Edited version of private advice

Authorisation Number: 1051790734985

NOTICE

This edited version has been found to be misleading or incorrect. It does not represent the ATO’s view of the relevant law.

This notice must not be taken to imply anything about:

● the binding nature of the private advice issued to the applicant

● the correctness of other edited versions.

Edited versions cannot be relied upon as precedent or used for determining how the ATO will apply the law in other cases.

Date of advice: 13 January 2021

Ruling

Subject: GST and supply of rights to a non-resident

Question

1. Is the supply of a single-year, pre-paid OSHC Policy GST-free under paragraph (b) of item 4 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where the application and payment for a Policy is accepted by the Insurer, and the OSHC Policy is entered into, whilst the Policy Holder is outside the Indirect Tax Zone (Australia)?
2. Is the supply of a multi-year, pre-paid OSHC Policy GST-free under paragraph (b) of item 4 in the table in subsection 38-190(1) of the GST Act where the application and payment for a Policy is accepted by the Insurer, and the OSHC Policy is entered into, whilst the Policy Holder is outside of Australia?
3. Is the supply of an open-ended, pay-as-you-go OVHC Policy GST-free under paragraph (b) of item 4 in the table in subsection 38-190(1) of the GST Act where the application for a Policy is accepted by the Insurer, and the OVHC Policy is entered into, whilst the Policy Holder is located outside of Australia?
4. Where the Insurer accepts a Policy Holder's application to upgrade or downgrade their level of cover whilst located in Australia, is any additional payment by the Policy Holder consideration for the original supply?
5. Where the Insurer accepts a Policy Holder's application to add a new person to the Policy whilst located in Australia, is any additional payment by the Policy Holder consideration for the original supply?
6. Where the Insurer accepts an OSHC Policy Holder's application to extend their Policy whilst located in Australia, is any additional payment by the Policy Holder consideration for the original supply?
7. Is the Insurer's proposed process to establish the physical location of the Policy Holder at the time of acceptance of the Policy fair and reasonable?

Answer

1. Yes. The supply of a single-year, pre-paid OSHC Policy is a GST-free supply where the application and payment for a OSHC Policy is accepted by the Insurer, and the OSHC Policy is entered into whilst the non-resident OSHC Policy Holder is located outside of Australia.
2. Yes, the supply of a multi-year, pre-paid OSHC Policy is GST-free where the application and payment for a Policy is accepted by the Insurer, and the OSHC Policy is entered into whilst the non-resident Policy Holder is outside of Australia.
3. Yes, the supply of an open-ended, pay-as-you-go OVHC Policy is a GST-free supply where the application for a Policy is accepted by the Insurer, and the OVHC Policy is entered into whilst the non-resident Policy Holder is outside of Australia.
4. Yes, where the Insurer accepts a Policy Holder's application to upgrade or downgrade their level of cover whilst located in Australia, any additional payment by the Policy Holder is consideration for the original GST-free supply.

Relevantly the Commissioner accepts that the Insurer does not make any new supply for GST purposes upon the upgrade or downgrade of an existing Policy. Therefore, any additional premium charged is a change to the consideration for the original supply.

5. Yes. Where the Insurer accepts a Policy Holder's application to add a new person to the Policy whilst located in Australia, any additional payment by the Policy Holder is consideration for the original GST-free supply.

Relevantly the Commissioner accepts that the Insurer does not make any new supply for GST purposes upon adding a new person to the existing Policy. Therefore, any additional premium charged is a change to the consideration for the original supply.

6. Yes. where the Insurer accepts an OSHC Policy Holder's application to extend their Policy whilst located in Australia, any additional payment by the Policy Holder is consideration for the original GST-free supply.

That is, the Commissioner accepts that the Insurer does not make a new supply for GST purposes upon extending an existing Policy. Therefore, any additional premium charged is a change to the consideration for the original supply.

7. Yes, the Insurer proposed process to establish the physical location of the Policy Holder at the time of acceptance of the Policy fair and reasonable.

This ruling applies for the following periods:

1 January 2021 till month ending 31 December 2023

Relevant facts and circumstances

Entity A (the Insurer) carries on an enterprise in Australia and is registered for GST.

The Insurer offers an Overseas Student Health Cover Policy (OSHC Policy) and Overseas Visitors Health Cover Policy (OVHC Policy) to non-residents (Non-Resident Policy Holder).

The Insurer enters into a contract of insurance (the OSHC Policy and/or OVHC Policy) with the Non-Resident Policy Holder whilst the Non-Resident Policy Holder is located outside Australia.

The OSHC Policy and/or OVHC Policy commences upon arrival of the non-resident in Australia.

The Insurer requires that payment of Premiums for an OSHC Policy and/or OVHC Policy be made at the time of application, and will only accept applications where the Premiums, for the minimum period relevant to the applicant, have been paid.

Occasionally, changes to a OSHC Policy and/or OVHC Policy may be requested by a Policy Holder during the term of the Policy.

These changes are limited to the following circumstances:

•         Level of cover - a Policy Holder may upgrade or downgrade their coverage during the term of the Policy to increase or decrease their level of cover.

•         Couples or Family cover - a Policy Holder may add or remove a Partner or Dependant.

•         As a subset to this, a Couples OSHC Policy may be split into two Single Policies if the personal circumstances of the couple change. In such cases the original Couples Policy is cancelled, and a new Policy is issued to each single OSHC Policy Holder.

•         Extension of term (OSHC only) - an OSHC Policy Holder may extend the term of their OSHC Policy if they are extending the duration of their study in Australia.

When there is a change in the persons covered under a Policy, the Policy Holder is sent a confirmation of the change to an existing policy.

Specifically, for OVHC Policies, a confirmation of change to the existing policy and relevant updated Certificate of Cover (and accompanying visa letter attachment) is issued.

Proposed apportionment methodology - Establishing the physical location of a recipient

To determine the split between the onshore (taxable) and offshore (GST-free) OSHC and OVHC policies, the Insurer proposes to use an apportionment methodology.

As established above, the recipient of the supply of OSHC or OVHC will always be the individual Policy Holder. Therefore, it is relevant to establish where the Policy Holder is at the time the application is accepted.

The Insurer proposes to place a requirement on the applicant (Policy Holder) to confirm whether they are physically in or outside of Australia at the time of making the application. As the application is approved on the day it is made, this is a reasonable proxy for confirming the Policy Holder's location when the application is approved.

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