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Edited version of your written advice
Authorisation Number: 1012928442731
Date of advice: 17 December 2015
Ruling
Subject: Income and GST
Issue 1 - Assessability of commission income
Question 1
Is the commission you earn from your income from your website business included in your assessable income in Australia?
Answer
No
Issue 2 - Goods and Services Tax
Question 1
Do you need to register for and pay goods and services tax?
Answer
No.
Question 2
If you provided commission services to providers outside Australia, would these have any effect on the application of goods and services laws to your supplies to Australian providers?
Answer
No.
This ruling applies for the following period(s)
1 July 2014 to 30 June 2019.
The scheme commences on
The scheme has commenced
Relevant facts and circumstances
You are not a resident of Australia for taxation purposes.
You are not registered for goods and services tax (GST) in Australia.
You reside in Country A
You have commenced an internet based business (your business).
You have registered your business in Australia and Country A.
Your business operates through a website hosted by an Internet Service Provider (ISP) based in Country A.
The ISP has no involvement in your business, other than hosting your website.
You will earn income on a commission basis from bookings made through your website.
You will pay tax in Country A.
You might provide booking services to providers outside Australia in the future.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
A New Tax System (Goods and Services Tax) Act 1999 Division 84
Reasons for decision
Issue 1 - Assessability of commission earned through your business
Question 1
Is the commission you earn from your income from your website travel business included in your assessable income in Australia?
Answer
No
Section 6-5 of the Income Tax Assessment Act 1997 provides that the assessable income of a foreign resident includes the ordinary income they earn from Australian sources in an income year.
Regular commission payments constitute ordinary income and the 'source' of income is generally considered to be the location the work is carried out.
You are a foreign resident and not a resident of Australia for taxation purposes and you will earn income in the form of commission from a website travel business operated though an ISP based in Country A. The commission you will earn is considered to have a foreign source and will not be included in your assessable income in Australia.
Issue 2 - Good and Services Tax
Question 1
Do you need to register for and pay GST?
Answer
No. You are only required to be registered for GST if you run a business or other enterprise and your GST turnover is $75,000 or more.
Furthermore, your supplies of commission services to Australian tour operators and accommodation providers would not make you liable to pay GST as you would not be making any taxable supplies.
Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) outlines when a taxable supply is made. You make a taxable supply if:
• you make the supply for consideration; and
• the supply is made in the course or furtherance of an enterprise that you carry on; and
• the supply is connected with Australia; and
• 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.
Your supplies are not connected with Australia as they are done in Country A. Amounts paid to you by the Australian tour operator and accommodation providers are as commission fees for your agent services to them. As you are out of Australia, the supply is not connected with Australia under paragraph 9-5(c) of the GST Act so GST will not apply to that commission. Accordingly, you do not have to register for GST and your supplies are not subject to GST.
Question 2
If you provided commission services to providers outside Australia, would these have any effect on the application of GST laws to your supplies to Australian providers?
Answer
No. These services would also not be connected with Australia.