a representative or delegate nominated by a company to travel on behalf of the company on the trade mission. We assume that the representative/delegate would be either an employee or agent of the company and therefore 'another entity' for the purposes of paragraph (b) in subsection 38-190(4).

Paragraph (b) of subsection 38-190(4) also requires that the supply is provided to another entity 'outside Australia'. Paragraph 272 of GSTR 2007/2 states that a supply is provided when the thing supplied is done. Paragraph 273 of GSTR 2007/2 states that if the thing provided is a service provision of that service occurs during the period of time when the service is performed. As the representative/delegate is an individual, the approach taken in paragraph 276 of GSTR 2007/2 applies:

276. To determine whether there is provision of a supply to an individual in Australia or outside Australia we distinguish between resident and non-resident individuals, according to whether they are physically in or outside Australia when the thing supplied is done. Distinguishing between individuals on the basis of their residency status and physical presence at a location is consistent with the approach taken for individuals in GSTR 2004/7 and GSTR 2005/6.

We assume that the representative/delegate of a company would be an Australian resident who is physically outside Australia for the duration of the trade mission. On that basis, apart from the advice on visas required for the trade mission, the representative/delegate is physically present outside Australia when the items listed under 'what is included in the fee' in the Invitation to Participate are provided. The present case is analogous to an example in GSTR 2004/7 of a service provided to an Australian resident where the effective use or enjoyment of that supply takes place 'outside Australia' for the purposes of item 3:

Example 8 - resident individual who is not in Australia

223. An Australian tourist is arrested in New Zealand for possession of an illegal substance. While in New Zealand waiting for her trial, she receives legal advice from an Australian solicitor. She is not in Australia when the thing supplied is done for the purposes of item 3. However, the supply is only GST-free if the other requirements of item 3 are satisfied.

For the reasons set out above we consider that, apart from advice on visas and profiles of the company and the representative/delegate in the mission delegates booklet, the supply made by T in return for the Participation Fee meets the requirements of subsection 38-190(4) of the GST Act and is therefore taken to be made to a recipient who is not is Australia for the purposes of paragraph (a) of item 3 in the table in subsection 38-190(1).

Paragraph (b) of item 3:

Paragraph (b) of item 3 contains a requirement that the effective use and enjoyment of the supply takes place outside Australia. Paragraph 49 of GSTR 2007/2 describes a two-step approach to determining whether effective use and enjoyment of a supply takes place outside Australia:

49. Thus to work out whether effective use or enjoyment of a supply takes place outside Australia we take a two-step approach. First, we determine the entity to which the supply is provided - the providee entity (we explain how to determine this at paragraphs 52 to 81). We then determine whether provision of the supply to the providee entity is outside Australia (we explain how to determine this at paragraphs 82 to 136). Effective use or enjoyment of the supply takes place outside Australia if there is provision of the supply to the providee entity outside Australia. This two-step approach is summarised in flowchart form at pages 33 to 36.

For the purposes of applying subsection 38-190(4) we have already determined that the providee entity in relation to the supply made by T where a representative/delegate of a company participates in a trade mission is the representative/delegate. We have also determined that the profiles in the mission delegates booklet are not provided to the representative /delegate and that the advice on visas is provided to the representative/delegate in Australia. Subject to those exceptions, the representative/delegate is outside Australia when the other items listed under 'what is included in the fee' in the Invitation to Participate are provided to the representative/delegate. We therefore consider that the requirement in paragraph (b) of item 3 is satisfied to that extent.

Third requirement in item 3:

The third requirement in item 3 in the table in subsection 38-190(1) is that the supply made by T is 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. Paragraph 21 of Goods and Services Tax Ruling GSTR 2003/7 states:

21. Under items 1, 2 and 3 it is only where the connection between the supply and the goods or real property is a direct one that the location of goods or real property is regarded as the place where consumption occurs. The addition of the adverb 'directly' to the phrase 'connected with' implies a more emphatic connection between the supply and goods or real property. The inference is that the supply is so closely aligned with goods or real property that it is appropriate to treat the location of the goods or real property as the place where consumption occurs.

