Edited version of private advice

Authorisation Number: 1051937915562

Date of advice: 10 January 2022

Ruling

Subject: GST and supply of courses and consulting services by non-resident

Question 1

Are you required to be registered for GST under section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No. You are not currently required to be registered for GST

Question 2

Do you make a taxable supply of courses or consulting services under section 9-5 of the GST Act?

Answer

No (under the current circumstances). Therefore, GST is not payable by you on your supply of courses or consulting services to:

• Entity A (under the current/existing circumstances); or
• Entity B (under the current/existing circumstances); or
• Entity C (under the current/existing circumstances); or
• Entity D (under the current/existing circumstances); or
• any other customers (under the current/existing circumstances)

Question 3

Can you cancel your GST registration with effect from (date)?

Answer

Yes.

Relevant facts and circumstances

You are registered for GST. You were registered for standard (full) GST registration from (date) to (date). You have been registered for simplified GST registration from date.

You are a non-resident. You are a foreign company.

You supply courses. You also supply consulting services, which you deliver to staff in a particular profession. Primarily, the work you do involves training. Occasional consulting to a workforce involving a particular profession is also provided. Your customers include Australian entities, such as operators of certain sorts of establishments. You perform these services both remotely (from overseas) and in Australia.

You charge fees for your services.

Your Australian customers differ from year to year.

Your Australian customers are registered for GST and carrying on enterprises in Australia. Your Australian customers do not acquire your courses or consulting services for private or domestic purposes.

You have an employee director, who at times delivers services on your behalf in Australia. Occasionally, you sub-contract out the delivery of courses to another party - this is for online coaching work.

You do not have an Australian sales agent who enters into contracts with your customers on your behalf.

You provided the following information on the number of days your employee has been in Australia since (year)

• year A: (number) days
• year B: (number) days
• year C: (number) days
• year D: (number) days
• year E: (number) days (approximately (number) days related to temporarily being unable to leave a particular State or Territory in Australia during the period of (month, year) to (month, year due to certain reasons. No work was done in Australia during the period in which your employee was unable to leave that State or Territory).

You use your Australian customers' premises in Australia to deliver courses or consulting services where they are suitable. At other times, your Australian customers hire an external venue (at their expense) to accommodate participant numbers.

You provided the following information on services you supplied to customers/will supply to customers, including the start and end dates of courses you have supplied to them and the Australian venues used to deliver the courses in the past:

• Entity A start date to end date (a number of rolling course cohorts with content primarily delivered online from overseas, but with also some face to face work). The Australian venue used by your employee to deliver the services was (venue name).
• Entity B start date to end date (a number of rolling course cohorts with content primarily delivered online from overseas). The Australian venues used by your employee to deliver those services were (venue name) and (venue name).

Entity B has asked you to perform further work (almost all content will be delivered online from overseas) which will begin in (month, year) and go into the following calendar year.

• Entity C (keynote address delivered from overseas).
• Entity D start date to end date. The Australian venues used by your employee to deliver the services were (venue name), (venue name), (venue name) and (venue name).

The ATO asked you whether or not your employee would at times perform services at the same premises in Australia over separate, non-continuous periods or whether they will do so in future. You gave the following information in response to this question:

Not sure whether to answer no or yes to this question, as Entity B has asked you to do further work which will go into (calendar year), but this is only because of the disruptions caused by a certain problem, otherwise it would likely be a no.

You provided details of sales invoices you issued to Australian customers from late (year) to late (year).

You have asked the ATO to consider whether you could cancel your GST registration with effect from (date). You have not done any of the following things on or after that date:

• charged GST to customers or issued sales invoices with a GST component
• remitted GST to the ATO
• claimed input tax credits
• reported GST on sales.

In the period from (date) to the current time, you have not been telling customers that you are registered for GST.

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

A New Tax System (Goods and Services Tax) Act 1999 section 9-26

A New Tax System (Goods and Services Tax) Act 1999 section 9-27

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

A New Tax System (Goods and Services Tax) Act 1999 subsection 25-55(1)

A New Tax System (Goods and Services Tax) Act 1999 Division 188

Reasons for decisions

Question 1

Summary

As you are not making any supplies connected with Australia, for GST purposes, you are not required to be registered for GST.

