Edited version of your written advice

Authorisation Number: 1013035705740

Date of advice: 22 June 2016

Ruling

Subject: GST and supplies to non-resident companies

Question 1

Is the supply of membership subscription by the Australian company to non-resident companies a taxable supply under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Advice

Yes. The supply of membership subscriptions by the Australian company to non-resident companies is a taxable supply under section 9-5 of the GST Act.

Question 2

Is the supply of training or seminar in Australia by the Australian company to the employees of the non-resident companies a taxable supply under the GST Act?

Advice

Yes. The supply of training or seminar in Australia by the Australian company to the employees of the non-resident companies is a taxable supply under section 9-5 of the GST Act by virtue of subsection 38-190(3) of the GST Act.

From 1 October 2016 the supply of training or seminar in Australia to the employees of the non-resident companies will be GST-free under item 2 in the table in subsection 38-190(1) of the GST Act due to the amendment in subsection 38-190(3) of the GST Act.

Question 3

Is the supply of advertising services by the Australian company to non-resident companies a taxable supply under the GST Act?

Advice

Where the non-resident companies are the only entities involved with the supply of advertising services when these services are done, the supply of advertising services made by the Australian company to the non-resident companies is GST-free under item 2 in the table in subsection 38-190(1) of the GST Act.

Where the non-resident companies have a local representative and, both the non-resident company and the local representative are involved with the supply of advertising services at the time these services are done, the supply of advertising services made by the Australian company to the non-resident companies is a taxable supply under section 9-5 of the GST Act.

Where the non-resident companies have a local representative and the involvement of the local representative is not minor in relation to the supply of advertising services, the supply of advertising services made by the Australian company to the non-resident companies is a taxable supply under section 9-5 of the GST Act.

Question 4

Is the supply of registration for the Australian conference and show by the overseas company to non-resident companies a taxable supply under the GST Act?

Advice

Full registration

Where a full registration is made for attending the Australian conference and show, the supply of entry to the conference and show by the Australian company to the non-resident company is a taxable supply under section 9-5 of the GST Act.

Partial registration

Where a partial registration is made for attending the Australian conference and show, the supply of entry to the conference and show by the Australian company to the non-resident company is a taxable supply under section 9-5 of the GST Act.

From 1 October 2016, the supply will be GST-free under item 2 in the table in subsection 38-190(1) of the GST Act because of the amended subsection 38-190(3) of the GST Act.

Partial registration with social event

Where a partial registration and a request to receive the social events held on that day is made, the supply of entry to the Australian conference and show by the Australian company to the non-resident company is a taxable supply under section 9-5 of the GST Act.

Question 5

Is the supply of booth/exhibition space for the Australian conference and show by the Australian company to non-resident companies a taxable supply under the GST Act?

Advice

Yes, the supply of booth/exhibition space, for the Australian conference and show by the Australian company to non-resident companies is a taxable supply under section 9-5 of the GST Act.

Question 6

Is the supply of sponsorships for the Australian conference and show by the Australian company to non-resident companies a taxable supply under the GST Act?

Advice

Platinum, gold and silver sponsorship packages

There are four distinct supplies being made within the platinum, gold and silver sponsorship packages:

1. A supply of real property (booth or equivalent space in the exhibition) which is a taxable supply under section 9-5 of the GST Act.

2. A supply of entry to the whole conference and to the social event party which is a taxable supply under section 9-5 of the GST Act by virtue of subsection 38-190(3) of the GST Act.

3. A supply of meal (gala dinner) which is a taxable supply under section 9-5 of the GST Act.

4. A supply of promotional/advertising services.

Where the non-resident companies are the only entities involved with the supply of promotional/advertising services when these services are done, the supply of promotional/advertising services made by the Australian company to the non-resident companies is GST-free under item 2 in the table in subsection 38-190(1) of the GST Act.

Where the non-resident companies have a local representative and, both the non-resident company and the local representative are involved with the supply of promotional/advertising services at the time these services are done, the supply of promotional/advertising services made by the Australian company to the non-resident companies is a taxable supply under section 9-5 of the GST Act.

Where the non-resident companies have a local representative and the involvement of the local representative is not minor in relation to the supply of promotional/advertising services, the supply of promotional/advertising services made by the Australian company to the non-resident companies is a taxable supply under section 9-5 of the GST Act.

Other sponsorships

The supply of the other sponsorships is a supply of one thing being a supply of promotional/advertising services with the complimentary tickets being merely integral, ancillary or incidental to the supply of promotional/advertising services.

The GST status of the promotional/advertising services is similar to the GST status of the supply of promotional/advertising services made in the platinum, gold and silver sponsorship packages.

Relevant fact

You are an Australian association representing a specific Australian industry and registered for the goods and services tax (GST).

