Edited version of private advice

Authorisation Number: 1052087222957

Date of advice: 15 February 2023

Ruling

Subject: GST and supply of broadcast technical services to non-resident

Question 1

Should entity A charge goods and services tax (GST) on the supply of broadcast technical services to entity B, a non-resident, where entity B had their staff members presence in Australia during the supply?

Answer

No. Entity A did not make any supplies to the employees of entity B during their presence in Australia. The employees of entity B were in Australia to facilitate an event for their employer entity B and not in relation to the supply made by entity A to entity B.

Please refer to the reasons for decision for more details.

Question 2

Should entity A charge GST on the supply of broadcast technical services to entity C where entity C had their xx crew members presence in Australia during the supply?

Answer

No. Entity A did not make any supplies to the xx crew members supplied by entity C during their presence in Australia.

Please refer to the reasons for decision for more details.

This ruling applies for the following period:

Not applicable

The scheme commenced on:

Not applicable

Relevant facts and circumstances

Entity A is carrying on an enterprise of providing broadcast technical services and registered for goods and services tax (GST).

Contract with entity B

Entity A entered into a contract with entity B, a non-resident entity to provide broadcast technical services for a sporting event held in Australia.

Entity B is not registered with ASIC and does not have an ABN or ARN or ABRN.

The sporting event held in Australia for seven days and the duration of the contract with entity B was for seven days.

Entity B sent four members of their staff to Australia to co-ordinate the attending rightsholders, media and to deal with the organising committee in relation to the planned broadcasting services, radio and media.

These four staff travelled to each event as part of the Media and Broadcast Team and stayed in Australia during the sporting event.

None of these four staff had a direct involvement in the broadcast technical services provided by entity A.

Entity A did not make any supplies to entity B's staff during the sporting event and under the agreement with entity B.

The following roles were performed by the four staff of entity B:

•         Staff 1: Looked after the contractual requirements of the TV and Radio rightsholders and print media who attended the event and others overseas.

•         Staff 2: was the 2IC to the above role.

•         Staff 3: Dealt with the Organising Committee on behalf of the entity B making sure broadcast was delivered what was agreed and dealt with any changes. Also passed on any broadcast updates or changes from the employer.

•         Staff 4: managed the TV and Radio rightsholders in the commentary and mixed zone positions.

Staff 3 was the entity A's main contact before the event started and held regular team meetings between the Organising Committee and entity A to check the project planning progress.

Staff 4 provided the rightsholder bookings from Rate Card related to the entity A's supply of equipment.

The staff sent by entity B did not have a fixed place in Australia to carry on their duties.

Contract with entity C

Entity C entered into a contract with an international sporting organisation to supply broadcast technical services for the international sporting event held in Australia.

Entity C is not registered with ASIC and does not have an ABN or ARN or ABRN.

Entity C entered into a subcontract with entity A to provide the broadcast technical services to the nominated event site

The international sporting event was held in Australia for less than 183 days.

Entity A provided technical support with yy crew members and production facilities.

Entity C provided xx crew positions which included engaging local freelance crew. The crew members from entity C stayed in Australia during the event.

Entity C did not provide any supplies to any of the xx crews sent by entity C.

The xx crews sent by entity C did not have a fixed place in Australia to carry out their services and used the event site to perform their roles.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 9-26(2)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(1) and 38-190(3).

A New Tax System (Goods and Services Tax) Act 1999 subsection 184-1(1)

Reasons for decision

A supply of service provided to a non-resident who is not in the indirect tax zone (Australia) when the supply is made, will be GST-free.

Item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that a supply made to a non-resident who is not in the indirect tax zone when the thing is done, and:

a)    the supply is neither a supply of work physically performed on goods situated in the indirect tax zone when the work is done nor a supply directly connected with real property situated in the indirect tax zone; 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.

Entity A has supplied broadcast technical services to entity B and entity C under contracts in relation to sporting events held in Australia. These supplies were not supplies of work physically performed on goods situated in Australia when the work is done, nor these supplies were directly connected with the real property situated in Australia. Therefore, the requirements of paragraph (a) in item 2 are met.

However, if a supply of service is made to a non-resident but provided to a third party in Australia, the supply may be excluded from GST-free treatment under item 2 due to subsection 38-190(3) of the GST Act, which states:

Without limiting subsection (2) or (2A), a supply covered by item 2 in that table is not GST-free if:

a)    it is a supply under an agreement entered into, whether directly or indirectly with a non-resident; and

b)    the supply is provided, or the agreement requires it to be provided to another entity in the indirect tax zone; and

c)    for a supply other than an input taxed supply - none of the following applies:

              i.        the other entity would be an Australian-based business recipient of the supply, if the supply had been made to it;

             ii.        the other entity is an individual who is provided with the supply as an employee or officer of an Entity that would be an Australian-based business recipient of the supply, if the supply had been made to it; or

           iii.        the other entity is an individual who is provided with the supply as an employee or officer of the recipient, and the recipient's acquisition of the thing is solely for a creditable purpose and is not a non-deductible expense.

