Private ruling: GST and supply of brokerage services provided to non-resident jointly with another broker from Australia.
Date of advice: 26 August 2025
Published: 27 October 2025

Ruling: Q2: Are you required to issue a tax invoice including goods and services tax (GST) to broker 1 for the commission received from the non-resident vessel seller or builder for the brokerage services provided by you jointly with broker 1? Answer: 2 No.

Relevant facts and circumstances: • You provide international vessel brokerage services to non-resident sellers and/or builders of vessel. • You, as broker 2, provide the brokerage services jointly with another broker (broker 1) from Australia to the non-resident sellers and/or builders of vessels. • When you have multiple brokers involved in a transaction, one party (generally broker 1) receives the total commission for the services provided by all the brokers. • The brokers will have written or verbal agreement on commission split such as 60/40 ratio. • At completion of sale, the seller/builder transfers the commission funds to broker 1 (also called the stakeholder), then broker 1 will distribute the commission split with broker 2 or any other brokers involved. • You provide the following brokerage services directly to the non-resident seller/builder: - Facilitating communication between the builder and potential buyers. - Providing technical advice on vessel specifications and customizations. - Participating in negotiations to finalise contract terms. - Provide support during the building process, including multiple trips to the overseas yard over the building period and regular meetings with the buyer. - Supporting the completion process, including ensuring buyer satisfaction and post-sale arrangements. • As part of the transaction, the following contracts are entered into: a. A contract between buyer and seller b. A contract between seller and broker 1 indicating commission payable, and the responsibility of broker 1 to distribute commission with other brokers. c. A contract between brokers agreeing on the commission split. • When you find a purchaser who is interested in buying a vessel, you contact offshore vessel companies. The vessel companies or their agents will provide you with the details of broker 1. • Generally, you will enter into an agreement with broker 1 in writing for the commission split. • You also advised that the agreement between you and broker 1 does not stipulate that you are a subcontractor or an employee of broker 1. • Both buyer and seller/builder are non-resident entities, and the product involved which is a vessel was never imported into Australia. • You have confirmed that you do not make any supplies to broker 1.

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 - subsection 38-190(1) and (3)

Reasons for decision: Summary: Goods and Services Tax (GST) is payable on any taxable supply you make. Section 9-5 of the A New Tax System (goods and Services Tax) Act 1999 (GST Act) provides that 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. The supply of brokerage services provided by you would satisfy the requirements of section 9-5 of the GST Act. You make the supply for consideration as you receive a share of commission from the non-resident seller/builder, you make the supply in the course of your enterprise you carry on, the supply is connected with Australia as the supply is made through your enterprise carried on in Australia, and you are registered for GST. The supply of brokerage services will not be considered as an input taxed under any GST Act. However, it should be determined whether the supply of brokerage services made to a non-resident seller/builder will satisfy any of the GST-free provisions of the GST Act. GST-free supplies Section 38-190 of the GST Act lists supplies of things other than goods or real property for consumption outside Australia that are GST-free. The brokerage services you supply are neither good nor real property and therefore comes within the scope of subsection 38-190(1) of the GST Act. In particular, table item 2 of subsection 38-190(1) of the GST Act (item 2) is relevant to the circumstances of the case. Under item 2, a supply is GST-free where it is: a supply that is made to a non-resident who is not in Australia when the thing supplied is done; and 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. The requirement that the non-resident in item 2 is not in Australia when the thing supplied is done is a requirement that the non-resident or recipient is not in Australia in relation to the supply when the thing supplied is done. In your circumstances, the supply is made to the offshore entity that does not have an Australian presence and therefore this requirement is met. In your circumstances, you provide brokerage services to non-resident entities located outside Australia. You do not perform anything physically on the vessel while providing the brokerage services. Therefore, it is our view that the supply of services is not a supply of work physically performed on goods. Hence, the supply will satisfy the requirements of item 2. Limitation of item 2 However, a supply covered by item 2 will not be GST-free if the provisions of subsection 38-190(3) of the GST Act are met. Subsection 38-190(3) of the GST Act provides that the supply will not be GST-free if: (a) it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and (b) the supply is provided, or the agreement requires it to be provided, to another entity in Australia; and (c) for a supply other than an input taxed supply - none of the following applies: (i) the other entity would be an Australian-based business recipient of the supply, if the supply had been made to it; (ii) the other entity is an individual who is provided with the supply as an employee or officer of an entity that would be an Australian-based business recipient of the supply, if the supply had been made to it; or (iii) the other entity is an individual who is provided with the supply as an employee or officer of the recipient, and the recipient ' s acquisition of the thing is solely for a creditable purpose and is not a non-deductible expense. The supply of brokerage services will not satisfy the requirements of subsection 38-190(3) of the GST Act as you are not required to provide the services to another entity in Australia. Therefore, subsection 38-190(3) of the GST Act will not override the GST-free status of the supply under item 2. Transaction with broker 1 You provide the brokerage services to the non-resident seller/builder jointly with broker 1. The non-resident seller/builder will only enter into a commercial agreement with broker 1 to market and sell their products. While you do not enter into any direct agreement with the non-resident seller/builder, broker 1 has the authority to bring other brokers in to provide the brokerage services to non-resident seller/builder. Broker 1 is the only broker who will receive the commission from the non-resident seller/builder in relation to the sale of vessel . Broker 1 (or an agent) enters into a commercial agreement with seller/builder to market and sell the product jointly with a third party and will receive additional commission if an additional broker is engaged. You are not a subcontractor or an employee to broker 1 and do not make any supplies to broker 1. You will have a written or verbal agreement with broker 1 to receive your share of commission from the non-resident seller/builder. Given the fact that you have made arrangement with broker 1 only for the commission split, it is our view that you do not make any supplies to broker 1. The commission you receive from the non-resident seller/builder through broker 1 is for the supply of brokerage services provided to them jointly with broker 1. Therefore, as your supply of brokerage services is made to the seller/builder rather than to broker 1 you are not making a taxable supply to broker 1. Hence, you are not required to issue a tax invoice to broker 1.

Question 1: Is the supply of brokerage services to a non-resident vessel seller or builder a GST-free supply under section 38-190 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where the vessel was never imported into Australia? | Does Division 165 apply to this private ruling?: Division 165 of the A New Tax System (Goods and Services Tax) Act 1999 is a general 'anti-avoidance' rule that can apply in certain circumstances if you or another entity obtains a GST benefit from a scheme that you entered into or carried out for the main purpose of obtaining a GST benefit, or allowing another to obtain one. | It may also apply in some cases where the GST benefit arises as a principal effect of a particular scheme. An entity can get a 'GST benefit' under the GST, Luxury Car Tax or Wine Equalisation Tax laws. | If Division 165 applies, the benefit can be cancelled. For example, we might increase the net amount for a particular tax period. | Unless your private ruling specifically discusses Division 165, we have not considered the application of the anti-avoidance provisions to your case. | If you want us to rule on whether Division 165 applies in your circumstances, contact your contact officer to find out what details we will need to make the private ruling.