You have been formed to bring together for the benefit of the Australian industry, representatives of the main groups in the industry, merchants, processors, local manufacturer, agents representing overseas manufacturers, industry suppliers and any other interested parties. Your purpose is to promote and encourage the business interest of your members.

Supply of membership subscription to non-residents

You have a substantial number of non-resident companies as members of your association. The purpose of these overseas companies to become members of your association is to promote and sell their products into the Australian Market.

The non-resident company carries on business activities in Australia for the sole purpose of selling their products in the Australian Market. These activities generally constitute marketing strategy for the sale of their products throughout Australia. The Australian agent or Australian office of the non-resident company will do the marketing and selling of the products in Australia.

There is only one category of membership available to the non-residents. The benefits received are mainly industry updates, Australian standards and updates and the comfort of promoting to potential customers under the Industry Association and Brand of your association.

Under the association's code of conduct, members will have an Australian registered business. You advised that the non-resident company must be represented by an Australian agent or an Australian office set up by the non-resident complying with Australian corporate laws as part of your rules to be a member.

When completing the membership application form, the non-resident company will insert the ABN of the Australian agent or Australian office. The membership application form also states that the members are required to first be a member of the Industry State Association in Australia and detail of the membership number in that state is required when completing the membership form.

You email updates and information to the appropriate non-resident personnel and provide a copy to the Australian office or Agent so it is not compulsory for the non-resident members to attend the meetings held in Australia.

Training and seminars

You supply training and seminars in Australia and charge a separate fee for attending the training and/or seminars.

It is not compulsory for the non-resident members to participate in any Australian training as the overseas companies are highly professional and conduct their own seminars and training overseas. You ensure they comply with Australian Standards.

Advertising in the Australian Magazine

The Australian Magazine is issued quarterly and you supply advertising services to entities (members and non-members) who would like to advertise in the magazine.

The non-resident company contacts you if they wish to place an advertisement in the magazine in regard to the products that are to be sold by its local representative in Australia.

You confirm space depending on availability and confirm the company's current membership status. The non-resident company provides all advertising material to you who then collate the material and determine the page position in the magazine. The non-resident company exercises full control of the advertising and determines when and where to have the advertisement. You raise an invoice to the non-resident company for the advertising.

When supplying the advertising services, you may deal with either the non-resident company or the local representatives or with both the non-resident company and the local representative depending on requirements.

With the consent of the non-resident company, you may deal with the local representative of the non-resident company for the advertising services. In this instance, the local representative will supply instruction and art images to you for the production of their half or full-page advertising that they have chosen. The reason for the interaction with the local body is because the overseas company is satisfied with the arrangement and secondly without this interaction you cannot produce an advertisement.

The acquisition of the advertising made by the non-resident company does not relate to supply of residential premises in Australia.

The non-resident company does not request you to provide its advertising to another entity in Australia.

Conference and show in Australia

The purpose of the conference is to promote industry products and services, foster relations and attend various speaker sessions advising on latest innovations and technical issues. Attendees receive the benefits of keeping abreast with the local market changes and the opportunity of meeting face to face potential customers.

The Australian conference is held for all industry participants' members and non-members. Members have the benefit of a discounted rate. The Australian conference and show is a three day event and consists of social events and conference. The fees vary according to the needs of the attendees, from full registration to partial registration such as a particular day or event.

When a full registration is made by the non-resident company, the attendees will be provided with social events and information for the three day events.

When the non-resident company elects for a partial registration that is a one day delegate, the attendee will only be provided with information during the conference. However, the non-resident company can request to participate in the social event on that day when completing the registration form and an additional fee for the social event will be charged to the non-resident company in this instance.

The attendees pay for their own travelling and accommodation when attending the conference in Australia.

When the non-resident company registers for the conference, it is more likely that their overseas staff will attend the conference. Generally if the local representative registers it is for him/her.

Exhibition booth and floor space only

The price of an exhibition booth at the convention centre is $xxx including GST and the price for floor space only is $yyy. An exhibitor who wished to exhibit a custom booth at the conference should purchase floor space.

Purchase of any exhibition space at the conference includes full conference registration for one representative to attend the conference inclusive of all benefits, company name, logo contact details, including a link to your website listed on the conference website, company logo and name included in the delegate handbook as an exhibitor, a small amount of free tickets to the welcome reception to distribute to your customers and a list of attending delegates.

Sponsorship for the conference

Entities are invited to promote their products and services as a sponsor and/or exhibitor at the Australian conference and show

The sponsorships that you supply vary and are supplied according to the level of offer for the general awareness of the sponsor and their products at the conference. The entity and their brand are advertised throughout the conference and in all corresponding advertising. Other forms of sponsorship can be specific to an event and the price varies accordingly.

