Private ruling: Goods and services tax (GST) and migration advice
Published: July 2014

Ruling: Q1: Is GST payable by you on your supply of advice you provide to an overseas corporate client that does not have corporate operations in Australia if the advice relates to registering the overseas company as a standard business sponsor with the Department of Immigration and Border Protection (DIBP) and enabling an overseas skilled employee to relocate to work in Australia? | A1: No. | Q2: Is GST payable by you on your supply of advice you provide to an overseas corporate client that has an Australian subsidiary if the advice relates to the procedures and corresponding visa applications required to enable the overseas employees to fill positions in the Australian subsidiary? | A2: GST may or may not be payable, depending on the situation. See reasons for decisions for more information. | Q3: Is GST payable by you on your supply of advice to an individual who is overseas if the advice relates to an individual visa application to enable that person to travel to Australia (potentially, subject to approval)? | A3: No. | Q4: Is GST payable by you on your supply of advice to an individual who is in Australia on a temporary visa? | A4: Yes. | Q5: Is GST payable by you on your supply of advice that you provide to an Australian company in respect of an overseas employee who may be required to transfer to Australia? | A5: Yes.

Relevant facts and circumstances: You are registered for GST. You are an Australian based company. You provide Australian migration related advice through your office in Australia. You charge for these services. You require advice on the following scenarios: Scenario 1 You supply advice to an overseas corporate client that does not have corporate operations in Australia. The advice relates to registering the overseas company as a standard business sponsor with DIBP and enabling an overseas skilled employee to relocate to work in Australia. You provide the advice to the overseas company. Scenario 2 You supply advice to an overseas corporate client that has an Australian subsidiary. The advice relates to the procedures and corresponding visa applications required to enable the overseas employees to fill positions in the Australian subsidiary. You provide the advice to the overseas company. Scenario 3 You supply advice to an individual who is overseas. The advice relates to an individual visa application to enable that person to travel to Australia (potentially, subject to approval). You provide the advice to the individual. Scenario 4 You supply advice to an individual who is in Australia on a temporary visa. The individual is visiting Australia. The individual is a non-resident for tax purposes. The individual has a consultation with you face to face; over the phone or via Skype in regards to whether they might be successful in obtaining permission to live or work in Australia and how to apply for such permission. The consultation is lengthy, for example, it can last half an hour, for example. The individual needs to provide information to you about themselves, for example, what qualifications they have, in order for you to advise them. Scenario 5 You supply advice to an Australian company in respect of an overseas employee who may be required to transfer to Australia. You provide the advice to the Australian company.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1) | A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 9-40 | A New Tax System (Goods and Services Tax) Act 1999 section 38-190

Reasons for decision: Summary: The supply of these services is GST-free under section 38-190 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) because the recipient is not in Australia in relation to the supply when the supply is made. | Detailed Reasoning - Detailed reasoning: GST is payable by you on your taxable supplies. You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which states: You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with Australia; and (d) you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. (*Denotes a term defined in section 195-1 of the GST Act) You meet the requirements of paragraph 9-5(a) to 9-5(d) of the GST Act. This is because: • you supply services for consideration • you supply the services in the course of furtherance of an enterprise that you carry on • your supply of the services is connected with Australia, and • you are registered for GST. There are no provisions of the GST Act under which your supplies of the services are input taxed. Therefore, what remains to be determined is whether you are making GST-free supplies. Item 2 Item 2 in the table in subsection 38-190(1) of the GST Act (item 2) provides that a supply of something, other than goods or real property, to a non-resident who is not in Australia when the thing supplied is done is GST-free if: (a) 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 (b) the non-resident acquires the thing in carrying on the non-resident's enterprise, but is not registered or required to be registered for GST. Subsection 38-190(3) of the GST Act provides that a supply covered by item 2 is not GST-free if: (a) it is a supply under an agreement entered into with a non-resident, and (b) the supply is provided to another entity in Australia. Item 3 A supply of something, other than goods or real property, is GST-free under item 3 in the table in subsection 38-190(1) of the GST Act (item 3) if it is a supply: (a) that is made to recipient who is not in Australia when the thing supplied is done; and (b) the effective use or enjoyment of which takes place outside Australia; other than a supply of work physically performed on goods situated in Australia when the thing supplied is done, or a supply directly connected with real property