Edited version of private advice

Authorisation Number: 1052305354245

Date of advice: 02 October 2024

Ruling

Subject: Goods and services for international use

Question 1

Is your supply of goods and services to volunteers for consumption overseas a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

No, your supply of goods to volunteers whilst they are overseas is not connected with Australia under section 9-25 of the GST Act.

Your supply of services to volunteers whilst they are in overseas is GST-free under table item 3 of subsection 38-190(1) of the GST Act.

This ruling applies for the following periods

XX September 20YY to XZ September 20YY

Relevant facts and circumstances

You provide a program where volunteers can spend time overseas.

Your agent co-ordinates between you and the volunteer to arrange the program.

You are registered for GST.

There are both Australian and international volunteers. International volunteers do not physically enter Australia in relation to the program.

The volunteer arranges and pays for their own flights directly with the airline.

Your agent will take the volunteer's booking, send them paperwork and take payment.

Your agent will keep an agreed amount as their commission for arranging the program, checking travel and medical documents and co-ordinating between you and the volunteer.

Once the volunteer has participated in the enrichment program, your agent sends you the balance.

The balance includes a donation and the cost of goods and services provided to the volunteer whilst overseas on the program.

You send the balance to a non-resident entity to cover the cost of the goods and services provided to the volunteer for the program. The donation is also sent to the non-resident entity separately to cover general costs for the rehabilitation centre and/or specific projects.

The non-resident entity invoices you for the cost of the goods and services provided for the relevant number of volunteers participating in the program.

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 38-190

Reasons for decision

Taxable supplies

GST is payable on taxable supplies. 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 Australia; 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.

All the above requirements must be met for a supply that you make, to be a taxable supply.

You meet the requirements of paragraphs 9-5(a),9-5(b) and 9-5(d) of the GST Act, that is:

•                     you supply goods and services for consideration; and

•                     your supply of goods and services is made in the course or furtherance of an enterprise that you carry on; and

•                     you are registered for GST.

However, your supply of goods to the volunteers overseas on the program is not connected with Australia under section 9-25 of the GST Act as the goods are not delivered or made available in Australia to the volunteer. The goods are never removed or brought into Australia and therefore any supply of goods you make to the volunteer whilst they are overseas are not taxable supplies as it does not satisfy paragraph 9-5(c) of the GST Act.

Your supply of services to the volunteer overseas is connected with Australia as you make the supply through an enterprise that you carry on in Australia pursuant to paragraph 9-25(5)(b) of the GST Act. As a result, your supply of services to the volunteer overseas are taxable supplies unless it is input taxed or GST-free.

There are no provisions of the GST Act under which your supply of services is input taxed. Therefore, what remains to be determined is whether your supply of services is GST-free.

GST-free supply

Relevant to your supply of services to the volunteer is table item 3 of subsection 38-190(1) of the GST Act (item 3).

Item 3 applies irrespective of whether the recipient is a resident or non-resident of Australia.

Under item 3, a supply of a thing other than a supply of work physically performed on goods situated in Australia when the thing supplied is done or a supply directly connected with real property situated in Australia is GST-free if:

(a) the supply is made to a recipient who is not in Australia when the thing supplied is done; and

(b) the effective use or enjoyment of which takes place outside Australia.

All the requirements in item 3 must be satisfied for the supply of services to be treated as GST-free and provided that the supply is not negated by subsection 38-190(2A) of the GST Act.

Paragraph (a) of item 3

GSTR 2004/7 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 (GSTR 2004/7) provides more information on when a recipient of a supply is 'not in Australia when the thing supplied is done.'

The requirement that the recipient in item 3 is 'not in Australia' when the thing supplied is done is a requirement, in our view, that the recipient is 'not in Australia in relation to the supply' when the thing supplied is done. If the recipient is in Australia in relation to the supply, the recipient does not satisfy the 'not in Australia' requirement.

An individual is in Australia if that individual is physically in Australia.

The volunteer is not in Australia when the services are supplied. The program is conducted overseas and the volunteer receives services in relation to the program solely whilst they are overseas. Therefore, paragraph (a) of item 3 is satisfied.

Paragraph (b) of item 3

Paragraph (b) of item 3 requires the place of effective use or enjoyment of a supply to be determined (that is, whether the place is outside Australia).

Your supply of services is provided when the service is done. The services are provided to the volunteer overseas and therefore the effective use and enjoyment of the services take place outside Australia. As such, paragraph (b) of item 3 is also satisfied.

Subsection 38-190(2A) of the GST Act

Subsection 38-190(2A) of the GST Act provides that a supply covered by any of the items 2 to 4 in the table in subsection 38-190(1) of the GST Act is not GST-free if the acquisition of the supply relates (whether directly or indirectly, or wholly or partly) to the making of a supply of real property situated in the indirect tax zone that would be input taxed under subdivision 40-B or 40-C of the GST Act.

This provision does not apply as your supply of services to the volunteer is not connected with real property situated in Australia. As such, your supply of services to the volunteer for consumption overseas is GST-free under item 3.