Private ruling: GST and supply of demonstration videos and advertising services to overseas clients
Date of advice: 1 May 2019
Published: June 2019
Ruling period: Not applicable
Date scheme commenced: Not applicable

Ruling: Q1: Are you making GST-free supplies of demonstration videos and advertisement space on social media to overseas clients? | A1: Yes.

Relevant facts and circumstances: ● You create demonstration videos and reviews on gaming hardware products such as video games. ● The demonstration videos are uploaded on social media on various video games supplied by overseas companies. ● The overseas companies pay you a commission when their products are sold. ● Some overseas companies use your social media website to advertise their products and pay you commission. ● You receive large amount of income from the advertisement commission. ● You do not have any written agreements with the overseas companies to provide these supplies. ● Your annual income during the past six months has exceeded the GST registration turnover threshold of $75,000.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 – subsection 38-190(1) and (3)

Reasons for decision: Summary: Subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) specifies circumstances where the supply of things other than goods or real property for consumption outside of Australia, is GST-free. Videos and advertisements on websites are considered as intangibles and are neither good nor real property. As such, the supply of demonstration videos on YouTube and advertisement space is appropriately considered under subsection 38-190(1) of the GST Act. Items 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 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 ● the non-resident acquires the thing in carrying on the non-resident’s enterprise, but is not registered or required to be registered. The supply of demonstration videos and advertisement space on social media to a non-resident overseas recipient is neither 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 recipients acquire the demonstration videos and advertisement space on social media in carrying on their enterprise overseas and are 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: ● it is a supply under an agreement entered into, whether directly or indirectly with a non-resident; and ● the supply is provided, or the agreement requires it to be provided to another entity in Australia. In this case, there is no agreement between you and the non-resident recipients to provide the supply to another entity in Australia. Therefore, the supply is not excluded by subsection 38-190(3) of the GST Act from being GST-free. As the supply of demonstration videos and advertisement space on social media 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 supply will be GST-free.