Edited version of private advice

Authorisation Number: 1051521426450

Date of advice: 28 May 2019

Ruling

Subject: GST and your supply of services

Question 1

Is the supply of services made by you to an Australian entity (AE) a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No, the supply of services you make to AE is not a taxable supply under section 9-5 of the GST Act.

Question 2

Are you required to be registered for GST under section 23-5 of the GST Act?

Answer

No, you are not required to be registered for GST under section 23-5 of the GST Act.

This ruling applies for the following period:

1 July 2018 - 30 June 2019

Relevant facts and circumstances

You are registered for GST.

You were a full time employee of AE until 30 June 2018 working overseas.

You are living overseas and been away from Australia for last 12 years.

After ceasing employment with AE, you entered into a Short Time Adviser Agreement (the agreement) with AE. Under the agreement:

·        you act as a Management Advisor in relation to the contract between Australian government and AE

·        you will be providing services to AE for the term in accordance with the Engagement Conditions on the agreement

·        the location of your services will be overseas

·        you will be paid a professional fee in Australian dollars per day excluding GST

·        AE will be reimbursing you for the cost of visa expenses, police checks and medical checks, clearances and vaccinations

·        the cost of short term accommodation will be paid for or reimbursed by AE.

The agreement commenced on mid 2018 with end date late 2018. However, the term of the agreement was extended to mid 2019.

You have advised that this is the only supply you are making in the course of running your enterprise. You do not make supplies in Australia to other entities.

You will be providing services to AE for the Term in accordance with the Engagement Conditions on the agreement

The postal address for your business is overseas address.

For the purpose of this ruling, you provided an Australian address for convenience.

AE may anytime change the location of your services to another place overseas by giving you notice.

Your performance of the Engagement will be reviewed by AE on an ongoing basis.

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 9-27

A New Tax System (Goods and Services Tax) Act 1999 section 23-5

A New Tax System (Goods and Services Tax) Act 1999 section 188-10

Reasons for Decision

These reasons for decision accompany the Notice of private ruling.

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Question 1

Summary

The supply of services you make to AE is not a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Detailed reasoning

GST is payable on taxable supply.

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 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.

('Indirect tax zone' refers to Australia)

All of the above must be satisfied for the supply of services to AE to be a taxable supply. Based on the information you have provided, the supply satisfies paragraphs 9-5(a), (b) and (d) of the GST Act. We have to now see if the supply satisfies paragraph 9-5(c) i.e. if the supply you are making is connected with Australia.

Supply connected with the indirect tax zone

The connection with Australia is one of the elements required to be satisfied before a supply becomes a taxable supply.

Under subsection 9-25(5) of the GST Act, a supply of anything 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

The supply of services made to AE needs to satisfy only one of the paragraphs in subsection 9-25(5) of the GST Act for the supply to be connected with the indirect tax zone.

Your supply of services is done overseas therefore paragraph 9-25(5)(a) does not apply.

For the purpose of paragraph 9-25(5)(b) of the GST Act, subsection 9-27(1) provides that an enterprise of an entity is carried on in the indirect tax zone if:

a)     the enterprise is carried on by one or more individuals covered by subsection (3) who are in the indirect tax zone; and

b)     any of the following applies:

(i)     the enterprise is carried on through a fixed place in the indirect tax zone; or

(ii)    the enterprise has carried on through one or more places in the indirect tax zone for more than 183 days in a 12 month period; or

(iii)  the entity intends to carry on the enterprise through one or more places in the indirect tax zone for more than 183 days in a 12 month period.

You are an individual referred to in paragraph 9-27(1)(a). Your enterprise is not carried on by you in Australia which is evident from the fact that you are living overseas and has been away from Australia for the last 12 years. As per your agreement with AE, you provide your services overseas. You do not make supplies of your services in Australia to other entities. Furthermore, your business address is also overseas.

As you are not carrying on your enterprise in the indirect tax zone therefore paragraph 9-25(5)(b) is also not satisfied. You do not satisfy paragraph 9-25(5)(c) because your supply of services is not a supply of right.

Australian consumer is defined as an Australian resident entity that is not registered for GST and if registered they do not acquire the thing supplied solely or partially for the purpose of their enterprise. The recipient of your supply is AE which, according to the publicly available Australian Business Register is registered for GST. AE is acquiring your services to carry on its enterprise. Therefore AE is not an Australian consumer. Paragraph 9-25(5)(d) is also not satisfied.

As your supply is not connected with the indirect tax zone under any of the paragraphs in subsection 9-25(5) of the GST Act. Paragraph 9-5(c) is not satisfied. Therefore the supply of services you make to AE is not taxable.

Question 2

Summary

You are not required to be registered for GST under section 23-5 of the GST Act.

Detailed reasoning

Who is required to be registered for GST?

Section 23-5 of the GST Act provides you are required to be registered if:

a)     you are carrying on an enterprise; and

b)     your GST turnover meets the GST registration turnover threshold.

(According to section 23-15 of the GST Act, the registration turnover threshold is $75,000)

Under subsection 188-10(1) of the GST Act you have a GST turnover that meets a particular turnover threshold if:

a)     your current GST turnover is at or above the turnover threshold, and the Commissioner is not satisfied that your projected GST turnover is below the turnover threshold; or

b)     your projected GST turnover is at or above the turnover threshold.

Current GST turnover

Under subsection 188-15(1) of the GST Act, your current GST turnover at a time during a particular month is the sum of the values of all the supplies that you have made, or are likely to make, during the 12 months ending at the end of that month, other than:

a)     supplies that are input taxed; or

b)     supplies that are not for consideration (and are not taxable supplies under section 72-5 of the GST Act); or

c)     supplies that are not made in connection with an enterprise that you carry on.

Projected GST turnover

Under subsection 188-20(1) of the GST Act, your projected GST turnover at a time during a particular month is the sum of the values of all the supplies that you have made, or are likely to make, during that month and the next 11 months, other than:

a)       supplies that are input taxed; or

b)       supplies that are not for consideration (and are not taxable supplies under section 72-5); or

c)       supplies that are not made in connection with an enterprise that you carry on.

Supplies that are not connected with the indirect tax zone are disregarded when working out your current and projected GST turnover.

You advised that this is the only supply you are making and your intention is to retire on 30 June 2019. As discussed above, the supplies you are making are not connected with Australia and therefore disregarded in working out your current and projected GST turnover. As such, you will not meet the GST turnover threshold. Accordingly, you are not required to be registered for GST.