GST issues registers

Tourism and hospitality industry partnership

Issue 6 - Supply arrangements involving three parties

Nature of arrangement

A resident travel agent (the supplier) agrees with a non-resident (the recipient) to provide services to other resident entities that are associated with the non-resident (for example, a subsidiary). Although the non-resident company is the contracted recipient of the supply, it is not the entity that makes use of the services. These services are consumed by the subsidiary in Australia.

Issue

What is the GST treatment of commission received by a local travel agent from a non-resident entity in respect of arranging services provided by the local travel agent to a local entity?

For source of ATO view, refer to the general application of the principles in GSTR 2005/6 - Goods and services tax: the scope of subsection 38-190(3) and its application to supplies of things (other than goods or real property) made to non-residents that are GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999.

Decision

The GST-free treatment of the supply is denied by subsection 38-190(3) which states:

Without limiting subsection (2), a supply covered by item 2 in that table is not GST-free if:

(a)

it is a supply under an agreement entered into, whether directly or indirectly, with a *non-resident

(b)

the supply is provided, or the agreement requires it to be provided, to another entity in Australia.

*denotes a defined term in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

Where a local travel agent provides arranging services to a resident entity, even though the agreement to provide the services is made with a non-resident entity, GST would apply to the supply of the services.

References

•

GSTR 2005/6 - Goods and services tax: the scope of subsection 38-190(3) and its application to supplies of things (other than goods or real property) made to non-residents that are GST-free under item 2 of the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999.

•

Subsection 38-190(3)

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