Depending on the sponsorship packages (platinum. Gold or silver) the benefits are as followed:

• Acknowledgement of sponsorship during the opening and closing sessions, and at appropriate times throughout the conference.

• An opportunity to address the delegates- a senior representative from the sponsor organisation is invited to address delegates at the opening session.

• Sponsor's company name and logo will appear on all event literature.

• Sponsor's corporate banner will be displayed in a prominent position (as selected by the event organisers).

• A full page advertisement in the Delegate handbook.

• A promotional paragraph and contact details showcasing sponsor's company in the Delegate handbook.

• Supply of booth or equivalent space in the Australian exhibition.

• An opportunity to include one insert into delegate bags.

• A number of full conference registrations inclusive of all benefits.

• A number of complimentary tickets to the gala dinner.

• A number of complimentary tickets to the social event party.

• A list of attending delegates.

The other type of sponsorships relates to the social events to be held during the conference and show and the benefits includes advertising and promoting the sponsor's company in the social event. In some social events a complimentary ticket for the event may be given as well.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 38-190

Reasons for decisions

Note: Where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in subsection 195-1 of the GST Act.

Question 1

GST is payable on a taxable supply. Under section 9-5 of the GST Act, an entity makes a taxable supply if:

a) the supply is made for consideration; and

b) the supply is made in the course or furtherance of an enterprise that the entity carries on; and

c) the supply is connected with Australia; and

d) the entity is registered for GST.

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

Yours supply of membership to the non-resident company satisfies paragraphs 9-5(a) to 9-5(d) of the GST Act as:

a) you make the supply for consideration; and

b) the supply is made in the course of an enterprise that you carry on in Australia; and

c) the supply is connected with Australia as the supply is made through an enterprise that you carry on in Australia; and

d) you are registered for GST.

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

There is no provision under the GST Act that makes your supply of membership subscription an input taxed supply.

GST-free supply

Relevant to your supply of membership subscription to the non-resident company is item 2 in the table in subsection 38-190(1) of the GST Act (item 2).

Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident is GST-free if it is a supply that is made to a non-resident that is not in Australia when the thing supplied is done, and:

a) the supply is neither a supply of work physically performed on goods situated in Australia when the work is done, nor a supply directly connected with real property situated in Australia; or

b) the non-resident acquires the thing in carrying on the non-resident's enterprise, but is not registered or required to be registered for GST.

Precondition of item 2 - non-resident is 'not in Australia'

Goods and Services Tax Ruling GSTR 2004/7 provides guidance on when a non-resident is 'not in Australia' for the purposes of item 2.

The requirement that the non-resident in item 2 is not in Australia when the thing supplied is done is a requirement that the non-resident is not in Australia in relation to the supply when the thing supplied is done.

Under paragraph 37 in GSTR 2004/7, we consider that a non-resident company is in Australia if that company carries on business (or in the case of a company that does not carry on business, carries on its activities) in Australia:

a) at or through a fixed and definite place of its own for a sufficiently substantial period of time, or

b) through an agent at a fixed and definite place for a sufficiently substantial period of time.

We consider that it would be reasonable for a supplier to conclude that a non-resident company is in Australia if:

• the company is registered with ASIC; or

• the company has a permanent establishment in Australia for income tax purposes.

Even if a company is in Australia, it may not be in Australia in relation to the supply and so can still satisfy the 'not in Australia'. To work out whether a company is in Australia in relation to the supply, it is necessary to examine the role the presence of the company in Australia plays in relation to the supply when the supply is done (that is, when the services are performed).

A non-resident company is in Australia in relation to the supply if the supply is solely or partly for the purposes of the Australian presence, for example its Australian branch, representative office or agent if it is a non-resident company, or the Australian head office if it is an Australian incorporated company, the company is in Australia in relation to the supply. There is a connection between the supply and the presence in Australia that is not a minor connection.

If the supply is not for the purposes of the Australian presence but that Australian presence is involved in the supply, the company is in Australia in relation to the supply except where the only involvement is minor.

If the involvement of the Australian presence is limited to the carrying out of simple administrative tasks on behalf of the company, as a matter of administrative convenience, that involvement is so minor. The connection between the supply and the presence is so minor in nature that it is reasonable to conclude that the presence of the company in Australia is not in relation to the supply.

Tasks of a simple administrative nature include:

• payment of, or arranging for payment of, the supplier's invoice on behalf of the company;

• passing on an e-mail to the company;

• being a point of telephone contact to pass on messages to the company;

• being a mailing address or delivery contact on behalf of the company;

• being a point of contact for a visiting representative of the company; and

• on-forwarding information to the company.

