Edited version of private advice

Authorisation Number: 1051911758274

Date of advice: 21 October 2021

Ruling

Subject: GST - requirement to register

Question 1

Are you required to register for the goods and services tax (GST) and is your supply of 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

No. you are not required to register for GST because you are not carrying on an enterprise when supplying your services to the non-resident company under paragraph 9-20(2)(a) of the GST Act as you are an employee of the non-resident company. Your supply is outside the scope of the GST law.

Relevant facts

You are an Australian individual and currently not registered for GST.

You are employed by a non-resident company located outside Australia and have given us a copy of your engagement letter. You consider yourself as an employee of the non-resident company because you have access to their leave provisions and have given us a copy of your leave provisions.

You are paid a yearly consulting fee of USD$xxx and you receive a monthly reimbursement of USD$xxx for cellular and internet expenses and to cover pre-approved expenses for home office set up such as laptop, monitor etc. You are also granted the option to buy non- voting common units of the company subject to the approval of the Company's Board of Directors.

For every monthly payment received you are expected to pay your own tax and there are no deductions taken prior to being paid the monthly amount. There is also no super contribution. No time sheet is required to get paid as you work very irregular hours across the seven days. You are not required to send an invoice as you get paid roughly the same date each month.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-20

A New Tax System (Goods and Services Tax) Act 1999 section 23-5

Reasons for decision

Detailed reasoning

Under section 23-5 of the GST Act you are required to register for GST if:

a)    you are carrying on an enterprise; and

b)    your GST annual turnover meets the GST registration turnover threshold which currently is AU$75,000 (AU$150,000 for non-profit organisation.

Carrying on an enterprise

Subsection 9-20(1) of the GST Act defines what activity or series of activities done by an entity that would constitute an 'enterprise' for GST purposes.

Subsection 9-20(2) of the GST provides what activity or series of activities would not constitute an enterprise for GST purposes and includes activities done by a person as an employee.

After considering all the information you gave to us, we consider you are engaged as an employee by the non-resident company and this is substantiated by your employment agreement which clearly states that this is the term under which you are employed.

In this instance you are not carrying an enterprise under 9-20(2)(a) of the GST Act when you are performing your services as an employee of the non-resident company.

As you are not carrying on an enterprise for GST purposes, you will not be required to register for GST. Your supply is outside the scope of the GST law.