Edited version of private advice

Authorisation Number: 1052228854379

Date of advice: 21 March 2024

Ruling

Subject: GST and the supply of content to non-resident platform operators

Question 1

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

Answer 1

No

Question 2

Is your supply of digital content to a A(non-resident social media platform operator) a taxable supply under section 9-5 of the GST Act?

Answer 2

No, your supply of digital content to A is not taxable under section 9-5 of the GST Act.

Question 3

Is your supply of digital content to users on B (a non-resident social media platform operator) a taxable supply under section 9-5 of the GST Act?

Answer 3

No, your supply of digital content to users on B is not a taxable supply under section 9-5 of the GST Act.

Question 4

Is your supply of services to a non-resident entity in accordance with the Partnership Agreement taxable under section 9-5 of the GST Act?

Answer 4

No, your supply of services to the non-resident entity in accordance with the Partnership Agreement is not taxable under section 9-5 of the GST Act.

This ruling applies for the following periods

1 July 2021 to 30 June 2023

Relevant facts and circumstances

•         You live stream for a non-resident entity on social media platforms. You are not employed by the non-resident, but you have a partnership with them to promote their business online.

•         You do not provide any services to Australia or any Australian branch in connection with the non-resident entity.

•         You are an Australian resident for FY2022.

•         You are a non-resident for FY2023.

•         You departed Australia in January 2022. You left Australia to travel and work remotely for the non-resident. You intended to stay in New Zealand for 1 year and Canada for 6 months. However, due to covid restrictions you were unable to enter New Zealand. You re-located to Canada instead and moved to New Zealand after covid restrictions eased.

•         You have also provided us with a copy of the Partnership Agreement between you and the non-resident

•         A and B do not provide information on the location of your subscribers.

•         You do not issue invoices to your viewers who subscribe or make donations to you.

•         A and B do not have any representatives in Australia that are involved with your supplies.

•         The non-resident entity makes a direct payment of $27,500 USD per week into your account, which you then partly use to live-stream. Any amount remaining is cashed out and deposited into your bank account.

•         You reached the $75,000 GST registration threshold in March 2022.

•         You are not registered for GST.

•         You also live-stream content not related to the non-resident entity on B.

•         You do not generate income from any other sources.

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 9-20

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

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

A New Tax System (Goods and Services Tax) Act 1999 section 188-10

Reasons for decision

Question 1

FY2022

Your supply of content to users/subscribers on B is taxable (refer to the response to Question 3) and will need to be included in the calculation of your GST-turnover.

Your supply of services to the non-resident entity under the Partnership Agreement is GST-free (refer to the response to Question 4). Similarly, your supply of content to A is also GST-free (refer to the response to Question 2). However, consideration received from these supplies will still need to be included in the calculation of your GST-turnover as subsection 188-15(1) of the GST Act, provides that only supplies that are input taxed, not for consideration or not made in connection with an enterprise that you carry on will be excluded from the calculation of your GST turnover. None of these exclusions apply in your circumstances.

Your GST turnover would have exceeded the $75,000 registration threshold in March 2022. However, you left Australia in January 2022. As supplies made to the non-resident entity and A are not connected with Australia after this date, those supplies will not be included in the calculation of your GST turnover and therefore you did not reach the GST turnover threshold in FY2022.

As you have not satisfied the requirements under section 23-5 of the GST Act, you will not be required to be registered for GST in FY2022.

FY2023

Subsection 188-15(3) of the GST Act further states that:

(3) In working out your current GST turnover, disregard:

(a)  any supply that is not *connected with the indirect tax zone; and

(b)  any supply that is connected with the indirect tax zone because of paragraph 9-25(5)(c), unless:

(i)    the supply is made to an *Australian consumer; and

(ii)   the supply is not *GST-free; and

(iii)  the thing to be acquired under the right or option referred to in that paragraph is not goods or *real property; and

(c)   (Repealed by No 65 of 2019)

(d)  any *GST-free supply made by a *non-resident that does not make the supply through an *enterprise that the non-resident *carries on in the indirect tax zone.

Consideration received from your supplies under the Partnership Agreement with the non-resident entity satisfies paragraph 188-15(3)(a) of the GST Act as your supply of services is not connected with Australia (refer to the response in Question 4).

Therefore, consideration received from your supply of services to the non-resident entity under the Partnership Agreement will not count towards the calculation of your GST turnover and you will not be required to be registered in FY2023 as your GST turnover does not exceed the registration threshold.

Question 2

a)    Who is the recipient of your supply?

To address this issue, the first step is to identify the nature of the supply you make to A.

The term 'supply' is defined in subsection 9-10(1) of the GST Act as 'any form of supply whatsoever' and includes a creation, grant, transfer, assignment or surrender of any right (paragraph 9-10(2)(e) of the GST Act). This definition requires an entity, the supplier to make the supply and generally another entity, the recipient to acquire the supply.

The Commissioners' views on supplies are outlined in several goods and services tax rulings. Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies (GSTR 2006/9) provides 16 propositions that are considered relevant in analysing a transaction in relation to a supply.

