Private ruling: GST - taxable supply
Date of advice: 28 July 2023
Published: 18 September 2023
Ruling period: Year ended 30 June

Ruling: Q1: Are you making taxable supplies as part of your gambling activities pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, you are not making taxable supplies as part of your gambling activities pursuant to section 9-5 of the GST Act. | Q2: Are you required to be registered for goods and services tax (GST) pursuant to Division 23 of the GST Act? | A2: No, you are not required to be registered for GST pursuant to Division 23 of the GST Act as you do not meet the GST registration turnover threshold. | Q3: If the answers to Question 1 and/or Question 2 is 'Yes', are you making a gambling supply pursuant to Division 126 of the GST Act? | A3: As the answers to Question 1 and/or Question 2 is 'No', this question is not applicable and an answer is not necessary.

Relevant facts and circumstances: You are an Australian-incorporated company limited by shares. You are not registered for GST. You earn revenue via tipping on the likely outcomes of sporting events and you utilise a number of strategies to generate betting advantages. You then use these tips to place bets on your clients' bookmakers' accounts. You use your own funds to fund bookmaker accounts. After a set period of time, you conduct an account reconciliation of the client's bookmakers' accounts. The account reconciliation determines the profit generated from the client's accounts. The profit is calculated based on the payout on successful bets placed less the cost of unsuccessful bets. If a loss is to occur, it is your agreement with your client that you bear the risk of any losses and would retain any losses to be used to offset against future profits. The total profit generated from all client accounts is multiplied by a percentage. This amount is then shared equally among all client accounts that were active during the betting period (Client Profit Share). The Client Profit Share is then distributed to each client in the relevant betting period as the client's share of the profit in your gambling activities. You retain the remaining share as your profit from your gambling activities. Your gross income in your first full year of operation is projected to be in excess of $75,000. You will not undertake any other types of activities.

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 9-10 | A New Tax System (Goods and Services Tax) Act 1999 Division 23 | A New Tax System (Goods and Services Tax) Act 1999 Division 126

Reasons for decision: Summary: Section 9-5 provides that you make a taxable supply if: (a) you make a supply for consideration (b) the supply is made in the course or furtherance of an enterprise that you carry on (c) the supply is connected with the indirect tax zone, and (d) you are 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. In this case, we have to first consider whether or not the requirement under paragraph 9-5(a) is satisfied, that is, whether or not you are making a supply for consideration. Based on the facts you provided as you provide money to your clients, under paragraph 9-10(4)(a), a supply does not include a supply of money unless the money is provided as consideration for a supply that is a supply of money or digital currency. Furthermore, you do not receive any consideration from your clients as you are the one who deposits your funds into their bookmakers' accounts. You subsequently utilise the funds in your clients' accounts to apply your wagers. Consequently, you do not satisfy the first requirement under paragraph 9-5(a) as you are not making a supply to another entity and it is not necessary for us to proceed further in considering whether you will satisfy the other requirements under section 9-5. As such, we determine that you are not making a taxable supply under the above arrangement. As discussed in Question 1, where you are not making a supply to another entity, you would not have any GST turnover and could not meet the GST registration turnover threshold. In this regard, you are not required to be registered for GST pursuant to Division 23. As the answers to Question 1 and/or Question 2 is 'No', this question is not applicable, and an answer is not necessary.

Reasons for decision: All legislative references in this ruling are of the GST Act unless otherwise stated.