Edited version of your written advice

Authorisation Number: 1013125405948

Date of advice: 23 November 2016

Ruling

Subject: Supplies made through an electronic distribution platform

Question

Will the entity be treated as the supplier to Australian consumers from 1 July 20XX; and therefore, will be liable to remit GST on taxable supplies?

Answer

Yes. The entity will be treated as the supplier to Australian consumers from 1 July 20XX; and therefore, the entity will be liable to remit GST on taxable supplies.

Relevant facts and circumstances

The entity is a body that oversees and supports a market through which members are allowed to make supplies to end users. It supervises the carrying on of the members' business and provides infrastructure that enables the members to carry on such business.

The physical infrastructure provided by the entity includes computer systems and servers through which the entity communicates with members and others involved in the market. As the entity's intermediaries are located worldwide, the vast majority, if not all correspondence and communication are made electronically through this infrastructure either via the entity's website or individually via email or other forms of electronic communication.

Further email correspondence is also used extensively by the entity in the conduct of its day-to-day business of managing, monitoring and overseeing the marketplace.

Supplies are made to end users by means of electronic communication

The entity is not registered for GST. However, it will register for GST effective from 1 July 20XX. At this point in time, the entity does not intend to be a member of a GST group. The entity will enter into an agreement with members that it will account for the GST liabilities for supplies made to Australian consumers through the market.

The supplies are made by members to Australian consumers. The private ruling request only concerns supplies indirectly to Australian consumers, or directly to Australian consumers, who are not registered for GST.

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 84-55

A New Tax System (Goods and Services Tax) Act 1999 section 84-70

Reasons for decision

GST is payable on a taxable supply.

A supply is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if all of the following are satisfied:

(a) the supply is for consideration; and

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

(c) the supply is connected with the indirect tax zone; and

(d) the supplier is registered or required to be registered for GST.

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

Assuming the requirements of paragraphs (a), (b) and (d) above are satisfied, what remains to be determined is whether the supply made is connected with the indirect tax zone.

According to subsection 9-25(5) of the GST Act, a supply of anything else 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; or

(c) all of the following apply:

(i) neither paragraph (a) nor (b) applies in respect of the thing;

(ii) the thing is a right or option to acquire another thing;

(iii) the supply of the other thing would be connected with the indirect tax zone; or

(d) the recipient of the supply is an Australian consumer.

Subsection 9-25(7) of the GST Act states:

An entity is an Australian consumer of a supply made to the entity if:

(a) the entity is an *Australian resident (other than an entity that is an Australian resident solely because the definition of Australia in the *ITAA 1997 includes external Territories); and

(b) the entity:

(i) is not *registered; or

(ii) if the entity is registered - the entity does not acquire the thing supplied solely or partly for the purpose of an *enterprise that the entity *carries on.

The entity's clients include Australian resident individuals and Australian companies. This private ruling pertains only to the entity's business with an Australian client who is either not registered for GST or, if registered for GST, does not acquire the supply solely or partly for the purposes of an enterprise that is carried on by that client. Therefore, the recipient of the supply is an Australian consumer. Accordingly, the supply is connected with the indirect tax zone.

As all the requirements of section 9-5 of the GST Act are satisfied, the supply is a taxable supply. There is no provision in the GST Act under which the supply would be GST-free or input taxed.

The supplier

Under the basic rules, the entity's members would be the suppliers and would be required to register for GST and would be liable for GST on their supplies to Australian consumers.

GST law amendments allow the responsibility for GST liability that arises under the amendments to be shifted from the supplier to the operator of an electronic distribution platform.

Section 84-70 of the GST Act states:

84-70 Meaning of electronic distribution platform

(1)

A service (including a website, internet portal, gateway, store or marketplace) is an electronic distribution platform if:

(a) the service allows entities to make supplies available to end-users; and

(b) the service is delivered by means of *electronic communication; and

(c) the supplies are to be made by means of electronic communication.

(2)

However, a service is not an electronic distribution platform solely because it is:

(a) a carriage service (within the meaning of the Telecommunications Act 1997); or

(b) a service consisting of one or more of the following:

(i) providing access to a payment system;

(ii) processing payments;

(iii) providing *vouchers the supply of which are not *taxable supplies because of section 100-5.

The entity operates a business within which members compete with each other to make supplies. The entity allows the members to make supplies available to end users. The service is delivered and the supplies are made by means of electronic communication. The entity will enter into an agreement with members that it will account for the GST liabilities for the supplies made through the market. Therefore, the entity is an operator of an electronic digital platform.

Subsection 84-55(1) of the GST Act provides that if an inbound intangible consumer supply is made through an electronic distribution platform, the operator of the platform, instead of the supplier, is treated for the purposes of the GST law:

● as being the supplier of, and as making, the supply; and

● as having made the supply for consideration for which it was made; and

● as having made the supply in the course of furtherance of an enterprise that the operator carries on.

Therefore, from 1 July 20XX and subject to subsection 84-55(4) of the GST Act, the entity would be liable to remit GST on taxable supplies made through the marketplace.