Detailed reasoning

An entity is required to be registered for GST if it meets the requirements of section 23-5 of GST Act, which states:

You are required to be registered under this Act if:

(a)   you are *carrying on an *enterprise; and

(b)   your *GST turnover meets the *registration turnover threshold.

(*As defined in section 195-1 of the GST Act).

The registration turnover threshold is $75,000.

You are carrying on an enterprise. Therefore, you meet the requirement of paragraph 23-5(a) of the GST Act.

An entity's GST turnover meets a particular turnover threshold if the requirements of subsection 188-10(1) of the GST Act are met, which states:

You have a GST turnover that meets a particular *turnover threshold

if:

(a)  your *current GST turnover is at or above the turnover threshold, and the Commissioner is not satisfied that your *projected GST turnover is below the turnover threshold; or

(b)  your projected GST turnover is at or above the turnover threshold.

Section 188-15 of the GST Act sets out the method for calculating current GST turnover. Subsection 188-15(1) of the GST Act states:

Your current GST turnover at a time during a particular month is the sum of the *values of all the supplies that you have made, or are likely to make, during the 12 months ending at the end of that month, other than:

(a)  supplies that are *input taxed, or

(b)  supplies that are not for *consideration (and are not *taxable supplies under section 72-5): or

(c)   supplies that are not made in connection with an *enterprise that you *carry on.

In accordance with paragraph 188-15(3)(a) of the GST Act, any supply that is not connected with the indirect tax zone (Australia) is excluded from the calculation of current GST turnover.

Section 188-20 of the GST Act sets out the method for calculating projected GST turnover. Subsection 188-20(1) of the GST Act states:

Your projected GST turnover at a time during a particular month is the sum of all of the *values of all the supplies that you have made, or are likely to make, during that month and the next 11 months, other than:

(a)  supplies that are *input taxed; or

(b)  supplies that are not for *consideration (and are not *taxable supplies under section 72-5); or

(c)   supplies that are not made in connection with an *enterprise that you *carry on.

In accordance with paragraph 188-20(3)(a) of the GST Act, any supply that is not connected with Australia is excluded from the calculation of projected GST turnover.

"Connected with Australia"

As only supplies connected with Australia are included in the GST turnover calculations, we need to consider whether your supplies of services are connected with Australia.

A supply of an intangible, for example, a service, is connected with Australia if the requirements of subsection 9-25(5) of the GST Act are met, which states:

A supply of anything other than goods or *real property is connected

with the indirect tax zone if:

(a)  the thing is done in the indirect tax zone; or

(b)  the supplier makes the supply through an *enterprise that the supplier *carries on in the indirect tax zone; or

(c)   all of the following apply:

(i)               neither paragraph (a) nor (b) applies in respect of that thing:

(ii)              the thing is a right or option to acquire another thing;

(iii)             the supply of the other thing would be connected with the indirect tax zone: or

(d)  the *recipient of the supply is an *Australian consumer.

However, in accordance with section 9-26 of the GST Act, supplies of services made by non-residents, but which are performed in Australia may be disconnected with Australia, despite the fact that they are performed in Australia. This provision overrides paragraph 9-25(5)(a) of the GST Act.

Paragraph 9-25(5)(c) is not relevant to your situation, as you do not supply rights or options. You carry on a business of providing services.

The services you supply to Australian customers are performed in Australia and also overseas.

Services performed in Australia

When you deliver courses or perform consulting services in Australia, the thing supplied is services, which are done in Australia, as they are performed in Australia (in accordance with paragraph 37 of Goods and Services Tax Ruling GSTR 20019/1). Therefore, your supplies of these courses and consulting services, which are delivered in Australia, meet the requirement of paragraph 9-25(5)(a) of the GST Act. However, we need to consider whether the overriding provision - section 9-26 of the GST Act applies.

In accordance with item 1 in the table in subsection 9-26(1) of the GST Act, a supply of anything other than goods or real property is not connected with Australia if

• the supplier is a non-resident; and
• the supplier does not make the supply through an enterprise that it carries on in the indirect tax zone; and
• the thing supplied is done in the indirect tax zone; and
• the recipient is an Australian-based business recipient.

