Edited version of your written advice

Authorisation Number: 1012848972752

Date of advice: 27 July 2015

Ruling

Subject: GST registration for non-residents

Question 1

Are you required to be registered for Goods and Services Tax (GST) under section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes. You are required to be registered for GST under section 23-5 of the GST Act.

Relevant facts and circumstances

You are registered for GST.

You are a non-resident that uses a third party partner in Australia to provide services to your customers in Australia.

The partner charges you GST on their service fees and you in turn charge your Australian customers GST.

You have no physical presence in Australia.

Your GST turnover exceeds $75,000 per annum.

You have been registered for GST since 20xx.

However, the colleagues who worked on the registration are no longer with the company, and as such, you have been unable to gain access to your account or speak to anyone at the ATO regarding this.

To your knowledge, you have never completed a GST return and neither have you been contacted by the ATO to query your non-submission.

You currently have a GST liability of $$$, which you need to settle via completing the appropriate return(s). The liability has arisen over the certain tax periods.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-20,

A New Tax System (Goods and Services Tax) Act 1999 section 9-25,

A New Tax System (Goods and Services Tax) Act 1999 section 23-5,

A New Tax System (Goods and Services Tax) Act 1999 section 23-15,

A New Tax System (Goods and Services Tax) Act 1999 section 188-10,

A New Tax System (Goods and Services Tax) Act 1999 section 188-15,

A New Tax System (Goods and Services Tax) Act 1999 section 188-20, and

Tax Administration Act Schedule 1 section 105-55.

Reasons for decision

Summary

You are required to be registered for Goods and Services Tax (GST) under section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Detailed reasoning

Section 23-5 of the GST Act provides that you are required to be registered for GST if:

(a) you are carrying on an enterprise and

(b) your annual turnover meets the registration turnover threshold.

Carrying on an enterprise

Subsection 9-20(1) of the GST Act defines an enterprise as an activity, or series of activities, done:

(a) in the form of a business; or

(b) in the form of an adventure or concern in the nature of trade…

Paragraph 9-20(2)(b) of the GST Act provides that an enterprise does not include an activity or series of activities done as a private recreational pursuit or hobby.

Section 195-1 of the GST Act defines a business as any profession, trade, employment, vocation or calling, but does not include occupation as an employee.

You provide services to your customers in Australia through a third party partner. In these circumstances we are satisfied that you are undertaking an enterprise as defined in section 9-20 of the GST Act.

Registration turnover threshold

Under section 23-15 of the GST Act, your registration turnover threshold (unless you are a non-profit body) is $50,000, or such higher amount as the regulations specify. The registration turnover threshold was increased from $50,000 to $75,000 with effect from 1 July 2007.

Subsection 188-10(1) of the GST Act provides that your annual turnover meets a particular turnover threshold if:

(a) your current annual turnover is at or above the turnover threshold and the Commissioner is not satisfied that its projected annual turnover is below the turnover threshold or

(b) your projected annual turnover is at or above the turnover threshold.

At any particular time, your current annual turnover is the sum of the values of all the supplies that the entity has made, or is likely to make, during the current month and the preceding 11 months (subsection 188-15(1) of the GST Act).

Your projected annual turnover, at any particular time, is the sum of the values of all the supplies that the entity has made, or is likely to make, during the current month and the next 11 months (subsection 188-20(1) of the GST Act).

However, any supply that is not connected with the indirect tax zone is disregarded in working out your current or projected GST turnover. (see paragraphs 188-15(3)(a) and 188-20(3)(a) of the GST Act respectively).

Connected with the indirect tax zone

Under subsection 9-25(5) of the GST Act, a supply of anything other than goods or real property is connected with the indirect tax zone if:

(a) the thing is done in the indirect tax zone; or

(b) the supplier makes the supply through an enterprise that the supplier carries on in the indirect tax zone; …

Under paragraph 170 of Goods and Services Tax Ruling 2000/31 (GSTR 2000/31), 'Thing', as defined in section 195-1, means anything that can be supplied or imported. You have advised that you use a third party partner in Australia to provide services to your customers in Australia. The 'thing' being supplied is the services'. The services are done in the indirect tax zone as it is provided to customers in Australia. Therefore the supply of your services is connected with the indirect tax zone as defined in paragraph 9-25(5)(a) of the GST Act.

You advised that your GST turnover exceeds $75,000 for the supply of your payroll services, made through a third party partner, to customers in Australia. This means that your current annual turnover and your projected annual turnover will exceed $75,000.

Therefore, you are required to be registered for GST under section 23-5 of the GST Act.

Time limits on GST payments and credits

Subdivision 105-C of Schedule 1 to the TAA imposes time limits on recovering unpaid net amounts of indirect taxes and payments of refunds and credits.

In particular, section 105-55 of Schedule 1 to the TAA provides that you are not entitled to a refund or credit in respect of tax periods that are not within four (4) years of the end of the tax period unless you have notified the Commissioner of your entitlement.

Your request for a private ruling in relation to your enterprise in which we received on [date] is considered to be a suitable notification.

Unfortunately, you cannot make a claim for a refund or credit for the tax periods prior to [date] as the time limit for notifying us of your entitlement has expired. We must receive your notification within four years after the end of the tax period in which your refund or credit relates.

The Commissioner has no discretion to extend the four year time limit. This was confirmed by the Administrative Appeals Tribunal (AAT) decision in Australian Leisure Marine Pty Ltd v FC of T, 2010 ATC 10-148. Paragraph 18 of the AAT decision states:

The Commissioner (and this Tribunal) has, in my view, no discretion to extend the time which is provided for by s 105-55(1) of Sch 1 to the Act in which the applicant may give notice of its entitlement to claim the additional input tax credits.

Accordingly, you will not be required to pay net amounts or be entitled to claim input tax credits that are attributable to the tax periods prior to [date]. Note that the GST law requires that all outstanding returns (known as Activity Statements) will need to be lodged - even those that relate to tax periods prior to the four year cutoff for collections and refunds.