Proposition 11 detailed in GSTR 2006/9 provides that the agreement is the logical starting point when working out the entity making the supply and the recipient of that supply.

Therefore, to determine the nature of the supply regard must be given to the Agreement and Terms of Service set out by A.

Under clause 8a(i) of the Terms of Service set out by non-resident social media platform operator, you provide them an unrestricted, worldwide, irrevocable, fully sub-licenseable, nonexclusive, and royalty-free right to: (a) use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, perform, and display your content.

We consider this to be the supply you make to A.

Given the nature of your contractual relationship, we consider A to be the recipient of your supply.

b)    Is the supply taxable?

Under section 9-5 of the GST Act, 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 for GST.

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

You are carrying on an enterprise of supplying digital content to A. You receive consideration for your supply but you are not required to be registered for GST in FY2022 and FY2023 (as established in the response to Question 1). Therefore, your supply of content to A is not taxable under section 9-5 of the GST Act.

Note: If you return to Australia and are registered or are later required to be registered the below reasoning will apply. This reasoning was required to determine the response to Question 1.

One of the requirements for a taxable supply is that the supply should be connected with the indirect tax zone (Australia).

Subsection 9-25(5) of the GST Act provides that a supply of anything other than goods or real property is connected with Australia if:

a)    the thing is done in Australia; or

b)    the supplier makes the supply through an enterprise that the supplier carries on in Australia; or

c)    all of the following apply:

                      i.        neither paragraph (a) nor (b) applies in respect of the thing;

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

                    iii.        the supply of the other thing would be connected with Australia; or

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

To satisfy whether your supply of content will be connected with Australia, you need to meet one of the listed elements in subsection 9-25(5) of the GST Act. Since you make the supply through your enterprise carried on in Australia in FY2022, your supply will satisfy paragraph 9-25(5)(b) of the GST Act.

However, your supply of digital content to A from January 2022 will not be connected with Australia and therefore is not taxable as you make the supply of digital content (to a non-resident entity) from a location outside Australia.

As such only your supply of content to the non-resident social media platform operator prior January 2022 will be a taxable supply unless it is GST-free or input taxed. There are no provisions that make your supply of digital content input taxed.

c)    Is the supply made to A GST-free?

Subsection 38-190(1) of the GST Act provides that the supplies of things other than goods or real property for consumption outside Australia will be GST-free.

Table item 2 of subsection 38-190(1) of the GST Act (item 2) states that a supply that is made to a non-resident who is not in Australia when the thing supplied is done is GST-free where:

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.

Only one of the paragraphs in item 2 need to be satisfied.

Your supply of digital content to A satisfies paragraph (a) of item 2 as:

• your supply of digital content is a non-resident who is not in Australia in relation to your supply when the supply is done; and
• your supply of digital content is neither a supply of work physically performed on goods located in Australia nor a supply connected with real property situated in Australia.

There is no need to consider paragraph (b) as paragraph (a) is satisfied.

Subsection 38-190(3) of the GST Act does not apply to limit the application of item 2.

Therefore, your supply of digital content to A in consideration for the program fees is GST-free under table item 2 of subsection 38-190(1) of the GST Act. No GST is payable on the program fees.

Question 3

a)    Who is the recipient of your supply?

According to the Terms of Service for users, there is a contract between you and B. However, you are only granted a non-exclusive, limited, non-transferable, freely revocable license to use the platform for your commercial and/or personal use as permitted by the features of the platform. B only facilitates the transaction between users by providing their platform for online streaming services where users can connect with streamers and communicate through postings, chatrooms, etc.

B claims no ownership right over your user content. You own all your content, including software, images, text, graphics, illustrations, logos, patents, trademarks, service marks, copyrights, photographs, audio, video, music and all intellectual property rights related to it.

Furthermore, under clause 2.1 of the Terms of Service, you grant each user of the service a non-exclusive license to access your user content through the service, and to use, reproduce, distribute, display and perform such user content as permitted through the functionality of the service and under these terms.

Channel subscriptions are only available to affiliates and partners. A user can subscribe by visiting the channel they wish to subscribe to and clicking the 'subscribe' button. A pop-up will appear allowing the user to complete the process by adding a payment method.

Based on the Terms of Service and the method of subscription, it is our view that you do not make a supply of digital content to B, but rather you make the supply of digital content directly to other users/subscribers through B under the Terms of Service.

b)    Is your supply to users of B taxable?

Your supply of content users/subscribers will satisfy all the requirements of paragraphs (a) and (b) of section 9-5 of the GST Act as:

•         you make the supply of digital content for consideration; and

•         the supply is made in the course or furtherance of an enterprise that you carry on.

Your supply of content to users of B will not be taxable as you are not required to be registered under paragraph 9-5(d) of the GST Act.

Note: If you return to Australia and are registered or are later required to be registered the below will apply. This reasoning was required to determine the response to Question 1.

We will need to consider whether your supplies or services are connected with Australia under paragraph 9-5(c) of the GST Act.