situated in Australia. Subsection 38-190(4) of the GST Act provides that a supply is taken, for the purposes of item 3, to be a supply made to a recipient who is not in Australia if: (a) it is a supply under agreement with an Australian resident, and (b) the supply is provided to another entity outside Australia. If a supply to a non-resident is not GST-free under item 2, it will not be GST-free under item 3. In the first scenario you set out, you are supplying migration related advice, which are not goods or real property. Goods and Services Tax Ruling GSTR 2004/7 provides the Australian Taxation Office view on the meaning of 'not in Australia' for the purposes of item 2 and item 3. Paragraph 31 of GSTR 2004/7 states: 31. The requirement that the non-resident in item 2, or the recipient in item 3, is not in Australia when the thing supplied is done is a requirement, in our view, that the non-resident or recipient is not in Australia in relation to the supply when the thing supplied is done. Paragraph 37 of GSTR 2004/7 explains when a non-resident company is in Australia. It states: 37. A non-resident company is in Australia if that company carries on business (or in the case of a company that does not carry on business, carries on its activities) in Australia: (a) at or through a fixed and definite place of its own for a sufficiently substantial period of time; or (b) through an agent at a fixed and definite place for a sufficiently substantial period of time. Paragraph 41 of GSTR 2004/7 explains when a non-resident company is in Australia in relation to a supply. It states: 41. A non-resident company is in Australia in relation to the supply if the supply is solely or partly for the purposes of the Australian presence, for example, its Australian branch. If the supply is not for the purposes of the Australian presence but that Australian presence is involved in the supply, the company is in Australia in relation to the supply, except where the only involvement is minor. You supply the advice to a non-resident company that does not have a presence in Australia. Therefore, this entity is not in Australia in relation to your supply when the thing supplied is done. 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. Paragraphs 59 to 62 of Goods and Services Tax Ruling GSTR 2005/6 provide guidance on the meaning of 'supply is provided to another entity'. They state: 59. The word 'provided' is used in subsection 38-190(3) to contrast with the term 'made' in item 2. In the context of section 38-190, the contrasting words indicate that if a non-resident contracts for a supply to be provided to another entity, the place of consumption should be determined with regard to the entity to which the supply is provided, not the entity to which the supply is made. 60. The example in the Explanatory Memorandum accompanying the Bill that introduced subsection 38-190(3) illustrates this. In that example, non-resident parents contract for the supply of education services to be provided to their children in Australia. The contractual flow of the services is to the parents, while the actual flow of the services is to the children. The supply is made to the parents (non-residents) and provided to another entity, each child, in Australia. 61. Thus the expression 'provided to another entity' means, in our view, that in the performance of a service (or in the doing of some thing), the actual flow of that supply is, in whole or part, to an entity that is not the non-resident entity with which the supplier made the agreement for the supply. The contractual flow is to one entity (the non-resident recipient) and the actual flow of the supply is to another entity. 62. For example, if a supply of entertainment services is made to a non-resident company and in the performance of that service the employees are the entities that are entertained, the actual flow of that service is to another entity, each employee (see above where the meaning of 'another entity' is discussed). The supply is made to the non-resident company (the employer) and provided to another entity (each employee). You supply the advice under an agreement you have with a non-resident company. However, you do not provide the advice to 'another entity in Australia'. You provide the advice to the non-resident company. Hence, you make a GST-free supply under item 2. Therefore, you do not make a taxable supply. Hence, GST is not payable. | Summary: The supply of the services under scenario 2 is not GST-free under section 38-190 of the GST Act if the subsidiary is a branch of the overseas company, as the recipient of the supply would be in Australia in relation to the supply when the supply is made under such circumstances. The supply of the services is GST-free under section 38-190 of the GST Act under scenario 2 if the subsidiary is not a branch of the overseas company, as the recipient of the supply would not be in Australia in relation to the supply when the supply is made under such circumstances. | Detailed Reasoning - Detailed reasoning: If the overseas company carries on its own business in Australia through the subsidiary If the overseas company carries on its own business in Australia through the subsidiary (so that the subsidiary is a branch of the overseas company) and the advice relates to procedures and corresponding visa applications required to enable the overseas employees to fill positions in the Australian subsidiary, the supply is for the purposes of the recipient's Australian presence. Therefore, the recipient would be in Australia in relation to the supply when the supply is made under such circumstances. Hence, under such circumstances, your supply of the advice is not GST-free under item 2. There are no provisions of the GST Act under which your supply is GST-free under such circumstances. Therefore, as you meet all of the requirements of section 9-5, you make a taxable supply. Hence, GST is payable under such circumstances. If the overseas company does not carry on its own business in Australia through the subsidiary If the overseas company does not carry on its own business in Australia through the subsidiary and the advice relates to procedures and corresponding visa applications required to enable the overseas employees to fill positions in the Australian subsidiary, the supply is not for the purposes of an Australian presence of the overseas company in Australia and there is no such presence that is involved with the supply. Therefore, the recipient would not be in Australia in relation to the supply when the supply is made under such circumstances. 