Edited version of private advice

Authorisation Number: 5010086745233

Date of advice: 10 August 2022

Ruling

Subject: GST and supply of writing services

Question 1

Are the supplies you make under Scenario 1 and Scenario 2 included in the turnover calculation, thus requiring you to be registered for GST?

Answer

Yes, supplies you make under Scenario 1 and Scenario 2 are included in the calculation of turnover for GST purposes. However, the supplies you make under Scenario 1 are GST-free as all the requirements of section 9-5 of the GST Act are not met. The supplies made under Scenario 2 will be taxable supplies provided all the requirement of section 9-5 of the GST Act are met.

This ruling applies for the following period:

XX

The scheme commences on:

XX

Relevant facts and circumstances

You are a sole trader and are not registered for GST.

You are a tax resident in Australia.

Your sole trader business activities consist of copy writing and content writer.

You write contents that appears on businesses websites to help them sell a product or service.

Currently, majority of these writing services are provided to clients overseas and you have entered into a contract directly with them. (Scenario 1)

The money gets paid to your business account here in Australia. (Scenario 2)

You have acquired one regular client in Australia.

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 38-190

Detailed reasoning

Note: Where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in section 195-1 of the GST Act.

GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the GST Act if:

(a)  the supply is made for consideration; and

(b)  the supply is made in the course of the enterprise that the supplier carries on; and

(c)   the supply is connected with Australia; and

(d)  the supplier is registered or required to be registered for GST.

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

Scenario 1: You supply services to clients registered overseas

When you supply your content write up services to clients based and registered overseas you satisfy paragraphs (a) and (b) in section 9-5 of the GST Act.

A supply is GST-free if it is listed in Division 38 of the GST Act.

Relevant to the supply described above is item 2 and item 3 which may also be applicable to your circumstances. In the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) (item 2).

Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident is GST-free if it is a supply that is made to a non-resident, who is not in Australia when the thing supplied is done, and:

(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 for GST.

Where the requirements of paragraphs (a) or (b) of item 2 are satisfied, the supply will be GST-free.

However, item 2 is limited by subsection 38-190(3) of the GST Act.

Limitations of item 2 - subsection 38-190(3) of the GST Act

If the supply covered by item 2 is under an agreement entered into, whether directly or indirectly, with a non-resident entity and that supply is provided or the agreement requires that it to be provided to another entity in Australia, subsection 38-190(3) of the GST Act negates the GST-free status of that supply.

When an Australian entity provides content write up services to a non-resident subsection 38-190(3) of the GST Act will not be applicable if that supply is not provided or the agreement does not require that it to be provided to another entity in Australia.

Under such circumstances the services provided by the Australian entity to the non-resident entity will be GST-free.

Based on the circumstances provided, the supply is content write-ups for websites of clients located outside Australia. Item 2 of the Table under section 38 -190 is applicable to this type of supply. Therefore, the supply is GST-free.

Scenario 2: You supply services to clients in Australia

When you supply your writing services to clients based and registered in Australia you satisfy paragraphs (a),(b) and (c) in section 9-5 of the GST Act.

Therefore, we will need to determine if you need to be registered for GST.

Requirement to register for GST

Section 23-5 of the GST Act provides that you are required to be registered if:

(a)  You are carrying on an enterprise, and

(b)  Your GST turnover meets the registration turnover threshold.

You are required to be registered where both the above requirements are met.

In your case, as you satisfy the first requirement as you are a sole trader, it is therefore necessary to consider the second requirement.

We need to determine whether your GST turnover meets the registration turnover threshold. The registration turnover threshold for an entity (other than a non-profit entity) is $75,000.

As per section 188 of the GST Act all supplies, with the exception of the following:

(a)  supplies that are input taxed; or

(b)  supplies that are not for consideration (and are not taxable supplies under section 72-5); or

(c)   supplies that are not made in connection with an enterprise that you carry on.

Will be included in working out the GST registration threshold.

Your supplies do not meet any of the above exceptions and will form part of working out the GST registration threshold. As such, if your turnover exceeds $75,000 you will need to register for GST.