Private ruling: GST registration
Date of advice: 7 November 2016
Published: February 2017

Ruling: Q1: Is the non-resident entity required to be registered for GST? | A1: Yes. The non-resident entity is required to be registered for GST if its turnover meets the registration turnover threshold.

Relevant facts and circumstances: The non-resident entity sells tour packages to various destinations around the world. The non-resident's equipment used for making reservations is located overseas. Orders/bookings are taken by the non-resident entity through the web. If an individual wants to book a trip other than through the web, they will have to phone the non-resident entity and someone overseas will do it for them. The non-resident entity also sells the tour packages to travel agents who make bookings with the non-resident entity through the web. The non-resident entity has an employee based in Australia who visits travel agents to promote the various tour packages available for sale. The employee works from their home and communicates with the non-resident entity electronically through the non-resident entity's equipment. Travel agents are free to establish their own contractual and pricing arrangements with travellers and must account to the non-resident entity for an amount equivalent to the recommended retail price less the agreed commission.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 23-5 | A New Tax System (Goods and Services Tax) Act 1999 section 9-25 | A New Tax System (Goods and Services Tax) Act 1999 section 9-27

Reasons for decision: Summary: A non-resident entity is required to be registered for GST if the turnover from its supplies that are connected with the indirect tax zone meets the registration turnover threshold of $75,000 ($150,000 for non-profit bodies). According to subsection 9-25(5) of the GST Act, a supply of anything other than goods or real property is connected with the indirect tax zone if: (a) the thing is done in the indirect tax zone; or (b) the supplier makes the supply through an enterprise that the supplier carries on in the indirect tax zone; or (c) all of the following apply: (i) neither paragraph (a) nor (b) applies in respect of the thing: (ii) the thing is a right or option to acquire another thing; (iii) the supply of the other thing would be connected with the indirect tax zone; or (d) the recipient of the supply is an Australian consumer. For the purpose of paragraph 9-25(5)(b) of the GST Act, section 9-27 states:. (1) An *enterprise of an entity is carried on in the indirect tax zone if: (a) the enterprise is *carried on by one or more individuals covered by subsection (3) who are in the indirect tax zone; and (b) any of the following applies: (i) the enterprise is carried on through a fixed place in the indirect tax zone; (ii) the enterprise has been carried on through one or more places in the indirect tax zone for more than 183 days in a 12 month period; (iii) the entity intends to carry on the enterprise through one or more places in the indirect tax zone for more than 183 days in a 12 month period. (2) It does not matter whether: (a) the entity has exclusive use of a place; or (b) the entity owns, leases or has any other claim or interest in relation to a place. (3) This subsection covers the following individuals: (a) if the entity is an individual - that individual; (b) an employee or *officer of the entity; (c) an individual who is, or is employed by, an agent of the entity that: (i) has, and habitually exercises, authority to conclude contracts on behalf of the entity; and (ii) is not a broker, general commission agent or other agent of independent status that is acting in the ordinary course of the agent's business as such an agent. The non-resident entity has an employee who is based in Australia and is working from their home. As such, the enterprise of the non-resident entity is carried on in the indirect tax zone by an individual who is in the indirect tax zone. The individual carries on the non-resident's enterprise through a fixed place in the indirect tax zone. Accordingly, the supplies made by the non-resident entity are connected with the indirect tax zone under paragraph 9-25(5)(b) of the GST Act. The non-resident entity must calculate the total value of its supplies, including GST-free supplies, to determine whether its turnover meets the GST registration turnover threshold. If its turnover is $75,000 or more, the non-resident entity is required to be registered for GST