An entity is an Australian-based business recipient of a supply made to the entity if:

(a)  the entity is registered for GST; and

(b)  an enterprise of the entity is carried on in Australia; and

(c)   the entity's acquisition of the thing supplied is not solely of a private or domestic nature.

You are supplying courses and consulting services. These are not supplies of goods or real property.

You are a non-resident.

Your Australian customers are Australian-based business recipients because:

• they are registered for GST; and
• they carry on their enterprise in Australia; and
• their acquisition of the courses or consulting services is not solely of a private or domestic nature.

Whether you make the supplies in question through an enterprise that you carry on in Australia.

Section 9-27 of the GST Act defines the meaning of 'enterprise of an entity is carried on in the indirect tax zone' It states:

(1)  An *enterprise of an entity is carried on in the indirect tax zone if:

(a)  an enterprise is *carried on by one or more individuals covered by subsection (3) who are in the indirect tax zone; and

(b)  any of the following applies:

(i) the enterprise is carried on through a fixed place in the indirect tax zone;

.(ii) the enterprise has been carried on through one or more places in the indirect tax zone for more than

183              days in a 12 month period;

.(iii) . the entity intends to carry on the enterprise through one or more place in the indirect tax zone for

more than 183 days in a 12 month period.

(2) It does not matter whether:

(a)  the entity has exclusive use of a place; or

(b)  the entity owns, leases or has any other claim or interest in relation to a place.

(3) This subsection covers the following individuals:

(a)  if the entity is an individual - that individual;

(b)  an employee or *officer of the entity;

(c)   an individual who is, or is employed by, an agent of the entity that:

.(i) has, and habitually exercises, authority to conclude contracts on behalf of the

entity; and

.(ii) is not a broker, general commission agent or other agent of independent status

that is acting in the ordinary course of the agent's business as such an agent.

Under section 9-27 of the GST Act, an enterprise of an entity is carried on in Australia if the enterprise is carried on by one or more specified individuals who are in Australia, and

•         The enterprise is carried on through a fixed place in Australia; or

•         The enterprise has been carried on through one or more places in Australia for more than 183 days in a 12 month period, or

•         The entity intends to carry on the enterprise through one or more places in Australia for more than 183 days in a 12 month period.

The enterprise must be carried on by an individual of the type, or under the circumstances, set out in section 9-27 of the GST Act, for example, an entity can carry on an enterprise in Australia through an employee. At times, your employee performs services in Australia for Australian customers.

Your employee does not spend more than 183 days performing services in Australia in a twelve month period and you do not currently intend to carry on business activities in Australia for more than 183 days in a 12 month period in future.

You provided the following information on the number of days your employee has been in Australia:

• Year A: (number) days
• Year B: (number) days
• Year C: (number) days
• Year D: (number) days
• Year E: (number) days (approximately (number) days related to temporarily being unable to leave a particular State or Territory in Australia during the period of (month, year) to (month, year due to certain reasons. No work was done in Australia during the period in which your employee was unable to leave that State or Territory)

Additionally, you do not carry on your enterprise through a fixed place in Australia for the purposes of section 9-27 of the GST Act as explained below:

Law Companion Ruling LCR 2016/1 at paragraphs 37 to 39 explains when an enterprise is carried on through a fixed place. The term 'fixed place' is not defined in the GST Act, but is interpreted consistently with the term 'fixed place' in the permanent establishment articles in Australia's tax treaties and the similar term used in the definition of 'permanent establishment' in subsection 6(1) of the Income Tax Assessment Act 1936, as explained in Taxation Ruling TR 2002/5.

A fixed place has an element of permanence, both geographic and temporal, and the concept requires a stable or continual connection between the enterprise and the place that is more than temporary or transitory in nature. That is, the enterprise must be linked to a particular place, through which the habitual pursuit of business activities occurs, for a particular period.

In accordance with paragraph 29 of TR 2002/5 a place at or through which a person carries on any business in the context of the definition of PE in subsection 6(1) must be geographically permanent. Any area, viewed commercially and as a whole, may, in relation to the business concerned, be a place. Examples include business premises such as a factory, office, farm, mine or market.

In accordance with paragraph 33 of TR 2002/5.whether temporal permanence exists is a matter of fact and degree. However, as a guide, if a business operates at or through a place continuously for six months or more that place will be temporally permanent.

