Edited version of private advice

Authorisation Number: 1051634968125

Date of advice: 12 February 2020

Ruling

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

Question

Is your supply of translating services to the non-resident company a GST-free supply under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes. Your supply of translating services to the non-resident company is a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act.

Relevant facts

You are registered for GST and carry on your business activities in Australia.

You have entered into an agreement with a non-resident company located outside Australia for the supply of translating services.

You do the translation from your home office. You do the work on your personal computer and send the translation by email to project managers at the non-resident company's offices which are located outside Australia.

You are not required to provide your translating services under the Agreement to anyone in Australia.

The translations do not relate to residential properties in Australia and are not directly connected with property in Australia. The translations do not consist of work performed on goods located in Australia.

The non-resident company is not required to be registered for GST and does not have any employees in Australia in relation to your supply.

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

Reasons for decision

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 GST Act.

Detailed reasoning

GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the GST Act if:

1. the supplier makes the supply for consideration; and
2. the supply is made in the course or furtherance of an enterprise that the supplier carries on; and
3. the supply is connected with Australia; and
4. 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.

All of the above must be satisfied for your supply of translating services to be a taxable supply.

From the information given, your supply of translating services satisfies paragraphs (a) to (d) of section 9-5 of the GST Act as:

a)     you make your supply for consideration; and

b)     the supply is made in the course of a business that you carry on; and

c)     your supply is connected with Australia as it is made through a business that you carry on in Australia; and

d)     you are registered for GST.

However, your supply of translating services is not 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 translating services input taxed.

GST-free supply

Relevant to your supply of translating services is item 2 in the table in subsection 38-190(1) of GST Act (item 2).

Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident is GST-free if the non-resident 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.

Paragraph (a) of item 2

From the facts given, your supply of translating services satisfies paragraph (a) of item 2 as:

·        your supply is made to a non-resident that is not in Australia in relation to your supply when the supply is done; and

·        your supply of translating 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

Your supply of translating 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.

As paragraph (a) is satisfied there is no need to consider paragraph (b) of item 2.

Subsection 38-190(3) of the GST Act

Subsection 38-190(3) of the GST Act provides that without limiting subsection 38-190(2) or (2A), a supply covered by item 2 in that table is not GST-free if:

a)     it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and

b)     the supply is provided or the agreement requires it to be provided to another entity in Australia; and

c)     for a supply other than an input taxed supply - none of the following applies:

                           i.          the other entity would be an Australian-based business recipient of the supply, if the supply had been made to it;

                          ii.          the other entity is an individual who is provided with the supply as an employee or officer of an entity that would be an Australian-based business recipient of the supply, if the supply had been made to it; or

                         iii.          the other entity is an individual who is provided with the supply as an employee or officer of the recipient, and the recipient's acquisition of the thing is solely for a creditable purpose and is not a non-deductible expense.

From the facts given, subsection 38-190(3) of the GST Act does not apply to your supply of translating services as you are not required to provide your supply to another entity in Australia.

Since your supply of translating services is made and provided to the non-resident company, your supply of translating services is therefore GST-free under item 2.