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. You make the supply under an agreement with a non-resident company. However, you do not provide the supply to 'another entity in Australia'. Hence, you make a GST-free supply under item 2 if the overseas company does not carry on its own business in Australia through the subsidiary. Therefore, you do not make a taxable supply under such circumstances. Hence, GST is not payable under such circumstances. Paragraphs 245 to 326 of GSTR 2004/7 provide guidance on determining whether an overseas company carries on its own business in Australia through an agent. Type in GSTR 2004/7 into an internet search engine. Paragraphs 319 and 320 of GSTR 2004/7 discuss the situation where a non-resident company has a subsidiary in Australia. They state: 319. If a non-resident company has a subsidiary in Australia, the mere presence of that subsidiary does not mean that the non-resident company is carrying on a business in Australia. The fact that the non-resident company owns or controls a majority shareholding in a subsidiary does not make that company present in Australia. 320. However, if the subsidiary is acting as agent of the non-resident parent company and carrying on the business of the non-resident company in Australia at some fixed place of business for a sufficiently substantial period of time, the non-resident company is 'in Australia'. Ask the customer whether they carry on their own business in Australia through the subsidiary or whether the subsidiary only carries on its own separate business in Australia. | Detailed Reasoning - Question 3: You are making a supply of advice, which is not goods or real property. Paragraph 35 of GSTR 2004/7 explains when a non-resident individual is in Australia in relation to a supply. It states: 35. A non-resident individual is in Australia if that individual is physically in Australia. If a non-resident individual is physically in Australia and in contact (other than contact which is only of a minor nature) with the supplier, that presence is in relation to the supply. Paragraph 218 of GSTR 2004/7 explains 'minor contact'. It states: 218. Contact is minor if it is limited to contact of a simple administrative nature, such as checking on the progress of the supply or a courtesy call on the supplier. If this is the only contact between the non-resident individual and the supplier we consider that the individual is not in Australia in relation to the supply. You supply the advice to a non-resident individual who is physically overseas at the time you make the supply. Therefore, the recipient is not in Australia in relation to the supply when the supply is made. 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. You make the supply under an agreement you have with a non-resident. However, you do not provide the advice to 'another entity in Australia'. Hence, you make a GST-free supply under item 2. Therefore, you do not make a taxable supply. Hence, GST is not payable. | Detailed Reasoning - Question 4: You are making a supply of advice, which is not goods or real property. You supply the advice to a non-resident individual who is physically in Australia at the time you make the supply. The non-resident individual is in contact with you when you supply the advice and this contact is of more than a minor nature. The individual has a consultation with you face to face; over the phone or via Skype in regards to whether they might be successful in obtaining permission to live or work in Australia and how to apply for such permission. The consultation is lengthy, for example, it can last half an hour. The individual needs to provide information to you about themselves, for example, what qualifications they have, in order for you to advise them. The contact the non-resident individual has with you is not limited to contact of a simple administrative nature, such as checking on the progress of the supply or a courtesy call on the supplier. Therefore, the recipient is in Australia in relation to the supply when the supply is made. Hence, you do not make a GST-free supply under item 2. There are no provisions of the GST Act under which these supplies are GST-free. Therefore, as you meet all of the requirements of section 9-5, you make a taxable supply. Hence, GST is payable. | Detailed Reasoning - Question 5: You are supplying advice, which is not goods, or real property. You are making a supply to a resident company. The supply is for the purposes of their Australian presence because the advice relates to an overseas employee who may be required to transfer to Australia. Therefore, the recipient is in Australia in relation to the supply when the supply is made. You do not provide the advice to 'another entity outside Australia'. Hence, you do not make a GST-free supply under item 3. There are no provisions of the GST Act under which these supplies are GST-free. Therefore, as you meet all of the requirements of section 9-5, you make a taxable supply. Hence, GST is payable.