Edited version of your written advice

Authorisation Number: 1051493418542

Date of advice: 15 March 2019

Ruling

Subject: Goods and services tax (GST) and sale of SIM cards

Question

Is GST payable on your supply of SIM cards, which are for the purpose of enabling the holder to use on a prepaid basis telephone, data and text services outside Australia and which are pre-assigned with an allowance of calls, text and data?

Answer

No.

Relevant facts and circumstances

You are registered for GST.

You sell mobile device SIM cards, which are for the purpose of enabling the holder to use on a prepaid basis telephone, data and text services outside Australia.

You import these SIM cards from various overseas suppliers.

You act as a reseller with all cards being sold at a margin and not being sold on a commission basis.

The SIM cards are for operation in various countries (not Australia) and are pre-loaded with various data allowances / phone call usage and usage expiry periods. There is an allowance of calls/texts and data. No GST has been included at the importation on the value of the cards from the suppliers. The cards are then on sold to people for travelling outside of Australia (generally Australian residents). The majority of the cards are sold and delivered to Australian addresses.

The SIM cards only work on arrival in the designated countries (not Australia).

The telecommunication carriers for whom the SIM cards are supplied and on whose networks they operate are not connected to or located in Australia.

You are an independent third party from any of the telecommunications carriers.

The customer activates the SIM card by inserting the SIM into their phone and turning on a certain feature in their device settings. There is no unique numbers or personal information. The SIM activates as soon as it comes in contact with the network overseas. Some of your products have a method whereby the SIM card holder needs to dial the Telco's customer service line to complete activation also.

When the customer lands in the country the SIM card automatically activates and grants access to the bundle allowance.

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 Division 100

Reasons for decision

Summary

GST does not apply to the sale of the SIMS cards because they are non-taxable vouchers under Division 100 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Detailed reasoning

GST is payable on taxable supplies.

Generally, an entity (the supplier) makes a taxable supply where it meets the requirements of section 9-5 of the GST Act, that is,

(a) the supplier makes a supply for consideration

(b) the entity makes the supply in the course or furtherance of an enterprise it carries on; and

(c) the supply is connected with Australia, and

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

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

Also, there are special overriding rules under which supplies that meet the requirements of section 9-5 of the GST Act are not taxable.

Division 100 of the GST Act provides that the sale of certain sorts of vouchers is not taxable.

Section 100-5 of the GST Act states:

A supply of a *voucher is not a *taxable supply if:

(a) on redemption of the voucher, the holder of the voucher is entitled to supplies up to the *stated monetary value of the voucher; and

(b) the *consideration for supply of the voucher does not exceed the stated monetary value of the voucher.

Section 100-25 of the GST Act defines voucher.

Subsection 100-25(1) of the GST Act states:

A voucher is any:

(a) voucher, token, stamp, coupon or similar article; or*

(b) prepaid phone card or facility;

the redemption of which in accordance with its terms entitles the holder to receive supplies in accordance with its terms. However, a postage stamp is not a voucher.

Subsection 100-25(2) of the GST Act defines prepaid phone card of facility. It states:

A prepaid phone card or facility is any article or facility for the primary purpose of enabling the holder:

(a) to use, on a prepaid basis, telephone or like services supplied by a supplier of *telecommunications supplies; or

(b) to make, on a prepaid basis, acquisitions that are facilitated by using telephone or like services supplied by such a supplier.

Paragraph 32I of GSTR 2003/5 explains what are ‘like services’. It states:

32I. Paragraph 100-25(2)(a) refers to the primary purpose of the holder being able to use, on a prepaid basis, telephone or like services supplied by a supplier of telecommunication supplies. The phrase 'telephone or like services' refers to two types of services to which a prepaid phone card or facility holder is entitled. 'Telephone' services includes a range of services such as the provision of local calls, national long distance calls, international calls and calls to mobile phones. 'Like services' includes a range of services which are accessed using a mobile phone handset such as mobile phone messaging services (short message service (SMS) or multimedia messaging service (MMS)), text, graphics, images, sound, video, information, software content and data transmission services (including email) and Internet access services.

The supply of any prepaid phone card or facility as defined in section 100-25 of the GST Act is not taxable, by virtue of Division 100 of the GST Act.

Your SIM cards in question are articles or facilities for the primary purpose of enabling the holder: to use on a prepaid basis, telephone or like services supplied by a supplier of telecommunications supplies.

As the SIM cards in question in your case are prepaid phone cards or facilities, your sale of these SIM cards are not taxable by virtue of Division 100 of the GST Act.