Edited version of private advice

Authorisation Number: 1051793082604

Date of advice: 22 December 2020

Ruling

Subject: Goods and services tax and construction site inspection services supplied to non-resident

Question

Is goods and service tax (GST) payable on your supply of construction site inspection services to A?

Answer

No.

Your supply of the inspection services to A is GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)(item 2), because:

• inspection services are not goods or real property; and
• your customer is a non-resident who is not in Australia in relation to your supply, for the purposes of item 2; and
• although your inspection service is directly connected with real property situated in Australia, your customer acquires the service in carrying on its enterprise and is not registered or required to be registered for GST; and
• your service is not a right or option to acquire something the supply of which would be connected with Australia and would not be GST-free; and
• your customer's acquisition of the service does not relate to the making of a supply of real property situated in Australia that would be input taxed under Subdivision 40-B or 40-C of the GST Act; and
• subsection 38-190(3) of the GST Act does not prevent your supply of the service from being GST-free under item 2 as you are not providing, and are not required to provide, your service to a third party who is in Australia (you are providing your service to your customer as you give your feedback/comments and photos to A).

Relevant facts and circumstances

You are registered for GST.

You have been engaged to undertake work for an overseas, non-resident entity, A, a foreign company. You bill A for the work and A pays you.

A is not registered with ASIC. A does not have a presence in Australia. A is not registered or required to be registered for GST.

The work involves undertaking an engineering site inspection on a construction site in Australia

B, an overseas based company, contracted A to perform the site inspection services.

Due to covid, you are undertaking the site inspections.

There is a contract between A and C under which A is engaged to provide C with design advice so that it can properly procure the services of the main contractor to construct a position of the overall project (called the mezzanines) under a design and build contract with D (developer) who have given the D&B to E (who uses F). A is really only an external advisor to C. C pays A for their services. A will be asking you to carry out future inspections on the mezzanines.

B provides design system requirements. A provides the specifications from which an Australian engineering design firm must then undertake the actual designs and an Australian firm then undertakes construction.

The inspections are to ensure the construction meets the specifications. The inspections are required to verify the works are in accordance with design documents. You undertake these inspections and provide feedback/comments by way of an email and photos to A from which they create a report, which they give to B.

If Covid restrictions are lifted, A would plan to send an employee to visit the site on a few (2-3) occasions and each visit would only last 2 days at most but if this isn't possible, A will ask you to visit on their behalf.

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