Private ruling: GST and supply of services to a non-resident
Date of advice: 14 September 2018
Published: November 2018

Ruling: Q1: Is the supply of services by the entity to the non-resident for which it receives commission GST-free under subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, the supply of services by the entity to the non-resident for which it receives commission is GST-free under subsection 38-190(1) of the GST Act.

Relevant facts and circumstances: The entity is registered for GST. It is a subsidiary of a non-resident entity. The entity and the non-resident are carrying on separate enterprises. The entity provides services to the non-resident for which it charges a commission. The supply of the services is a not a supply of work physically performed on goods nor a supply directly connected with real property. The entity does not make any supply on behalf of the non-resident. The non-resident does not have any employee or any other presence in Australia at the time the entity provides its services. The non-resident is not registered or required to be registered for GST.

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 38-190

Reasons for decision: Summary: GST is payable on a taxable supply. Section 9-5 of the A New Tax System (Goods and Services tax) Act 1999 (GST Act) 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 the indirect tax zone; 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 under section 195-1 of the GST Act) The entity makes the supply of services for consideration and in the course of its enterprise. The supply is connected with the indirect tax zone as the entity makes the supply through an enterprise that it carries on in the indirect tax zone. The entity is registered for GST. All the requirements in paragraphs 9-5(a) to 9-5(d) are satisfied. Therefore, the supply of services by the entity is a taxable supply unless it is GST-free or input taxed. There is no provision in the GST Act under which the supply of the services would be input taxed. What remains to be determined is whether the supply is GST-free. Under item 2 in the table in subsection 38-190(1) of the GST Act (item 2), a supply made to a non-resident who is not in the indirect tax zone 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 the indirect tax zone when the work is done nor a supply directly connected with real property situated in the indirect tax zone; or (b) the non-resident acquires the thing in carrying on its enterprise, but is not registered or required to be registered. The supply of the services is made by the entity to the non-resident who is not in the indirect tax zone when the services are performed. The supply of the services is not a supply of work physically performed on goods nor a supply directly connected with real property. The requirement in paragraph (a) of item 2 is satisfied; therefore, the supply of services by the entity is GST-free. Accordingly, the commission that the entity receives from the non-resident for its supply of services is not subject to GST.