ATO ID 2001/575: GST and supply of IT industry domain name to a non-resident recipient outside Australia
Date of decision: 12 October 2000
Business line: Indirect Tax

Issue
Is the entity, a business operator in the Information Technology (IT) industry, making a GST-free supply under item 2 in the table in subsection 38-190 (1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies an IT industry domain name to a non-resident recipient outside Australia?

Decision
Yes, the entity is making a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act when it supplies an IT industry domain name to a non-resident recipient outside Australia.

Facts
The entity is a business operator in the IT industry. As a part of its business the entity acquires 'domain names' by reserving them from suppliers of domain name registrations and then supplies the domain names to its clients. The entity is supplying the domain name to a non-resident recipient who is outside Australia. The non-resident recipient acquires the domain name to carry on its overseas enterprise. The non-resident recipient is neither registered nor required to be registered for goods and services tax (GST). There is no agreement between the two parties to provide the supply to another entity within Australia. The non-resident recipient may use the domain name to conduct its business with customers throughout the world, including those in Australia. The entity is registered for GST.

Reasons for decision
Summary: Subsection 38-190(1) of the GST Act specifies circumstances where the supply of things other than goods or real property, for consumption outside of Australia, is GST-free. Domain names are intangible products and are neither goods nor real property. As such, the supply of a domain name is appropriately considered under subsection 38-190(1) of the GST Act. Item 2 in the table in subsection 38-190(1) of the GST Act provides 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: The supply of the domain name to a non resident overseas recipient is not work physically performed on goods situated in Australia nor directly related to real property in Australia. Therefore, the supply satisfies the requirements of item 2(a) in the table in subsection 38-190(1) of the GST Act. The non-resident recipient acquires the domain name in carrying on its enterprise overseas and is neither registered nor required to be registered for GST. Therefore, the supply satisfies the requirements of item 2(b) in the table in subsection 38-190(1) of the GST Act Item 2 in the table in subsection 38-190(1) of the GST Act is limited by subsection 38-190(3) of the GST Act which provides that a supply covered by item 2 in that table is not GST-free if: In this case, there is no agreement between the entity and the non-resident recipient to provide the supply to another entity within Australia. Therefore, the supply is not excluded by subsection 38-190(3) of the GST Act from being GST-free. As the supply satisfies the requirements in item 2 in the table in subsection 38-190(1) of the GST Act and is not excluded from being GST-free by subsection 38-190(3) of the GST Act, the entity is making a GST-free supply when it supplies the domain names to a non-resident recipient outside Australia.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190 (1) subsection 38-190 (1) table item 2 subsection 38-190 (3)
Related ATO interpretative decisions: ATO ID 2001/574
Subject references: Goods & services tax Consumption outside Australia GST-free