Edited version of private advice

Authorisation Number: 1051651157568

Date of advice: 25 March 2020

Ruling

Subject: GST and supply of services to non-resident companies

Supplier:

The client (you)

Recipient:

Non-resident (Company A)

Non-resident (Company B)

Non-resident (Company C)

Question 1

Are the supplies made by (you) to Company A GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services) Act 1999?

Answer

Yes, the supplies made by (you) to Company A are GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services) Act 1999.

Question 2

Are the supplies made by (you) to Company B GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services) Act 1999?

Answer

Yes, the supplies made by (you) to Company B are GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services) Act 1999.

Question 3

Are the supplies made by (you) to Company C GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services) Act 1999?

Answer

Yes, the supplies made by (you) to Company C are GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services) Act 1999.

This ruling applies for the following periods:

All tax periods ending on or after 4 years prior to the date of the issuing of the private binding ruling

Relevant facts and circumstances

Company A

·         You are registered for GST

·         You create videos in Australia and also overseas and then upload them on social media for the public to view

·         You are paid by Company A

·         You have accepted the social media's Terms

·         Advertisements are inserted into your content and social media controls the ad in terms of timing and determines which ads to play.

Company B

·         You are using an affiliate marketing merchant (Company B) based overseas

·         You promote their product and earn commission on sales made through your social media videos

·         You showcase products in your videos and will have links in the video description to online vendors for viewers to purchase the products

·         You earn commission for the sales that are directly linked to your videos.

Company C

·         You are paid by Company C to create short video commercials

·         The content of these videos is geared directly towards overseas market

·         The products and offers are not available to Australian residents.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 38-190

Reasons for decision

Detailed reasoning

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.

Questions 1, 2 and 3

GST is payable on a taxable supply.

GST-free supply

Under subsection 38-190(1) of the GST Act certain supplies of things, other than goods or real property, for consumption outside the indirect tax zone are GST-free.

Item 2 in the table in subsection 38-190(1) (item 2) provides that a supply that is made to a non-resident who is not in the indirect tax zone when the thing supplied is done is GST-free if:

(a)  the supply is neither a supply of work physically performed on goods situated in the indirect tax zone when the work is done nor a supply directly connected with real property situated in the indirect tax zone; 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.

Although Company A calculates the amount that it pays you with reference to the revenue that your content generates, we take the view that you make a supply to Company A of content by uploading your videos and making them available for ads to be placed by social media.

As an affiliate marketer for Company B, you use your videos to promote goods and services of merchants who have contracted with Company B. You provide links on your social media content to those merchants and are paid by Company B based on the traffic to those merchants that your content generates.

You are also paid by Company C for producing short videos. The content of these videos is geared directly towards overseas market.

From the facts given, you satisfy paragraph (a) of item 2 as:

·         you are supplying your services (videos) to non-residents who are not in Australia in relation to your supply when supply is done; and

·         your supply (videos) is not a supply directly connected with real property situated in Australia.

Therefore, the supply satisfies the requirements of item 2(a) in the table in subsection 38-190(1) of the GST Act. Only one of the paragraphs in item 2 needs to be satisfied for your supply of services to be GST-free.

Your supplies are GST-free under paragraph (a) in item 2 to the extent that subsection 38-190(3) of the GST Act does not negate that GST-free status.

There is no need to consider paragraph (b) when the requirements in paragraph (a) are satisfied.

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 information given subsection 38-190(3) of the GST Act does not apply to you as you are not required to provide the supplies to another entity in Australia.

Summary

The supplies made by you to non-resident companies (Company A, B and C) are GST-free under item 2 in the table in subsection 38-190(1) of the GST Act.