From the facts received, the non-resident company must be represented by an Australian agent or an Australian office set up by the non-resident company, complying with Australian corporate laws as part of the rules to be a member. Further your members are required to first be a member of the industry State Association in Australia when they register to be a member and the ABN of the Australian office is used when the non-resident company completes the membership registration form.

From the above, we consider that the non-resident company is in Australia in relation to the supply of membership subscription since the supply of the membership subscription is for the purposes of the Australian presence that the non-resident company has in Australia.

Item 2 is therefore not applicable to the supply of membership subscription since the non-resident company does not satisfy the precondition 'not to be in Australia in relation to the supply' for item 2.

Summary

The supply of membership subscription to the non-resident company is a taxable supply under section 9-5 of the GST Act.

Question 2

Your supply of training and seminar to the employee of the non-resident company satisfies paragraphs 9-5(a) to 9-5(d) of the GST Act as:

a) you make the supply for consideration; and

b) the supply is made in the course of an enterprise that you carry on in Australia; and

c) the supply is connected with Australia as the supply is made through an enterprise that you carry on in Australia; and

d) you are registered for GST.

However, your supply of training and seminar is not a taxable supply to the extent that it is a GST-free or input taxed supply.

There is no provision under the GST Act that makes your supply of training or seminar an input taxed supply.

GST-free supply

Relevant to the supply of training and seminar to the employees of the non-resident company is item 2 in the table in subsection 38-190(1) of the GST Act (item 2).

From the information received your supply of training and seminar to the non-resident company satisfies the requirements in paragraph (a) of item 2 as:

• The non-resident company has an Australian presence in Australia but the supply is not for the purposes of the Australian presence and the Australian presence is not involved with the supply. The non-resident company is therefore considered not to be 'in Australia in relation to the supply' when the training or seminar is carried on; and

• The supply is neither a supply of work physically performed on goods situated in Australia nor a supply that is directly connected with property in Australia.

However, item 2 is limited by subsection 38-190(3) of the GST Act.

Current subsection 38-190(3) of the GST Act

Subsection 38-190(3) of the GST Act provides that, without limiting subsection 38-190(2) or (2A), a supply covered by item 2 in that table is not GST-free if:

a) it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and

b) the supply is provided or the agreement requires it to be provided to another entity in Australia.

Paragraph (a) of subsection 38-190(3) of the GST Act

Paragraph (a) of subsection 38-190(3) of the GST Act is satisfied as you have entered into an agreement with the non-resident.

Paragraph (b) of subsection 38-190(3) of the GST Act

Goods and Services Tax Ruling GSTR 2005/6 provides guidance on the application of paragraph (b) in subsection 38-190(3) of the GST Act. Paragraphs 59, 61 and 62 in GSTR 2005/6 state:

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.

61. Thus the expression 'provided to another entity' means in our view that in the performance of a service (or in the doing of something), 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.

62. For example if a supply of entertainment services is made to a non-resident company and in the performance of that service the employees are the entities that are entertained, the actual flow of that service is to another entity, each employee. The supply is made to the non-resident company (the employer) and provided to another entity (each employee).

Thus the focal point in working out whether a supply is provided to another entity is the facts and circumstances of the doing of the thing supplied. By the supplier examining what it is required to do and in what circumstances, the supplier is able to objectively determine to whom the supply is provided.

When you supply the training and seminar in Australia, it is the employees of the non-resident company that are in receipt of the supply. Paragraph 38-190(3)(b) of the GST Act is satisfied as the supply is provided to another entity in Australia.

Summary

Since all the requirements in subsection 38-190(3) of the GST Act are satisfied, the supply of the training and seminar to the non-resident company is a taxable supply under section 9-5 of the GST Act.

Amended subsection 38-190(3) of the GST Act:

An amendment has been made to subsection 38-190(3) of the GST Act.

From 1 October 2016, the amended subsection 38-190(3) of the GST Act provides that without limiting subsection 38-190(2) or (2A), a supply covered by item 2 in that table is not GST-free if:

a) it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and

b) the supply is provided or the agreement requires it to be provided to another entity in Australia; and

c) for a supply other than an input taxed supply - none of the following applies:

i. the other entity would be an Australian-based business recipient of the supply, if the supply had been made to it;

ii. the other entity is an individual who is provided with the supply as an employee or officer of an entity that would be an Australian-based business recipient of the supply, if the supply had been made to it; or

iii. the other entity is an individual who is provided with the supply as an employee or officer of the recipient, and the recipient's acquisition of the thing is solely for a creditable purpose and is not a non-deductible expense.

As discussed above, paragraphs (a) and (b) of subsection 38-190(3) of the GST Act are satisfied when you supply the training and seminar to the employees of the non-resident company in Australia.