Subsection 9-26(2) of the GST Act defines 'Australian-based business recipient'. It states:

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

a)    the entity is registered; and

b)    an enterprise of the entity is carried on in the indirect tax zone; and

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

Entity A has supplied broadcast technology services under agreements with entity B and C. Therefore, the requirement of paragraph 38-190(3)(a) of the GST Act is met.

The employees of entity B and C were in Australia during the period when entity A made the supply of broadcast technology services. It should be determined whether entity A has provided any supplies to these employees of entity B and C in Australia under the agreements.

Goods and Services Tax Ruling GSTR 2005/6 provides guidance on determining whether a supply made to non-resident is provided to a third party who is in Australia.

An individual is considered as an entity under subsection 184-1(1) of the GST Act.

Paragraph 228 of GSTR 2005/6 provides that an employee is an individual and therefore an entity as defined. If a supply is made to a non-resident employer, and the supply is provided, or required to be provided, to an employee, that supply is provided to another entity.

The scenarios in paragraphs 122 to 124 involve situations where a service is supplied to a non-resident, but the supplier interacts with third parties who are in Australia in the course of performing that service. They state:

Determining whether a supply made to a non-resident employer is provided to an employee in Australia

122. To determine whether a supply is provided to an employee, it is essential to examine the nature of the supply closely. By examining what is really being supplied and how that supply is carried out, it is possible to establish to whom the service or other thing is provided, that is, the employer or another entity, the employee. If the supply is provided to the employee it is then necessary to consider if the employee's presence at a particular location is integral to the provision of that supply.

123. For example, a non-resident sole trader engages an Australian accounting firm to prepare Australian tax returns for non-resident employees working in Australia. The service involves the accounting firm meeting with the employees in Australia and preparing their individual tax returns. The tax return services are about the tax obligations of each individual. The tax return preparation services in these circumstances are provided to the individual employee. The employee is in Australia when the service is performed and that employee's presence in Australia is integral to, as distinct from being merely coincidental with, the provision of the supply. The supply otherwise covered by item 2 is not GST-free.

124. Where an employee is involved with the provision of a supply, the weight to be given to that fact differs according to the circumstances of the supply in question. In the above example, the fact that the employee has contact with the supplier strongly indicates, in the circumstances of the supply, that the supply is provided to that employee. On the other hand, contact by an employee with a supplier is of little relevance in circumstances where the employee's involvement with the provision of the supply is simply to facilitate the provision of the supply to the non-resident employer. This is the case where, for example, an employee of a non-resident employer interacts with a law firm in circumstances where the firm is providing legal advice concerning a business venture of the non-resident employer.

Supply to entity B by entity A

Entity A has confirmed that the presence of the employees of entity B has no involvement in the process of performing the supply of broadcast technology services to entity B. Entity A has not provided any supplies to the employees of entity B.

Entity B sent four of their staff to Australia to facilitate the sporting event held in Australia. The purpose of their presence is to co-ordinate or facilitate the sporting event by attending any issues in relation to rightsholders, media and to deal with the organising committee in relation to the planned broadcasting services, radio and media. While performing their duties one of the staff had interaction with entity A in relation to the sporting event, but not in relation to the supplies of broadcast technology services.

We consider that the involvements of the staff of entity B had with entity A was little relevance to the supplies made by entity A. As explained in paragraph 124 of GSTR 2005/6, the employee's involvement with the provision of the supply is simply to facilitate the sporting event for their employer entity B and not with the provision of the supply made by entity A to entity B.

Supply to entity C by entity A

Entity C has subcontracted the supply of broadcast technology services in relation to the international sporting event to entity A. Entity A has supplied yy crew members for the event under the subcontract with entity C and did not provide any supplies to other xx crews supplied by entity C. The presence of the xx crews supplied by entity C had no involvement with the supplies made by entity A.

We consider that the presence of xx crews was part of the overall supplies made by entity C to international sporting organisation under their contract with them. Based on the facts provided, entity A has not provided any supplies to the xx crews supplied by entity C and therefore, the presence of the xx crews has no relevance to the supplies made by entity A to entity C.

Conclusion

Since entity A has not provided any supplies to the employees of entity B and entity C under the relevant contracts, paragraph 38-190(3)(b) of the GST Act has not been satisfied. All the requirements under subsection 38-190(3) of the GST Act should be satisfied in order to prevent a supply being GST-free under item 2. Therefore, subsection 38-190(3) of the GST Act does not operate to prevent the supplies of broadcast technology services to entity B and entity C from being GST-free under item 2 in subsection 38-190(1) of the Act.

The supplies of broadcast technology services made by entity A to entity B and entity C were GST-free under item 2 in subsection 38-190(1) of the GST Act.