Edited version of private advice

Authorisation Number: 1051924389812

Date of advice: 24 November 2021

Ruling

Subject: Supply of advertising material

Question

Are you making a taxable supply to W under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where it contracts you to print and deliver advertising material to customers of Y in Australia?

Answer

Yes. You are making a taxable supply of advertising material. Therefore, GST is payable on this supply.

Relevant facts and circumstances

You are registered for GST.

You are in the business of printing and delivering advertising material.

You operate your business in Australia.

You have an overseas based customer named W.

W has an overseas based customer (X) which is the owner of an Australian subsidiary company (Y) which trades under the 'Y' brand.

W places an order with you on behalf of Y.

You print advertising material in Australia in the name of Y. You do not design the advertising material and you do not supply any intellectual property under this arrangement.

The advertising material is specifically addressed to Y's customers who have not placed an order with Y in a recent period of time and is a 'reactivating' campaign that seeks to engage with former customers.

Y's customers are located in Australia.

The advertising material is inserted into an envelope and delivered to Z who then delivers the letter under its standard mail delivery service.

You charge W for the supply you make to them.

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 9-25

Reasons for decision

Summary

You make a taxable supply to W as:

•         you supply advertising material for consideration (the price); and

•         you supply the advertising material in the course or furtherance of the enterprise that you carry on; and

•         the supply of the advertising material is connected with Australia; and

•         you are registered for GST; and

•         the supply is not GST-free or input taxed.

Detailed reasoning

GST is payable on taxable supplies.

You make a taxable supply if you meet the requirements of section 9-5 of the GST Act, which states:

You make a taxable supply if:

(a)         you make a supply for *consideration; and

(b)         you make the supply in the course or furtherance of an

*enterprise that you *carry on; and

(c)         the supply is *connected with the indirect tax zone (Australia); and

(d)         you are *registered or *required to be registered for GST

However, the supply will not be a *taxable supply to the extent that the supply is *GST-free or *input taxed.

(*Denotes a term defined in section 195-1 of the GST Act)

From the facts given, you make a supply of delivered goods (the advertising material) through an enterprise that you carry on for consideration and you are registered for GST. In this instance the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act are satisfied. There are no provisions of the GST Act under which your supply of the goods is GST-free or input taxed.

We shall now determine whether your supply of the goods is connected with Australia for the purposes of paragraph 9-5(c) of the GST Act.

A supply of goods is connected with Australia if one of the following requirements are satisfied:

•         the goods are delivered, or made available, in Australia to the recipient of the supply (subsection 9-25(1) of the GST Act);

•         the supply involves the goods being removed from Australia (subsection 9-25(2) of the GST Act);

•         the supply involves the goods being brought to Australia and the supplier imports the goods into Australia (subsection 9-25(3) of the GST Act);

•         the supply is an offshore supply of low value goods which is connected with Australia under Subdivision 84-C of the GST Act (subsection 9-25(3A) of the GST Act).

Goods and Services Tax Ruling GSTR 2018/2 provides guidance on when a supply of goods is connected with Australia.

Paragraphs 10, 11, 44 and 45 of GSTR 2018/2 provide guidance on subsection 9-25(1) of the GST Act. They state:

10. In the context of subsection 9-25(1), goods are delivered in Australia if the goods are physically delivered in Australia. Goods are also made available in Australia if the goods are physically made available in Australia. The terms 'delivered' and 'made available' look at the place where the goods are at the relevant time.

11. Circumstances in which goods are delivered or made available by a supplier in Australia to the recipient include:

•         where the supplier physically delivers the goods from a place in Australia to the recipient's nominated place in Australia, and

•         where the supplier has the goods imported into Australia, and shipped to themselves, prior to delivering or making the goods available to the recipient of the supply in Australia.

44. Ordinarily, a supply of goods that is delivered or made available in Australia is connected with Australia. This is the case even where the supply is made between two non-residents, neither of which makes the supply or acquisition in the course of an enterprise they carry on in Australia.

45. However, section 9-26 provides two exceptions to the connected with Australia rules in section 9-25(1) for supplies that involve a transfer of ownership of goods that are subject to a lease. If these exceptions apply, the supply will not be connected with Australia.

You are making supplies of delivered goods - the advertising material. In accordance with paragraph 44 of GSTR 2018/2, ordinarily, a supply of goods that is delivered in Australia is connected with Australia. When you supply the goods in question, you deliver the goods from a place in Australia to places in Australia nominated by your customer. The exceptions referred to in paragraph 45 of GSTR 2018/2 do not apply. Therefore, your supplies of these goods are connected with Australia under subsection 9-25(1) of the GST Act.

In accordance with paragraph 44 of GSTR 2018/2, the fact that your customer is a non-resident which does not make their acquisition from you in the course of an enterprise they carry on in Australia does not prevent your supply of goods from being connected with Australia under subsection 9-25(1) of the GST Act.

Therefore, you meet the requirement of paragraph 9-5(c) of the GST Act.

As all of the requirements of section 9-5 of the GST Act are met, you make a taxable supply of advertising material. Therefore, GST is payable on the supplies you make to W.