Paragraph (c) of subsection 38-190(3) of the GST Act

Requirement (i)

The term 'Australian based business recipient' describes the relationship that a recipient has with a particular supply. An entity is an 'Australian-based business recipient' of a supply that is made to it if:

a) the entity is registered;

b) an enterprise of an entity is carried on in Australia; and

c) the acquisition of the thing supplied is not solely of a private or domestic nature.

The employee to whom the supply of training and seminar has been provided is a non-resident individual that is not carrying on a business in Australia. The employee is therefore not an Australian based business recipient. Requirement (i) does not apply.

Requirement (ii)

An employee or officer is provided with a supply in their capacity as an employee or officer if the supply was provided to them in the performance of their duties or as part of their remuneration.

In this case, the training and seminar are provided to the employee of a non-resident company as part of their duties to the non-resident company. Requirement (ii) does not apply.

Requirement (iii)

Requirement (iii) requires that the acquisition is solely for a creditable purpose and is not a non-deductible expense.

An acquisition is solely for a creditable purpose where the thing is acquired solely for business purposes and the acquisition does not relate to making supplies that would be input taxed.

Division 69 of the GST Act is about non-deductible expenses and lists supplies that are generally not creditable acquisitions for non-resident employers. These expenses include entertainment expenses that could be paid to the employees of a non-resident as part of their remuneration package.

The provision of the training and seminar to the non-resident employees is solely for the business activity carried on by the non-resident. Further the training and seminar are not listed as a non-deductible expense under Division 69 of the GST Act. Requirement (iii) applies.

Summary

Since requirement (iii) in paragraph (c) of subsection 38-190(3) of the GST Act applies, the amended 38-190(3) of the GST Act is not applicable to the supply.

The supply of the training and seminar to the employees of the non-resident is GST-free under paragraph (a) of item 2.

Question 3

Your supply of advertising services to the non-resident company satisfies paragraphs 9-5(a) to 9-5(d) of the GST Act as:

a) you make the supply for consideration; and

b) the supply is made in the course of an enterprise that you carry on in Australia; and

c) the supply is connected with Australia as the supply is made through an enterprise that you carry on in Australia; and

d) you are registered for GST.

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

There is no provision under the GST Act that makes your supply of advertising services an input taxed supply.

GST-free supply

Relevant to your supply of advertising services to the non-resident company is item 2 in the table in subsection 38-190(1) of the GST Act (item 2).

Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident is GST-free if it is a supply that is made to a non-resident, who is not in Australia when the thing supplied is done, and:

a) the supply is neither a supply of work physically performed on goods situated in Australia when the work is done, nor a supply directly connected with real property situated in Australia; or

b) the non-resident acquires the thing in carrying on the non-resident's enterprise, but is not registered or required to be registered for GST.

Accordingly, where the provisions in either (a) or (b) above are met, the supply will be GST-free if the non-resident company is not in Australia in relation to the supply when the supply of membership is done.

Non-resident not in Australia in relation to the supply

The non-resident company contacts you if they wish to place an advertisement in the magazine in regard to the products that are to be sold by its local representative in Australia. When supplying the advertising services, depending on requirements you may deal with either the non-resident company or the Australian local representative or with both the non-resident and the Australian local representative.

Based on the information received, where you deal directly with the local representative (that is you only work with the local representative to produce the advertisement), the non-resident company is in Australia in relation to the supply since the involvement of the local representative is not minor in regard to the development of the advertising. In this instance item 2 is not applicable and the supply of advertising services is a taxable supply under section 9-5 of the GST Act.

Where the non-resident company contracts you for its supply of advertising services and there is no involvement from the local representative in relation to the supply of advertising services, the non-resident company satisfies the requirement 'not in Australia in relation to the supply'.

Further, where you are dealing with the non-resident company and the local representative (that is the non-resident and local representative work with you to produce the advertisement) when supplying the advertisement services, the non-resident company satisfies the requirement 'not in Australia in relation to the supply' as under the agreement the supply is made to the non-resident.

Paragraph (a) of item 2

From the information received your supply of advertising services to the non-resident company satisfies the requirements in paragraph (a) of item 2 as:

• the non-resident company is not in Australia at the time of the supply of advertising services;

• the supply is neither a supply of work physically performed on goods situated in Australia nor a supply that is directly connected with property in Australia.

However, item 2 is limited by subsection 38-190(3) of the GST Act.

Limitations of item 2 - subsection 38-190(3) of the GST Act

Current subsection 38-190(3) of the GST Act

Subsection 38-190(3) of the GST Act provides that, without limiting subsection 38-190(2) or (2A), a supply covered by item 2 in that table is not GST-free if:

a) it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and

b) the supply is provided or the agreement requires it to be provided to another entity in Australia.

