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Edited version of private advice
Authorisation Number: 1051924957607
Date of advice: 23 November 2021
Ruling
Subject: GST and supply of services to a non-resident
Question
Is the provision of clinical research services conducted in Australia under contract for a non-resident a GST-free supply?
Answer
The provision of clinical research services will be GST-free provided the non-resident entity:
• is not in the indirect tax zone (Australia) when the thing supplied is done; or
• it acquires the thing in carrying on its enterprise and is not registered or required to be registered for GST.
This ruling applies for the following period:
Period ending 20 May 20XX
The scheme commences on:
17 May 20XX
Relevant facts and circumstances
You are responsible for monitoring clinical trial activities conducted at sites in Australia.
Your daily activities include overseeing how the trials are run at the sites to ensure they are compliant with the protocol.
Your work Involved both on-site and off-site duties.
A subclause of the contract between you and the non-resident provides that your services shall be performed as a direct contractor and not as an employee of Worldwide and that all persons employed or utilised by you in the performance of your obligations shall be and remain your employees and shall not be the employees, general, special or otherwise, of the non-resident.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(1)
Reasons for decision
Relevant to the supply described above is 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).
Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident is GST-free if it is a supply that is made to a non-resident, who is not in Australia when the thing supplied is done, and:
(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 for GST.
Where the requirements of paragraphs (a) or (b) of item 2 are satisfied, the supply will be GST-free. However, item 2 is limited by subsection 38-190(3) of the GST Act.
Limitations of item 2 - subsection 38-190(3) of the GST Act
If the supply covered by item 2 is under an agreement entered into, whether directly or indirectly, with a non-resident entity and that supply is provided or the agreement requires that it to be provided to another entity in Australia, subsection 38-190(3) of the GST Act negates the GST-free status of that supply.
When an Australian entity provides clinical research associate services to a non-resident over a period of time subsection 38-190(3) of the GST Act will not be applicable if that supply is not provided or the agreement does not require that it to be provided to another entity in Australia. Under such circumstances the services provided by the Australian company to the non-resident entity will be GST-free.