Paragraph 134 on the Explanation section of GSTR 2003/7 states:

134. We consider that a supply of a thing other than goods or real property is directly connected with goods or real property where, for example, the direct object of the supply is the goods or real property in the sense that:

the supply changes or affects the goods or real property in a physical way;

there is a physical interaction with the goods or real property but without changing the goods or real property;

the supply establishes the quantity, size, other physical attributes or the value of the goods or real property;

the supply affects (or its purpose is to affect) or protects the nature or value (including indemnity against loss) of the goods or real property; or

the supply affects, or is proposed to affect, the ownership of the goods or real property including any interest in, or right in or over goods or real property.

With the exception of the preparation of the mission delegates booklet (which we consider to be goods), we do not consider that the items listed under 'what is included in the fee' in the Invitation to Participate fall within either the principle stated in paragraph 21 or the examples set out in paragraph 134 of GSTR 2003/7.

For the reasons set out above most of the items supplied by T which are listed under 'what is included in the fee' in the Invitation to Participate satisfy the requirements of item 3 in the table in subsection 38-190(1). The two exceptions are advice about visas required for overseas travel and the profiles in the mission delegates booklet.

Apportionment:

As noted above, section 9-5 of the GST Act states (in part):

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

Paragraph 440 of GSTR 2004/7 states that those words create a general apportionment rule for the GST Act. Paragraphs 441 and 442 of GSTR 2004/7 state:

441. If a supply consists of a taxable part and a GST-free part, it is necessary to apportion the consideration between these parts to work out the GST payable on the taxable part of the supply. We discuss how this apportionment is done at paragraphs 445 to 481.

442. The need to apportion in the context of items 2 and 3 arises if the thing supplied is done over a period of time. For example, apportionment is necessary if the recipient of a supply of services is in Australia in relation to the supply for part of the time over which the services are performed. That part of the supply that is done when the recipient is in Australia in relation to the supply is the taxable part of the supply. That part of the supply that is done when the recipient is not in Australia in relation to the supply is the GST-free part of the supply, provided the other requirements of the item are met.

However, as we have ruled in Question 2 that the supply made by T is a single composite supply which is GST-free under item 3, no apportionment is necessary.

Reasons for decision - Question 2

Summary

The supply by T of the items listed under 'what is included in the fee' in the Invitation to Participate should be characterised as a single composite supply which is GST-free. The first two items listed under 'what is included in the fee' in the Invitation to Participate, i.e.

Advice on visas required for travel

Company and delegate profile in mission delegates booklet

contribute to the proper performance by T of the contract to organise and facilitate an overseas trade mission and are therefore integral, ancillary or incidental to that dominant supply.

Detailed reasoning

The ruling request acknowledged that some of the items supplied by T pursuant to the Indemnity and Registration Form are supplied to the company in Australia, i.e. local client briefings and client support meetings in preparation for overseas travel. Those services are not listed under 'what is included in the fee' in the Invitation to Participate, but in the reasons for decision for Question 1 we concluded that two items which are so listed:

Advice on visas required for travel

Company and delegate profile in mission delegates booklet

do not satisfy paragraph (b) of subsection 38-190(4).

In the ruling request it was submitted that T makes a composite supply (defined in paragraph 17 of Goods and Services Tax Ruling GSTR 2001/8 as a supply that contains a dominant part and includes something that is integral, ancillary or incidental to that part) which is GST-free supply pursuant to item 3 in subsection 38-190(1) and subsection 38-190(4) of the GST Act as the dominant part of that supply is made to a recipient who is not in Australia and only ancillary or incidental parts of that composite supply are made to a recipient who is in Australia.

Mixed supply or composite supply:

Paragraphs 19 to 19B of GSTR 2001/8 state:

19. Where a transaction comprises a bundle of features and acts, it may be necessary to characterise what is supplied to determine whether a particular provision applies in whole or in part. The characterisation should be undertaken in a manner that is consistent with the object of the particular statutory provision in issue. For example, if a provision specifically requires different treatment of two components of a transaction, this will mean that the two components must necessarily be separately recognised. However, that does not mean that the two components need to be separately recognised for all purposes of the GST Act.

19A. An identification of the essential character of what is supplied may inform whether (and to which extent) a particular transaction falls within the terms of a specific statutory provision. You must consider all of the circumstances of the transaction to ascertain its essential character.

