Private ruling: GST and a supply of data lead generation services to an Australian entity
Date of advice: 1 December 2017
Published: April 2018

Ruling: Q1: Is a supply of data lead generation services by a non-resident entity (you) to an Australian entity subject to goods and services tax (GST)? | A1: The supply of data lead generation services by you to the Australian entity is not connected with Australia and therefore is not subject to GST.

Relevant facts and circumstances: You are a non-resident entity who based overseas. You do not have Tax File Number (TFN) or an Australian Business Number (ABN) and you are not registered for GST in Australia. You have a Contract with the Australian entity to supply data lead generation services. The Australian entity will receive the data sets via agreed transmission method. The leads are provided to the Australian entity in real-time via an Application Programming Interface ( API). All of your servers are located outside Australia, where your team is based. You do not have a permanent establishment in Australia. You do not have office or any permanent employee in Australia. You have no representatives in Australia in relation to your supply of data lead generation services to the Australian entity.

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 9-25 | A New Tax System (Goods and Services Tax) Act 1999 Section 23-5

Reasons for decision: Detailed Reasoning - Detailed reasoning: Note : Where the term ‘Australia’ is used in this document, it is referring to the ‘indirect tax zone’ as defined in section 195-1 of the GST Act. | Detailed Reasoning - Taxable supply: GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the GST Act if: a) the supplier makes the supply for consideration; and b) the supply is made in the course of an enterprise that it carries on; and c) the supply is connected with the indirect tax zone (Australia); and d) the supplier is registered or required to be register for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. Based on the facts given, your supply of data lead generation services satisfies paragraphs 9-5(a) and 9-5(b) of the GST Act as: ● you receive payments from for your supply; and ● the supply is made in the course of your enterprise (business). The next steps is to consider whether your supply of data generation services is connected with Australia under paragraph 9-5(c) of the GST Act and whether you are required to register for GST under paragraph 9-5(d) of the GST Act. | Detailed Reasoning - Connected with Australia: The connection with Australia is one of the elements required to be satisfied before a supply is a taxable supply. For the purposes of determining whether the supply is connected with Australia, section 9-25 of the GST Act makes a distinction between a supply of goods, a supply of real property, and a supply of anything other than goods or real property. Thus, before addressing the issue of connected with Australia, it is necessary to determine the characteristics of the supply. | Detailed Reasoning - 1 January 2017 to 30 June 2017: Subsection 9-25(5) of the GST Act provides that a supply of anything other than goods or real property is connected with Australia if: (a) the thing is done in Australia; or (b) the supplier makes the supply through an enterprise that the supplier carries on in Australia; or (c) all 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 Australia. The supply of data lead generation services to the Australian entity needs to satisfy only one of the paragraphs in subsection 9-25(5) of the GST Act for the supply to be connected with Australia. Paragraph 9-25(5)(a) of the GST Act Under paragraph 9-25(5)(a) of the GST Act, the connection with Australia requires that the 'thing' being supplied is 'done' in Australia. The meaning of 'done' depends on the nature of the 'thing' being supplied. 'Done' can mean, for example, performed, executed, completed or finished depending on what is supplied. If your supply of data lead generation services is considered to be ‘done’ in Australia, we need to consider whether section 9-26 of the GST Act applies. Section 9-26 of the GST Act From 1 October 2016 some supplies by non-residents are not connected with Australia where the requirements in section 9-26 of the GST Act are satisfied. In this instance, the supply made by the non-resident supplier is outside the scope of GST. The reverse charge provisions under Division 84 of the GST Act may apply to the recipient of the supply. Under item 1 in the table in subsection 9-26(1) of the GST Act a supply of anything other than goods or real property is not connected with Australia if: ● the supplier is a non-resident; and ● the supplier does not make the supply through an enterprise that that supplier carried on in Australia; and ● the supply of the thing is done in Australia; and ● the supply is made to an Australian-based business recipient. Subsection 9-26(2) of the GST Act defines ‘Australian-based business recipient’ as follows: (2) An entity is an Australian-based business recipient of a supply made to the entity if: a) The entity is registered; and b) An enterprise of the entity is carried on in the indirect tax zone; and c) The entity’s acquisition of the thing supplied is not solely of a private or domestic nature. Based on the information provided, you supply your data lead generation services to The Australian entity. The Australian entity is registered for GST. Furthermore, the Australian entity carries its business in Australia and the Australian entity acquires your data lead generation services for its business carried in Australia. Therefore your supply of data lead generation services will satisfy the requirements in section 9-26 of the GST Act and not connected with Australia under paragraph 9-25(5)(a) of the GST Act. Paragraph 9-25(5)(b) of the GST Act If a supply of a thing is not connected with Australia because the thing is not done in Australia, the supply is connected with Australia if, under paragraph 9-25(5)(b) of the GST Act, the supplier makes the supply through an enterprise that the supplier carries on in Australia. From the facts given, you are the supplier of the data lead generation services to the Australian entity. You make supplies through internet from overseas. You are an entity that is based overseas and do not conduct your business in Australia nor carry on business through a representative in Australia. Therefore, based on these facts, it is considered that you are not making the supply of data lead generation services through an enterprise that you carry on in Australia under paragraph 9-25(5)(b) of the GST Act. Paragraph 9-25(5)(c) of the GST Act The supply is also not connected with Australia under paragraph 9-25(5)(c) of the GST Act. This is because these are no supplies of rights or options to acquire other things where the supply of the other things would be connected with Australia. Accordingly, you have not met the requirement in paragraph 9-5(c) of the GST Act and the supply of data lead generation services by you to the Australian entity will not be connected with Australia up to the tax period 30 June 2017. Accordingly, your supply of data lead generation services to the Australian entity is not a taxable supply and will not be subject to GST as all the requirements in section 9-5 of the GST Act are not satisfied. | Detailed Reasoning - From 1 July 2017: From 1 July 2017 a new paragraph 9-25(5)(d) will apply to subsection 9-25(5) of the GST Act. Under paragraph (d) in subsection 9-25(5) of the GST Act, a supply of anything other than goods or real property is connected with Australia if the recipient of the supply is an Australian consumer . Under subsection 9-25(7) of the GST Act, an entity is an 'Australian consumer' of a supply made to the entity if: (a) The entity is an Australian resident for income tax purposes (excluding residents of external Territories), and (b) the entity: i. is not registered for GST, or ii. if the entity is registered for GST, the entity did not acquire the thing solely or partly for their enterprise. Based on the information provided, you supply your data lead generation services to the Australian entity. The Australian entity is an Australian entity that is registered for GST. Furthermore, the Australian entity carries its business in Australia and the Australian entity acquires your data lead generation services for its business carried in Australia. Therefore your supply of data lead generation services does not satisfy paragraph 9-25(5)(d) of the GST Act and not connected with Australia under paragraph 9-25(5)(d) of the GST Act from 1 July 2017. Even if your supply of data lead generation services is considered to be ‘done’ in Australia, the supply will not be connected with Australia under 9-26 of the GST Act. Please refer to the discussion in the reasons for decision for the period 1 January 2017 to 30 June 2017. Summary Since none of the paragraphs in subsection 9-25(5) of the GST Act is satisfied, your supply of data lead generation services to the Australian entity is not connected with Australia and your supply of data lead generation services does not satisfy paragraphs 9-5(c) of the GST Act. Accordingly, your supply of data lead generation services to the Australian entity is not a taxable supply and is not subject to GST as all the requirements in section 9-5 of the GST Act are not satisfied.