Edited version of your written advice

Authorisation Number: 1051179340767

Date of advice: 10 January 2017

Ruling

Subject: GST and supply of goods and services in Australia

Question 1

Is the supply of goods made by you as partner to a partnership to Australian customers a taxable supply under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Advice

Yes. The supply of goods made by you as partner to a partnership to Australian customers is a taxable supply under section 9-5 of the GST Act as the partnership is required to be registered for GST under section 23-5 of the GST Act.

Question 2

Is the partnership liable to pay goods and services tax (GST) when you as a partner receive a payment from an Australian company for your services to that company?

Advice

Yes, the partnership is liable to pay GST when you as a partner receive a payment from an Australian company for your services to that company because the supply of services is a taxable supply under section 9-5 of the GST Act.

Relevant facts

You are a partner to a partnership and are an executive manager for an Australian company. This is the only business activity that you carry on as a partner to the partnership and the partnership is currently not registered for GST. Your annual business income is above the GST registration threshold of $75,000.

As an executive manager for the Australian company you sell the company's products directly to Australian customers. You advised that at the time you purchase the products you make the payment via a direct debit system set up by the Australian company. You sell the products in your own right for the purposes of onsale and title passes to you upon delivery or payment whichever first occurs.

You also receive a payment from the Australian company for your services as executive manager and the payment is dependent on the sales you made.

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 23-5

Reasons for decisions

Note: Where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in section 195-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Question 1

GST is payable on a taxable supply. It is the responsibility of the supplier to determine whether their supply is a taxable supply under the GST Act.

Under section 9-5 of the GST Act a supply is a taxable supply if:

a) the supplier makes the supply 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 Australia; 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 under the GST Act.

All of the above must be satisfied for the supply made by the supplier to be a taxable supply.

From the facts given your supply satisfies all the requirements in section 9-5 of the GST Act when you sell the products to Australian customers as:

a) you supply the products for consideration;

b) the supply of the products is made in the course of an enterprise that you carry on as you are selling these products in your own right under a partnership business;

a) the supply is connected with Australia as the products are made available and delivered to the customers in Australia;

b) you are required to be registered for GST as your business annual income is above the GST registration turnover threshold of $75,000.

However, your supply is a taxable supply to the extent that it is GST-free or input taxed.

There is no provision under the GST Act that makes your supply of products in Australia GST-free or input taxed. Your supply of products is a taxable supply under section 9-5 of the GST Act and you are liable to pay GST for this supply.

Question 2

From the facts given you receive an income from the Australian company when you supply your services as Executive Manager to it.

Your supply of services as Executive Manager to the Australian company satisfies all the requirements in section 9-5 of the GST Act as:

● the payments you receive are consideration for your supply of services;

● your supply of services is made in the course of the partnership business that you carry on;

● the supply is connected with Australia as the services are done in Australia and through a business that you carry on in Australia'

● you are required to be registered for GST as your business annual income is above the GST registration turnover threshold of $75,000.

● Your supply of services to the Australian company is neither GST-free nor input taxed.

Accordingly, your supply of services to the Australian company is a taxable supply. You are liable to pay GST for this supply.