Edited version of private advice

Authorisation Number: 1052106319995

Date of advice: 18 May 2023

Ruling

Subject: Supplies of things, other than goods or real property, for consumption outside the indirect tax zone

Question

Are the services provided by an entity to non-resident customers who are outside the indirect tax zone when those services are supplied GST-free under subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999

Answer

Yes, the supplies of services are GST-free.

This ruling applies for the following periods:

All tax periods ending on or after 1 July 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

The entity is an Australian incorporated company

The entity is registered for GST with effect from the 1 July 20XX.

The entity carries on an enterprise providing outsourcing and offshoring consulting services

The entity provides these services to both customers located inside and outside of the Indirect Tax Zone (Australia).

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 38-190

Reasons for decision

Detailed reasoning

Under subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), certain supplies of things, other than goods or real property, for consumption outside the indirect tax zone (Australia) are GST-free.

Item 2 in the table in subsection 38-190(1) of the GST Act provides that a supply that is made to a non-resident who is not in the indirect tax zone when the thing supplied is done is GST-free if:

(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 for GST.

The Goods and Services Tax Ruling, Goods and services tax: in the application of items 2 and 3 and paragraph (b) of item 4 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999: when is a 'non-resident' or other 'recipient' of a supply 'not in Australia when the thing supplied is done'? when is 'an entity that is not an Australian resident' 'outside Australia when the thing supplied is done'? (GSTR 2004/7) explains the Commissioner's view of when a 'non-resident' or other 'recipient' of a supply is 'not in the indirect tax zone when the supply is made and, at paragraph 257 states:

"If a non-resident company does not have a fixed and definite place in Australia at, or through which, the business of the non-resident company is carried on in Australia, the company is not in Australia".

You make supplies to non-resident customers who are not in the indirect tax zone when the supplies are made. The supplies are neither supplies of work physically performed on goods situated in the indirect tax zone nor supplies directly connected with real property situated in the indirect tax zone. Therefore, the supplies made by you to your customers located outside of Australia are GST-free and, consequently, no Australian goods and service tax is payable on the supply of those services.