Edited version of private advice

Authorisation Number: 1052199161530

Date of advice: 6 December 2023

Ruling

Subject: GST and supply of advertisement

Question

Can you claim back the goods and services tax (GST) paid to Entity A in relation to advertising from July 20XX to June 20YY, from the Australian Tax Office (ATO)?

Answer

No. The supply of advertisement by Entity A was connected with Australia under paragraph 9-25(5)(d) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and therefore Entity A has made taxable supply to you during the period of July 20XX to June 20YY.

ATO will not be able to refund any GST paid by suppliers on their taxable supply.

Relevant facts and circumstances

•                     You are carrying on an online business and registered for goods and services tax (GST).

•                     You paid around $XXX to Entity A in relation to advertising during the period of July 20XX to June 20YY.

•                     You did not provide Entity A with your ABN and GST registration status during this period and Entity A charged GST on their supply of advertisement to you.

•                     From July 20YY, Entity A did not charge GST on their supply of advertisement as you provided your ABN and GST registration details to them.

•                     You were not aware that you are required to provide your ABN and GST registration details to Entity A to avoid being charged GST.

•                     Entity A advised you that they will not reimburse the GST charged during the period and you should claim the GST back from the ATO.

•                     You requested Entity A to issue tax invoices for their supply of advertisement during this period and they refused to issue tax invoices.

•                     You have provided sample receipts for the payments of advertisement generated from your account Entity A and bank statements to confirm the payments made to Entity A.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-5, 9-25

Reasons for decision

Generally, a supplier makes a taxable supply under section 9-5 of the GST Act when:

•                     it makes a supply for consideration (payment)

•                     the supply is made in the course or furtherance of an enterprise that the supplier carries on

•                     the supply is connected with the indirect tax zone (Australia), and

•                     the supplier is registered or required to be registered for Australian GST.

However, a supply is not a taxable supply to the extent that it is GST-free or input taxed.

The supply of advertisement made by Entity A was for consideration, and it was made by Entity A in the course or furtherance of their enterprise, and Entity A is registered for GST. The supply of advertisement is not considered as GST-free or input taxed according to the GST law.

Section 9-25 of the GST Act provides when a supply is connected with Australia. Paragraph 9-25(5)(d) of the GST Act provides that a supply other than goods or real property is connected with Australia if the recipient of the supply is an Australian consumer.

Subsection 9-25(7) of the GST Act provides the meaning of Australian consumer. An entity is an Australian consumer if they are not registered for GST or they are registered for GST but they do not acquire the thing supplied to them solely or partly for the purpose of the enterprise carried out by them.

During the period of July 20XX to June 20YY, you did not provide your ABN and GST registration details to Entity A. Entity A has treated you as an Australian consumer as per paragraph 9-25(5)(d) of the GST Act and has charged GST on their supply of advertisement. Therefore, the supply of advertisement made by Entity A during the period was connected with Australia and satisfied all of the requirements of a taxable supply under section 9-5 of the GST Act.

When you provided your ABN and GST registration details to Entity A July 20YY, Entity A is treating their supplies to you as business to business since July 20YY.

Since Entity A had treated their supplies to you during the period of July 20XX to June 20YY as taxable, they would have reported the GST payable on their supplies to you to the Australian Tax Office (ATO). There are no provisions in the Tax law to refund the GST paid by a supplier to the ATO that were treated as taxable supply. Hence the ATO will not refund the GST paid by Entity A in relation to the supply of advertisement during the period of July 20XX to June 20YY.