The following examples from TR 2002/5 provide assistance in determining whether you have a fixed place of business in Australia.

Example 1

37. Neil is a professional golfer and a resident of Namibia. He visits Australia to compete in an Australian golf tournament. The event is played at a prominent course in a major Australian city and takes four days. Neil is in Australia for a total of two weeks in the particular income year (including practice days and rest days.) The question is whether the golf course is a place at or through which Neil carries on his golfing business.

For the golf course to be a place at or through which Neil carries on his golfing business for the purposes of the definition of PE in subsection 6(1) his activity as a professional golfer in Australia would need to be both geographically and temporally permanent. While the activities on the golf course are undertaken at a single location which is geographically permanent, Neil plays at the course for only seven days (including practice days). As a result, sufficient temporal permanence does not exist and the golf course is therefore not a place at or through which Neil carries on his business for the purposes of the definition of PE in subsection 6(1).

Example 2

38. Plays & Co is a theatrical company incorporated in Iceland. The company visits Australia with a production of a modern Icelandic play. Plays & Co performs in a theatre in Melbourne over a 12 month period. It pays royalties to the author of the play who is a resident of Iceland. In this case the company has a place at or through which it carries on its business in Melbourne because it satisfies the geographic and temporal permanence requirements. This could have tax implications for the author of the play.

Example 3

39. If Plays & Co did not have a base in Australia and were to tour the country giving 'one-off' performances at numerous towns and cities for four months (and with separate performance contracts with local clubs and other venues) the company would not have a place at or through which it carries on business for the purposes of the definition of PE in subsection 6(1) in Australia in either its geographic or temporal sense. If the tour lasted more than six months there would be temporal permanence but because of the itinerant nature of the activity in Australia, Plays & Co does not satisfy the geographic permanence requirement and so does not have a place at or through which it carries on its business.

42. HKco is a computer service provider and a resident of Hong Kong. It successfully tenders to train the employees of Ausco, a company resident in Australia, in a new computer system. To undertake the training, HKco sends four of its employees to Australia for six months. Ausco provides HKco employees with a room in one of its offices for that six months. Because HKco has at its disposal a room in Ausco's offices for six months and carries on its business at or through that room, HKco has a place at or through which it carries on its business in Australia.

In the scenario in paragraph 42 of TR 2002/5, the ATO would consider that the supplier of the services has a fixed place of business in Australia, even though they are using their customer's premises and not their own premises. Pursuant to paragraph 9-27(2)(b) of the GST Act, an entity making a supply of services, which it performs at a venue in Australia, may meet the definition of carrying on an enterprise in Australia even if it does not own, lease or have any other claim or interest in relation to that place, but it will depend on the situation.

You have spent much less than 6 continuous months delivering services at any given venue in Australia in a given year. Over the past few years for which you have provided data, you have spent at a maximum approximately (number) days in Australia delivering services in any given year up from a minimum of (number) days. You do not plan to spend over 183 days performing services in Australia in the next twelve months.

Over the period of (date) to (date), which is a period of approximately twelve months, you had (number) Australian customers. Your Australian customers are responsible for providing or hiring (from a third party) the venue at which you perform your services in Australia, so the venue at which you perform your services in Australia is likely to change with each customer. Furthermore, a single customer may require you to perform services at multiple venues, for example, Entity D made available to you four different venues to enable you to provide services over a period of a number of days. The information you provided indicates that your employee would have delivered services in Australia over the course of a recent period of approximately 12 months (date to date) at at least (number) venues.

While a particular place in Australia may meet the permanence test in the context of section 9-27 of the GST Act where an enterprise operates at that place for a period of less than 6 continuous months (in unusual circumstances), in your case the nature of your enterprise activities does not have a sufficient element of permanence at any particular place in Australia.

Your enterprise is not linked to a particular place in Australia through which you habitually pursue your business activities when your employee is in Australia. Your enterprise activities at the various locations in Australia are more transitory in nature.

Since sufficient permanence does not exist, you do not carry on your enterprise through a fixed place in Australia for the purposes of section 9-27 of the GST Act.

As you do not meet either of the 183 day tests or the fixed place test, you do not carry on an enterprise in Australia for the purposes of the GST Act even though you send an employee to Australia to perform services from time to time. Hence, you do not supply courses or consulting services through an enterprise that you carry on in Australia.