19B. Having regard to the essential character and with regard to the statutory provision in issue, you can then determine whether the transaction is a mixed supply because it has separately identifiable parts that the GST Act treats as taxable and non-taxable, or whether it is a composite supply because one part of the supply should be regarded as being the dominant part, with the other parts being integral, ancillary or incidental to that dominant part.

Paragraph 19 of GSTR 2001/8 requires characterisation of what is supplied in a manner that is consistent with the statutory provision in issue. In the present case the statutory provision in issue is subsection 38-190(4) of the GST Act. The object of subsection 38-190(4) is explained in paragraphs 3.30 to 3.35 of the Explanatory Memorandum:

The Government's policy objective is to ensure that services provided to businesses overseas should not be subject to GST in the same way that exported goods are GST-free.

The Explanatory Memorandum then refers to four situations where this policy objective was not being achieved and, in relation to the fourth, provides the following example (Para 3.35):

Fourth, there are situations where supplies can be made outside Australia, but because the recipient is technically in Australia when the supply takes place, the supply is taxable. An example is where a company is located in Australia, but a supply is made to one of its employees outside Australia - strictly speaking the supply is made to the company, which is in Australia.

Paragraphs 3.34 and 3.35 of the Explanatory Memorandum then explain the recommended option for dealing with the four situations where the policy objective was not being achieved:

The Government proposes to extend GST-free treatment to deal with the last 3 situations.

That is, the Government proposes to…allow a wider range of services to be GST-free and will ensure that a supply to an Australian resident is GST-free if the supply is provided to an entity outside Australia.

Para 3.27 of the Explanatory Memorandum sets out specific examples of the supplies intended to be covered by subsection 38-190(4):

Item 11 adds new subsection 38-190(4) and provides that for the purposes of item 3 in the table in subsection 38-190(1) a supply will be taken to be made to a resident who is not in Australia when the thing supplied is done if the supply is provided to another entity outside Australia. Some examples of the types of supplies covered are:

A supply of mobile telephone roaming to an Australian business with an employee overseas; and

A supply to an Australian company of a training course to be conducted overseas.

Each of the examples set out in paragraph 3.27 of the Explanatory Memorandum would comprise a 'bundle of features and acts' (per paragraph 19 of GSTR 2001/8), but the Explanatory Memorandum indicates that subsection 38-190(4) is intended to apply to all of those features and acts and does suggest that any component of that bundle requires a different GST treatment. Similarly, for the purpose of applying subsection 38-190(4) in the present case the items listed under 'what is included in the fee' in the Invitation to Participate should be characterised as a single composite supply.

Applying the 'essential character of what is supplied' test in paragraphs 19A and 19B of GSTR 2001/8, the Indemnity and Registration Form and Invitation to Participate indicate that T supplies to the Participant the service of organising and facilitating a trade mission to an overseas destination. Having regard to subsection 38-190(4), that supply should be treated as a single composite supply which is GST-free.

Things that are integral, ancillary or incidental:

Paragraph 59 of GSTR 2001/8 states:

59. No single factor (by itself) will provide the sole test you use to determine whether a part of a supply is integral, ancillary or incidental to the dominant part of the supply. Having regard to all the circumstances, and taking a commonsense and practical approach, indicators that a part may be integral, ancillary or incidental include where:

you would reasonably conclude that it is a means of better enjoying the dominant thing supplied, rather than constituting for customers an aim in itself; or

it represents a marginal proportion of the total value of the package compared to the dominant part; or

it is necessary or contributes to the supply as a whole, but cannot be identified as the dominant part of the supply; or

it contributes to the proper performance of the contract to supply the dominant part.

In the ruling request it was submitted that activities undertaken by T in Australia contribute to the dominant supply comprising travel, activities and events outside Australia and contribute to the proper performance by T of that dominant part of the supply and therefore comprise integral, ancillary or incidental parts of that dominant supply.

In our view the first two items listed under 'what is included in the fee' in the Invitation to Participate contribute to the proper performance of the contract to organise and facilitate an overseas trade mission and are therefore integral, ancillary or incidental to that dominant supply. For example, without the correct visa the representative/delegate would be unable to participate in the trade mission. Similarly the profiles of the company and the representative/delegate contributes to the various networking events which take place overseas during the trade mission.