Amended subsection 38-190(3) of the GST Act

From 1 October 2016, the amended subsection 38-190(3) of the GST Act provides that without limiting subsection 38-190(2) or (2A), a supply covered by item 2 in that table is not GST-free if:

a) it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and

b) the supply is provided or the agreement requires it to be provided to another entity in Australia; and

c) for a supply other than an input taxed supply - none of the following applies:

i. the other entity would be an Australian-based business recipient of the supply, if the supply had been made to it;

ii. the other entity is an individual who is provided with the supply as an employee or officer of an entity that would be an Australian-based business recipient of the supply, if the supply had been made to it; or

iii. the other entity is an individual who is provided with the supply as an employee or officer of the recipient, and the recipient's acquisition of the thing is solely for a creditable purpose and is not a non-deductible expense.

Where you deal only with the non-resident company, subsection 38-190(3) of the GST Act and paragraph (c) in the amended subsection 38-190(3) of the GST Act are not applicable as you are not required to provide your supply to another entity in Australia. The supply of advertisement is GST-free under item 2 in this case.

Where you deal with the non-resident company and the Australian local representative, subsection 38-190(3) and paragraph (c) in the amended subsection 38-190(3) of the GST Act apply because:

• the advertising services are for the purposes of the Australian local representative; and

• with the involvement of the local representative in the production of the advertisement, the supply is provided to the Australian local representative.

In this case, the supply of advertising services is not GST-free under item 2.

Summary

Where the non-resident company is the only entity involved with the supply of advertising, the supply of advertising services made by you to the non-resident company is GST-free under item 2.

Where the non-resident and the local representative are involved with the supply of advertising services, the supply of advertising services made by you to the non-resident company is a taxable supply under section 9-5 of the GST Act.

Where the non-resident company has a local representative and the involvement of the local representative is not minor in relation to the supply of advertising services, the supply of advertising services made by you to the non-resident company is a taxable supply under section 9-5 of the GST Act.

Question 4

For GST purposes, a supply of entry to the conference and show is a supply of services.

Your supply of entry to the conference and show to be held in Australia to the non-resident company satisfies paragraphs 9-5(a) to 9-5(d) of the GST Act as:

a) you make the supply for consideration; and

b) the supply is made in the course of an enterprise that you carry on in Australia; and

c) the supply is connected with Australia as the supply is made through an enterprise that you carry on in Australia; and

d) you are registered for GST.

However, your supply of entry to the conference and show is not a taxable supply to the extent that it is a GST-free or input taxed supply.

There is no provision under the GST Act that makes your supply of entry to the conference and show services an input taxed supply.

GST-free supply

Relevant to your supply of entry to the conference and show made to the non-resident company is item 2 in the table in subsection 38-190(1) of the GST Act (item 2).

From the information received your supply of entry to the conference and show to the non-resident company satisfies the requirements in paragraph (a) of item 2 as:

• the non-resident company is not in Australia at the time of the supply of entry to the conference and show; and

• the supply is neither a supply of work physically performed on goods situated in Australia nor a supply that is directly connected with property in Australia.

However, item 2 is limited by subsection 38-190(3) of the GST Act.

Limitations of item 2 - subsection 38-190(3) of the GST Act

Current subsection 38-190(3) of the GST Act

Subsection 38-190(3) of the GST Act provides that, without limiting subsection 38-190(2) or (2A), a supply covered by item 2 in that table is not GST-free if:

a) it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and

b) the supply is provided or the agreement requires it to be provided to another entity in Australia.

When a non-resident company sends its employee in Australia to attend the conference and show subsection 38-190(3) of the GST Act applies as it is the employee that is in receipt of the supplies being made at the conference and show.

In this instance, the supply of entry to the conference and show is not GST-free under item 2 and is a taxable supply under section 9-5 of the GST Act.

Amended subsection 38-190(3) of the GST Act

From 1 October 2016, the amended subsection 38-190(3) of the GST Act provides that without limiting subsection 38-190(2) or (2A), a supply covered by item 2 in that table is not GST-free if:

a) it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and

b) the supply is provided or the agreement requires it to be provided to another entity in Australia; and

c) for a supply other than an input taxed supply - none of the following applies:

i. the other entity would be an Australian-based business recipient of the supply, if the supply had been made to it;

ii. the other entity is an individual who is provided with the supply as an employee or officer of an entity that would be an Australian-based business recipient of the supply, if the supply had been made to it; or

iii. the other entity is an individual who is provided with the supply as an employee or officer of the recipient, and the recipient's acquisition of the thing is solely for a creditable purpose and is not a non-deductible expense.

When a non-resident company sends its employee in Australia to attend the conference and show it is the employee that is in receipt of the supplies being made during the conference and show. In this instance, paragraphs (a) and (b) of subsection 38-190(3) of the GST Act are satisfied.

Paragraph (c) of subsection 38-190(3) of the GST Act

When a full registration is made by the non-resident company, the attendees will be provided with social events and information for the three day events.

