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Edited version of private advice
Authorisation Number: 1051925796275
Date of advice: 24 November 2021
Ruling
Subject: GST and supplies of agent services
Question
Should you charge GST when invoicing the non-resident entity for agent's commission?
Answer
According to the information provided your services are GST-free. Therefore, you do not need to charge GST when invoicing the non-resident entity for agent's commission.
This ruling applies for the following period:
1 July 20XX- 30 September 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You act as sales agent for a non-resident entity.
The non-resident entity engages you as a sales agent for their goods to be displayed in your showroom.
The Australian wholesaler purchases the goods directly from the non-resident entity.
The Australian wholesaler is invoiced by the non-resident entity for goods they see samples of in your showroom.
You invoice the non-resident entity for commission on goods the Australian wholesaler purchased from them.
The non-resident entity is not in Australia when your supplies of agent services are provided.
The non-resident entity is not registered nor is it required to be registered for GST.
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 agent's 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.