Edited version of private advice

Authorisation Number: 1051904427902

Date of advice: 30 September 2021

Ruling

Subject: GST and supplies of services

Question

Are your supplies of conducting inspections and providing reports on multiple Australian properties on behalf of what you were advised at that time were two Australian based companies and where you were subsequently informed to issue the invoices to overseas based entities GST-free?

Answer

Supplies of conducting inspections and providing reports on multiple Australian properties for consumption outside Australia to recipients not in Australia when the supplies are made are GST-free.

However, a supply is not GST-free if the supply is made to a recipient who is in Australia when the thing supplied is done.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

January 20XX

Relevant facts and circumstances

You are an Australian Registered Business, registered for GST, that provides consultancy services.

You seek clarification on whether specific transactions require GST to be charged.

Early this year, you were engaged by an Australian company to conduct inspections and provide reports on multiple Australian properties.

Your services are provided within Australia, you inspect and report on Australian properties, the instructions are received from an Australian intermediate assessing/loss adjusting company and your report and/or scope of works is issued to the Australian intermediate.

You were requested to invoice your costs to overseas based entities.

On completion of your instruction, you provided tax invoices addressed to the Australian entity.

You were later asked to amend those invoices and reissue them to overseas bases entities.

Being the first time, this has happened, you included GST on those invoices based on your own investigation and advice from your accountant. The Australian intermediate has since alleged these transactions are GST free and will be paid short of the GST component on the tax invoice. You would like a ruling on this to ensure if this scenario occurs again in the future that you understand your legal obligations regarding charging GST.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 sections 38-190(1) & (3)

Reasons for decision

Subsection 38-190(1) of the GST Act, specifies circumstances where the supply of things other than goods or real property, for consumption outside of Australia, is GST-free. Your supplies are intangibles and are neither goods nor real property. As such, those supplies are appropriately considered under subsection 38-190(1) of the GST Act.

Item 2 in the table in subsection 38-190(1) of the GST Act provides that a supply that is made to a non-resident who is not in Australia when the thing supplied is done is GST- free where:

•         (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.

Supplies of services to a non-resident (overseas recipient) is not work physically performed on goods situated in Australia nor directly related to real property in Australia. Therefore, a supply is GST-free if it satisfies the requirements of item 2(a) or 2(b) in the table in subsection 38-190(1) of the GST Act.

However, a supply is not GST-free if the supply is made to a recipient who is in Australia when the thing supplied is done.

Item 2 applies if either (a) or (b) above is satisfied.

Item 2 in the table in subsection 38-190(1) of the GST Act is limited by subsection 38-190(3) of the GST Act which provides that a supply covered by Item 2 in that table is not GST-free if:

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

•         the supply is provided, or the agreement requires it to be provided, to another entity in Australia.

Therefore, a supply is not excluded by subsection 38-190(3) of the GST Act from being GST-free if there is no agreement between an entity and the non-resident recipient to provide the supply to another entity within Australia.

To reiterate, a supply is not GST-free if the supply is made to a recipient who is in Australia when the thing supplied is done.