Subsection 9-25(5) of the GST Act provides that supplies of anything other than goods or real property is connected with Australia if:

• the thing is done in Australia; or
• the supplier makes the supply through an enterprise that the supplier carries on in Australia; or
• the thing is a right and satisfies all the requirements under paragraph (d) of subsection 9-25(5) of the GST Act; or
• the recipient of the supply is an Australian consumer.

The services are not provided from Australia as you operate your enterprise outside of Australia. Paragraph 9-25(5)(c) of the GST Act does not apply as you are not supplying rights. We will need to consider whether your subscribers are Australian consumers under paragraph 9-25(5)(d) of the GST Act.

Subsection 9-25(7) of the GST Act provides that an entity is an Australian consumer if:

•         the entity is an *Australian resident (other than an entity that is an Australian resident solely because the definition of Australia in the ITAA 1997 includes the external Territories); and

•         the entity is not *registered; or

•         if the entity is registered - the entity does not acquire the thing supplied solely or partly for the purpose of an *enterprise that the entity *carries on.

Goods and Services Tax Ruling GSTR 2017/1 Goods and services tax: making cross-border supplies to Australian consumers (GSTR 2017/1) provides more information on determining if the recipient is an Australian consumer.

Paragraph 13 states that under section 84-100 of the GST Act, you can treat the supply as having not been made to an Australian consumer if you:

• have satisfied particular evidentiary requirements, and
• reasonably believe that the recipient is not an Australian consumer.

Paragraph 15 further provides that you must have a reasonable basis for forming a reasonable belief about whether the recipient of the supply is an Australian consumer based on your usually systems and processes or have taken reasonable steps to obtain information about whether the recipient is an Australian consumer.

GSTR 2017/1 states:

29. Examples of information that the Commissioner will accept to support a conclusion about whether the recipient satisfies the residency element include:

•         the recipient's billing address

•         the recipient's mailing address

•         the recipient's banking or credit card details, including the location of the bank or credit card issuer

•         location-related data from third party payment intermediaries

•         mobile phone SIM or landline country code

•         recipient's country selection

•         tracking/geolocation software

•         internet protocol (IP) address

•         place of establishment of the recipient (for non-individual recipients)

•         representations and warranties given by the recipient

•         the origin of correspondence, and

•         locations, such as Wi-Fi spot, where the physical presence of the person receiving the service at that location is needed.

30. This is not an exhaustive list of evidence that would be relevant to establishing whether a recipient satisfied the residency element.

31. You must consider all the information collected through your usual business systems and processes. There must, on balance, support a conclusion about whether the recipient satisfies the residency element.

The supplies are connected with Australia under paragraph 9-25(5)(d) of the GST Act as users residing in Australia are considered to be 'Australian consumers,' and those supplies will be subject to GST. If you are unable to distinguish which subscribers reside in Australia, all supplies you make through the B will be taxable. You have stated that B does not provide you with this information and therefore all supplies you make through B will be taxable.

B may be responsible for GST under the Electronic Distribution Platform (EDP) rules if they are considered to be an EDP and the exclusions do not apply as there has been an inbound intangible supply of digital content through the platform.

Question 4

a)    Is your supply of services to the non-resident entity taxable?

Under section 9-5 of the GST Act, 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 for GST.

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

You are carrying on an enterprise of supplying services to the non-resident entity under the terms of the Partnership Agreement. You receive consideration from the non-resident entity to meet deliverables under the Partnership Agreement and you are not required to be registered in FY2022 and FY2023 as explained in the response to Question 1.

Note: If you return to Australia and are registered or are later required to be registered the below will apply. This reasoning was required to determine the response to Question 1.

We will need to consider whether the supply is connected with Australia under paragraph 9-5(c) of the GST Act.

Subsection 9-25(5) of the GST Act provides that a supply of anything other than goods or real property is connected with Australia if:

a)    the thing is done in Australia; or

b)    the supplier makes the supply through an enterprise that the supplier carries on in Australia; or

c)    all of the following apply:

                      i.        neither paragraph (a) nor (b) applies in respect of the thing;

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

                    iii.        the supply of the other thing would be connected with Australia; or

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

To satisfy whether your supply of services will be connected with Australia, you need to meet one of the listed elements in subsection 9-25(5) of the GST Act. Since you make the supply through your enterprise carried on in Australia in FY2022, your supply will satisfy paragraph 9-25(5)(b) of the GST Act.

Paragraphs 9-25(5)(a) to (c) does not apply for FY2023 as you were a non-resident. You left Australia in January 2022 for Canada and then relocated to New Zealand. You do not carry on an enterprise in Australia from January 2022 or make supplies from Australia.

Based on the information provided, you do not supply services to Australia or any Australian branch in connection with the non-resident entity and therefore the recipient is not an 'Australian consumer' under paragraph 9-25(5)(d) of the GST Act and the supply will not be connected with Australia.

Since you do not satisfy all the requirements of section 9-5 of the GST Act, your supply of services to the non-resident entity under the Partnership Agreement will not be taxable in FY2023.