When the non-resident company elects for a partial registration that is a one day delegate, the attendee will only be provided with information during the conference. However, the non-resident company can request to participate in the social event on that day when completing the registration form and an additional fee for the social event will be charged to the non-resident company in this instance.

Full registration

When a full registration is made by the non-resident company, requirement (iii) of paragraph (c) in subsection 38-190(3) of the GST Act will not be applicable since the acquisition of the entry to the conference and show by the non-resident will not be solely for a creditable purpose since the acquisition consists of conference and social events and the provision of the social events is for the private use of the employee while in Australia and not for the business purposes of the non-resident.

In this case the amended subsection 38-190(3) of the GST Act is applicable to the supply. The supply of entry to the conference and show is therefore not GST-free under item2. The supply is a taxable supply under section 9-5 of the GST Act.

Partial registration

When a partial registration is made by the non-resident company, requirement (iii) of paragraph (c) in subsection 38-190(3) of the GST Act will be applicable since the acquisition of the entry to the conference and show by the non-resident company will be solely for a creditable purpose when its employee attends the conference.

The amended subsection 38-190(3) of the GST Act is therefore not applicable and the supply is GST-free under item 2.

Partial registration with social event

When a partial registration and a request to receive the social events held on that day is made by the non-resident company, requirement (iii) in paragraph 38-190(3)(c) of the GST Act is not applicable. This is because the acquisition of attending the conference and receipt of the social events made by the non-resident company will not solely be for a creditable purpose because the provision of the social event will be for the private use of the employee and not for the business purposes of the non-resident company.

In this case the amended subsection 38-190(3) of the GST Act is applicable to the supply. The supply is therefore not GST-free under item 2 and is a taxable supply under section 9-5 of the GST Act.

Summary

Full registration

Where a full registration is made for attending the conference and show, the supply of entry to the conference and show by you to the non-resident company is a taxable supply under section 9-5 of the GST Act.

Partial registration

Where a partial registration is made for attending the conference and show, the supply of entry to the conference and show by you to the non-resident company is a taxable supply under section 9-5 of the GST Act.

From 1 October 2016, the supply will be GST-free under item 2 in the table in subsection 38-190(1) because of the amended subsection 38-190(3) of the GST Act.

Partial registration with social event

Where a partial registration and a request to receive the social events held on that day is made, the supply of entry to the conference and show by you to the non-resident company is a taxable supply under section 9-5 of the GST Act.

Question 5

Before we consider the GST status of the booth/exhibition space to the non-resident companies (members or non-members), we first need to consider the character of the supply.

Characterisation of the supply

A supply may be characterised as consisting of one or more things or parts. That is, the supply may be regarded as commercially distinct in its own right or it may be regarded as having several identifiable parts.

Goods and Services Tax Ruling GSTR 2001/8 distinguishes between a mixed supply and a composite supply.

A mixed supply contains separately identifiable parts (with at least one taxable part and at least one non-taxable part), which has to be separated or unbundled and individually recognised.

A composite supply has one dominant part with other parts that are not treated as having a separate identity because they are integral, ancillary or incidental to the dominant part. We consider that a part of the supply will be integral, ancillary or incidental where it is insignificant in value or function, or merely contributes to or complements the use or enjoyment of the dominant part of the supply. A composite supply is treated as a supply of a single thing.

As a means of minimising compliance costs, a supplier may treat something (or things taken together) as being integral, ancillary or incidental if the consideration that would be apportioned to it (if it were part of a mixed supply) does not exceed the lesser of $3.00 or 20% of the consideration of the total supply. The supplier may use this approach to treat a supply as composite supply, although it might otherwise be considered as a mixed supply. However, if the consideration for a part exceeds the lesser of $3.00 or 20% of the consideration for the total supply, it does not necessarily mean that part is not integral, ancillary or incidental (paragraphs 60 and 61 in GSTR 2001/8)

It is a question of fact and degree whether a supply is mixed or composite.

Taking into consideration all the facts given, we consider the supply of the booth/exhibition is the dominant part of the supply and the promotion/advertising and free tickets to the Welcome Reception are incidental to the supply of the booth/exhibition space since they contribute to the use of the dominant supply, booth/exhibition space.

For GST purposes, a supply of booth/exhibition space for a conference and show in Australia is a supply of real property in Australia (paragraphs 107 and 108 in Goods and Services Tax Ruling GSTR 2003/7).

Supply of real property in Australia

The supply of the booth/exhibition space for the conference and show in Australia by you to the non-resident company satisfies paragraphs 9-5(a) to 9-5 (d) of the GST Act as:

a) you make the supply for consideration; and

b) the supply is made in the course of an enterprise that you carry on in Australia; and

c) the supply is connected with Australia as the real property (booth and exhibition space) is located in Australia and

d) you are registered for GST.

