ATO ID 2001/578: GST and the subscription for Internet information services acquired from overseas
Date of decision: 4 May 2001
Business line: Indirect Tax

Issue
Is the entity, a research organisation, liable to pay goods and services tax (GST) under subsection 84-10(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it subscribes to an information service that is delivered via the Internet by a non-resident overseas supplier?

Decision
No, the entity is not liable to pay GST under subsection 84-10(1) of the GST Act when it subscribes to an information service that is delivered via the Internet by a non-resident overseas supplier.

Facts
The entity is a research organisation. In the process of carrying on its enterprise, the entity subscribes to information services that are delivered via the Internet. These may include the electronic versions of international scientific journals and periodicals. In this case, the entity acquires information, including electronic copies of journals and periodicals sent via the Internet by a non-resident overseas supplier. The acquisition of the information, including electronic copies of journals and periodicals, is solely for a creditable purpose. The supply of the information service is not done in Australia nor is it supplied through an enterprise that the non-resident overseas supplier is carrying on in Australia. The entity is registered for GST.

Reasons for decision
Summary: Division 84 of the GST Act applies to supplies not connected with 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 either: The supply of information, including electronic copies of journals and periodicals, sent via the Internet, is an intangible supply and not a supply of goods or real property. Furthermore, the supply is not connected with Australia as it is not done in Australia nor is it supplied through an enterprise that the non-resident overseas supplier is carrying on in Australia nor is it a right or option to acquire another thing. Therefore, the supply is appropriately considered under Division 84 of the GST Act. Under section 84-5 of the GST Act, a supply of anything other than goods or real property that is a supply not connected with Australia, is a taxable supply if: However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. Subsection 84-10(1) of the GST Act provides that where a supply is a taxable supply under section 84-5 of the GST Act, the GST amount payable on that supply is payable by the recipient of the supply. In this case, the entity acquires the information solely for a creditable purpose. As such, section 84-5 of the GST Act does not apply and the entity is not liable to pay any GST amount under subsection 84-10(1) of the GST Act when it subscribes to an information service that is delivered via the Internet by a non-resident overseas supplier.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 subsection 9-25(5) Division 84 subsection 84-5(1) subsection 84-10(1)
Related public rulings and determinations: GST Ruling GSTR 2000/31 | GST Ruling GSTR 2002/2
Other references: Electronic Commerce Issues Register - Chapter 4
Subject references: Goods and services tax GST international services GST offshore supplies Connected with Australia Reverse charge on offshore intangible supplies Taxable supply