Edited version of your written advice

Authorisation Number: 1012859082890

Ruling

Subject: GST supplies and registration

Question 1

Are you making a supply under section 9-10 of the A New Tax System (Goods and Services) Tax Act 1999 (GST Act), when you collect monies from participants attending your clinics that are presented by non-residents?

Answer

Yes, you are making a supply under section 9-10 of GST Act, when you collect monies from participants attending your clinics that are presented by non-resident.

Question 2

If the answer to 1 is yes, do you include the monies receives from participants attending your clinics when you calculate your GST turnover threshold under section 188-15 of the GST Act?

Answer

Yes. You include the monies received from participants attending your clinics when you calculate your GST turnover threshold under section 188-15 of the GST Act.

Relevant facts and circumstances

You are not registered for GST.

Your GST turnover thresholder is less than $75,000.

You run small clinics both in Australia and overseas.

From time to time, you invite non-resident (NR) to come to Australia to present at your clinic in which you facilitate. You do not have an agreement with the NR that states (expressed or implied) that you are an agent to the NR.

The facilitation includes the following services:

• You take bookings and collect monies from participants attending the clinics. You do not need to obtain authority from the NR as to who can attend the clinics.

• You act in your own name and you provide receipts to the attendees for the monies collected in your own name.

• You supply the use of your facilities to the NR.

• You provide tea and coffee for the clinic.

You pay all expenses out of the money's receipted from the participants.

You decide the price of the participant's attendance fee as well as the prices of the expenses incurred.

Prior to the NR arriving in Australia, you provide the NR an estimate of monies to be collected from participants attending the clinic, minus all expenses to be incurred. Any profit as outlined in the estimate is then given to the NR as payment for their services. This amount is paid to the NR on their arrival in Australia. In the event that there are losses, the NR will not be responsible to pay for the expenses out of their own pocket.

In the event of exchange rate fluctuations, you absorb any loss and retain any profits due to the difference between the estimated price given to the NR prior to arrival and the actual price paid to the NR on arrival.

All monies collected and all expenses paid are accounted for in your bookkeeping records.

In the event that the monies received from the participants attending the clinics is considered when calculating your GST turnover threshold, your GST turnover will be over $75,000.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-10

A New Tax System (Goods and Services Tax) Act 1999 subsection 188-10(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 188-15(1), and

A New Tax System (Goods and Services Tax) Act 1999 subsection 188-20(1).

Reasons for decision

Question 1

Summary

You are making a supply under section 9-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when you collect monies from participants attending your clinics that are presented by non-residents.

Detailed reasoning

The meaning of 'supply' is giving in section 9-10 of the GST Act. The general rules explain that a 'supply' is any form of supply whatsoever.

Goods and Services Tax Ruling GSTR 2006/9, Goods and Services Tax: Supplies (GSTR 2006/9), provides the Commissioner's view in respect of making supplies. According to paragraph 50 of the GSTR 2006/9, the Ruling uses ten propositions to assist in analysing a transaction to identify the supply or supplies made in that transaction. The first proposition is that for every supply there is a supplier.

The term 'supplier' is not defined in the GST Act. However, whenever the term is used in the Act, it refers to the entity that makes a supply or is capable of making a supply.

In an agency relationship, it is the principal and not the agent who is considered a supplier.

In your situation, you enter into an agreement with a non-resident (NR) to come to Australia to present at Australian clinics in which you facilitate. You take the bookings and collect monies from participants attending the clinics.

The question arises as to whether you act as a principal in your own right when you collect monies from participants attending the clinics, or whether the NR is principal and you act as agent for the NR.

The Commissioner's view on agency is given in Goods and Services Tax Ruling GSTR 2000/37 'Goods and services tax: agency relationships and the application of the law' (GSTR 2000/37).

Paragraph 28 of GSTR 2000/37 discusses the factors that indicate that an agency relationship exists:

28. In most cases, any relevant documentation about the business relationship, the description used by the parties and the conduct of the parties establish the existence of an agency relationship. Therefore, the following factors may show that you are an agent under an agency relationship, although no single factor (by itself) is determinative:

• any description of you as an agent, having authority to act for another party, in an agreement (expressed or implied) between you and the other party;

• any exercise of the authority that you are given to enter into legal relations with a third party;

• whether you bear any significant or commercial risk;

• whether you act in your own name;

• whether you are remunerated for your services by way of commissions and whether you are entitled to keep any part of your remuneration secret from another party; and

• whether you decide the price of things that you might sell to third parties.

According to the facts provided:

• You do not have an agreement with the NR that states (expressed or implied) that you are an agent.

• You enter into relations with participants of the clinics, without the need to obtain authority from the NR.

• You bear the commercial risk involved in the transaction as all expenses are paid out of the monies received from participants of the clinics. The NR is not expected to pay any expenses out of his/her own pocket.

• You act in your own name as all receipts are provided in your own name.

• You are also reimbursed any expenses that you made. In the event of exchange rate fluctuations, you absorb any loss and retain any profits due to the difference between the estimated price given to the NR prior to arrival and the actual price paid to the NR on arrival.

• You decide the price of the participant's attendance fee as well as the prices of the expenses that are incurred.

Therefore, we consider that you are acting as principal in your own right when you collect monies from participants attending the clinics.

We consider that you are the supplier of the clinics. You are making a supply under section 9-10 of the GST Act when you collect monies from participants attending your clinics.

Question 2

Summary

You include the monies received from participants attending your clinics when you calculate your GST turnover threshold under section 188-15 of the GST Act.

Detailed reasoning

Subsection 188-10(1) of the GST Act provides:

'You have an annual turnover that 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.'

'Turnover threshold' is defined in section 195-1 of the GST Act to include the registration turnover threshold.

Subsection 188-15(1) of the GST Act provides:

'Your current annual turnover at a time during a particular month is the sum of the *values of all the supplies that you have made, or are likely to make, during the 12 months ending at the end of that month, other than:

(a) supplies that are *input taxed; or

(b) supplies that are not for *consideration (and are not *taxable supplies under section 72-5); or

(c) supplies that are not made in connection with an *enterprise that you carry on.'

This means that at any particular time, your current annual turnover is the sum of the values of all the supplies that you have made, or are likely to make, during the current month and the preceding 11 months.

Subsection 188-20(1) of the GST Act provides:

'Your projected annual turnover at a time during a particular month is the sum of the *values of all supplies that you have made, or are likely to make, during that month and the next 11 months, other than:

(a) supplies that are *input taxed; or

(b) supplies that are not for *consideration (and are not *taxable supplies under section 72-5); or

(c) supplies that are not made in connection with an *enterprise that you *carry on.'

This means that at any particular time, your projected annual turnover is the sum of the values of all the supplies that you have made, or are likely to make, during the current month and the next 11 months.

As explained in the detailed reasoning in question one, we consider you to be the supplier of the clinics. The supply is made for consideration as you collect monies from the participants who attend the clinics. The supply is made in connection with your enterprise in which you carry on. There are no provisions in the GST Act which would make your supply of clinics input taxed.

Therefore, you should include the monies received from participants attending your clinics when you calculate your GST turnover threshold under section 188-15 of the GST Act.