As all of the requirements of item 1 in the table in subsection 9-26(1) of the GST Act are met, your supplies of services that you perform in Australia are not connected with Australia.

Services performed outside Australia for Australian customers

These services are not performed in Australia and they are not supplied through an enterprise that you carry on in Australia.

We shall now determine whether your supplies of services performed outside Australia for Australian customers are connected with Australia under the Australian consumer rule.

In accordance with subsection 9-25(7) of the GST Act, a customer who receives services is an 'Australian consumer' if:

(a)  the customer is an Australian resident; and

.(b) the customer is not registered for GST and/or it does not acquire the services solely or partly for

the purpose of an enterprise that it carries on.

Your Australian customers would be Australian residents. However, your Australian customers are registered for GST and they would be acquiring your services for the purposes of enterprises that they carry on in Australia. Therefore, your supplies of services to Australian customers are not connected with Australia under the 'Australian consumer' rule.

Hence, your supplies of services performed outside Australia for Australian customers are not connected with Australia.

Your supplies of services that you perform overseas for non-Australian customers are not connected with Australia.

Conclusion

As you do not make supplies connected with Australia, you do not meet the AUD $75,000 threshold for compulsory GST registration. Therefore, you do not meet the requirement of paragraph 23-5(b) of the GST Act. Hence, you are not required to be registered for GST.

Question 2

GST is payable on taxable supplies.

Section 9-5 of the GST Act states:

You make a taxable supply if:

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

(b) the supply is made in the course or furtherance of an

*enterprise that you *carry on; and

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

(d) you are *registered, or *required to be registered.

However, the supply is not a *taxable supply to the extent that it is

*GST-free or *input taxed.

In your case, you supply the courses and consulting services in question for consideration and in the course or furtherance of an enterprise that you carry on and you are registered for GST. Therefore, you meet the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) of the GST Act at the current time.

However, your supplies of courses and consulting services are not connected with Australia. Therefore, the requirement of paragraph 9-5(c) of the GST Act is not met. As not all of the requirements of section 9-5 of the GST Act are met, you do not make taxable supplies. Hence, GST is not payable on your supply of the courses or consulting services.

Question 3

Subsection 25-55(1) of the GST Act states:

The Commissioner must cancel your registration if:

(a)  you have applied for cancellation of registration in the *approved form; and

(b)  at the time you applied for cancellation of registration, you had been registered for at least 12 months; and

(c)   the Commissioner is satisfied that you are not required to be registered for GST.

You are not required to be registered for GST and you have been registered for more than 12 months.

Where a taxpayer is registered for GST but is not required to be registered for GST and they apply for cancellation of GST registration, we usually cancel the GST registration from the date the taxpayer chooses, provided that the taxpayer is not required to be registered for GST on that date.

A taxpayer cannot cancel their GST registration from a particular date if they are 'operating on a GST registered basis' on that date.

The fact that an entity is registered for GST does not itself mean that the entity is 'operating on a GST-registered basis' and is not a relevant factor.

An entity 'operates on a GST registered basis' if it:

• charges GST to customers or issues sales invoices with a GST component; or
• remits GST to the ATO; or
• claims input tax credits; or
• reports positive GST amounts in respect of sales in Business Activity Statements; or
• tells customers that it is registered for GST.

You have asked the ATO to consider whether you could cancel your GST registration with effect from (date). You have not done any of the following things on or after that date:

• charged GST to customers or issued sales invoices with a GST component
• remitted GST to the ATO
• claimed input tax credits
• reported GST on sales.

In the period from (date) to the current time, you have not been telling customers that you are registered for GST.

We therefore consider that you have 'not been operating on a GST registered basis' in the period since (date).

You may cancel your GST registration with effect from (date), as:

• you are not required to be registered for GST; and
• you have been registered for GST for more than 12 months; and
• you have not been 'operating on a GST-registered basis' in the period from (date) to the current time.

If you decide to cancel your GST registration with effect from (date), please email me a request to cancel your GST registration from that date and I will arrange for your cancellation request to be processed by the relevant processing area.

Before your GST registration is cancelled, you will need to lodge any outstanding GST return forms. The final GST return that you need to lodge is for the (quarter) (report zero GST in this form).