However, your supply of the booth/exhibition space for the conference and show in Australia is not a taxable supply to the extent that it is a GST-free or input taxed supply.

Your supply of the booth/exhibition space for the conference and show in Australia is not a GST-free or input taxed supply. The supply is therefore a taxable supply under section 9-5 of the GST Act.

Question 6

Before we consider the GST status of the sponsorship packages to the non-resident companies (members or non-members, we first need to consider the character of the supply.

Characterisation of the supply

Platinum, gold and silver sponsorship packages

Taking into consideration all the facts given, we consider that there are four equally dominant purposes (with each having an aim in itself) within the platinum, gold and silver sponsorship packages. The four distinct supplies within the platinum, gold and silver packages are:

1. a supply of real property (booth or equivalent space in the exhibition);

2. a supply of entry to the whole conference and to the social event party;

3. a supply of meal (gala dinner)and

4. a supply of promotional/advertising services.

Other type of sponsorships

For the other type of sponsorships, taking into consideration all the facts we consider that the supply of promotional/advertising services is the dominant part of the supply of the other type of sponsorships. Where complimentary tickets are included in the other type of sponsorships, these complimentary tickets are merely integral, ancillary or incidental to the supply of promotional/advertising services.

Accordingly the supply of the other type of sponsorships is a composite supply and therefore is treated as supply of one thing being a supply of promotional/advertising services.

The next step is to determine the GST status of these four supplies.

Supply of real property

As discussed in question 5, a supply of booth/exhibition space for a conference and show in Australia to a non-resident company is a taxable supply under section 9-5 of the GST Act

Supply of entry to the whole conference and social event party

A supply of entry to the whole conference and social event party to a non-resident company is a supply of services and this supply is provided to the attendees when the supply is done. In this instance subsection 38-190(3) of the GST Act will apply to the supply.

When you make these services to the non-resident and the services are provided to the attendees (resident or non-resident) in Australia when done, the supply of these services is a taxable supply under section 9-5 of the GST Act by virtue of subsection 38-190(3) of the GST Act (for more information on subsection 38-190(3) of the GST Act refer to questions 2, 3 and 4).

Supply of meal (gala dinner)

The supply of meal in Australia is a taxable supply under section 9-5 of the GST Act.

Supply of promotional/advertising services

The GST status to the supply of promotional/advertising services to the non-resident companies is similar to the GST status of the supply of advertising in question 3

Where the non-resident companies are the only entities involved with the supply of promotional/advertising services when these services are done, the supply of promotional/advertising services made by you to the non-resident companies is GST-free under item 2 in the table in subsection 38-190(1) of the GST Act.

Where the non-resident companies have a local representative and, both the non-resident company and the local representative are involved with the supply of promotional/advertising services at the time these services are done, the supply of promotional/advertising services made by you to the non-resident companies is a taxable supply under section 9-5 of the GST Act.

Where the non-resident companies have a local representative and the involvement of the local representative is not minor in relation to the supply of promotional/advertising services, the supply of promotional/advertising services made by you to the non-resident companies is a taxable supply under section 9-5 of the GST Act.

Summary

Platinum, gold and silver sponsorship packages

There are four distinct supplies being made within the platinum, gold and silver sponsorship packages:

1. A supply of real property (booth or equivalent space in the exhibition) which is a taxable supply under section 9-5 of the GST Act.

2. A supply of entry to the whole conference and to the social event party which is a taxable supply under section 9-5 of the GST Act by virtue of subsection 38-190(3) of the GST Act.

3. A supply of meal which is a taxable supply under section 9-5 of the GST Act.

4. A supply of promotional/advertising services.

Where the non-resident companies are the only entities involved with the supply of promotional/advertising services when these services are done, the supply of promotional/advertising services made by you to the non-resident companies is GST-free under item 2 in the table in subsection 38-190(1) of the GST Act.

Where the non-resident companies have a local representative and, both the non-resident company and the local representative are involved with the supply of promotional/advertising services at the time these services are done, the supply of promotional/advertising services made by you to the non-resident companies is a taxable supply under section 9-5 of the GST Act.

Where the non-resident companies have a local representative and the involvement of the local representative is not minor in relation to the supply of promotional/advertising services, the supply of promotional/advertising services made by you to the non-resident companies is a taxable supply under section 9-5 of the GST Act.

Other sponsorships

The supply of the other sponsorships is a supply of one thing being a supply of promotional/advertising services with the complimentary tickets being merely integral, ancillary or incidental to the supply of promotional/advertising services.

The GST status of the promotional/advertising services is similar to the GST status of the supply of promotional/advertising services made in the platinum, gold and silver sponsorship packages.