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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1051315930198

Date of advice: 6 December 2017

Ruling

Subject: GST and supply of software development services to a non-resident

Question

Is GST payable on your supply of services to X where you provide (render) these services to Y?

Answer

No.

Your supply of these services under such circumstances is GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) (item 2), as:

    ● software development services are not supplies of goods or real property; and

    ● the customer in question is a non-resident who is ‘not in Australia’ for the purposes of item 2; and

    ● the supply of the software development services is not a supply of work physically performed on goods situated in Australia when the work is done nor a supply that is directly connected with real property situated in Australia; and

    ● although you provide (render) these services to a third party who is in Australia:

      ● the third party would have been an Australian-based business recipient of the services you supply if it had instead contracted you to supply the services to it, rather than X contracting you to supply these services; and

      ● the supply you make is not input taxed

    (The exclusion at subsection 38-190(3) of the GST Act does not apply);

    and

    ● the exclusions at subsections 38-190(2) and 38-190(2A) of the GST Act do not apply.

An entity is an Australian-based business recipient of a supply made to it if:

    (a) the entity is registered for GST; and

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

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

Relevant facts and circumstances

You are registered for GST in Australia.

There is a contract between you and X (an overseas based company) (the client) to provide software development services to a third party, Y. Individual A, as your employee, is the specified personnel in the contract.

You invoice X for the services provided by Individual A. X then invoices Y.

You are not involved in any contract negotiations between X and Y. You simply supply the employee’s services to X.

Y is based in Australia and individual A performs their role from their home in Australia.

Y is 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 38-190


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