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Edited version of your written advice
Authorisation Number: 1013029115234
Date of advice: 7 June 2016
Ruling
Subject: Facilitation payment fee
Questions and answers
1. Are you assessable on the full amount of the funds which you will facilitate for your overseas client who is running a business?
No
2. Are you only assessable on the service fee which you will charge your overseas client for helping them to facilitate the payments they receive from their business?
Yes
This ruling applies for the following period
Year ended 30 June 2016
Year ended 30 June 2017
The scheme commenced on
1 July 2015
Relevant facts and circumstances
You are an Australian citizen and Australian resident living in Australia.
Your client is a Country A citizen who is resident in Country A.
You will assist your client in their business in facilitating their payments and charge a facilitation fee (service fee).
Your service fee will be a percentage of the funds facilitated.
You will transfer the total amount of the funds from the sales made by your client to your client.
You and your client have signed a Service Agreement detailing the financial management by you of funds belonging to your client:
The sales made by your client will have no connection with Australia or with you.
The Service Agreement sets out detailed record keeping rules to be followed by you and your client, for the purposes of transparency.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Reasons for decision
Assessable income
Assessable income of a resident taxpayer includes income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
Assessability of full amount of funds which you facilitate for your client
As a general rule, income generated from carrying on a business is assessable income. Your friend is running a business in Country A. Neither they nor the sales they makes have any connection with Australia. Furthermore, you do not have any connection to the work done by your client.
As it is your client who is running the business, the income generated from sales they make is their income and not yours.
You will transfer the total amount of the funds from the sales made by your client to your client. You are merely acting as an agent on behalf of your client. It is your client who will be making the sales. Thus you are not assessable on the full amount of the funds which you facilitate for your client.
Assessability of payment facilitation fee
You will charge a facilitation fee (service fee) to your client for facilitating the payments they receive from sales they make. The fee will be a percentage of the total funds facilitated.
The service fee you will charge is your assessable income as it will be earned by you.