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Edited version of your written advice
Authorisation Number: 1051404934439
Date of advice: 24 July 2018
Ruling
Subject: GST and supply of agency services
Question
Is the supply of agency services made by the Australian company to the overseas company a GST-free supply under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes, the supply of agency services made by the Australian company to the overseas company is a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act.
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.
Only one of the paragraphs in item 2 needs to be satisfied.
From the facts given, the Australian company’s supply of agency services satisfy paragraph (a) of item 2 as:
● its supply of agency services is made to the overseas company, a non-resident that is not in Australia in relation to the supply when the supply is done; and
● its supply of agency services 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
The Australian company’s supply of agency services is GST-free under paragraph (a) of item 2 to the extent that it is not negated by subsection 38-190(3) of the GST Act.
From the facts given, subsection 38-190(3) of the GST Act does not apply to the Australian company’s supply of agency services as it is not required to provide its supply to another entity in Australia. Its supply of agency services is therefore GST-free under item 2.
Relevant facts and circumstances
You are an Australian company based in Australia and are registered for GST. You supply agency services to an overseas company. For the overseas company you act as an agent and source products from Australia and overseas on a wholesale basis for the overseas based entity. All products you purchased as the overseas company’s agent will be consumed overseas.
The overseas company is responsible to pay for the products and you receive a fee for your services made to the overseas company. The overseas company does not have anyone in Australia when you perform this service and it does not have an office in Australia.
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