Private ruling: GST and supply of referral services
Date of advice: 1 June 2018
Published: August 2018

Ruling: Q1: Will the supply of referral services made by the Australian entity(you) to the overseas company be a GST-free supply under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, the supply of referral services made by you to the overseas company will be a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act (item 2). Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident is GST-free if it is a supply that is made to a non-resident that 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 for GST. Only one of the paragraphs in item 2 needs to be satisfied. From the fact given, your supply of referral services satisfy paragraph (a) of item 2 as: ● your supply of referral services will be made to an overseas company, a non-resident that will not be in Australia in relation to your supply when the supply is done; and ● your supply of referral services 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 Your supply of referral services is GST-free under paragraph (a) of item 2 to the extent that it is not negated by subsection 38-190(3) of the GST Act. From the facts given, subsection 38-190(3) of the GST Act does not apply to your supply of referral services as you are not required to provide your supply to another entity in Australia. Your supply of referral services is therefore GST-free under item 2.

Relevant facts and circumstances: You carry on your business activity in Australia and are registered for the goods and services tax (GST). You are in the process of finalising your agreement with an overseas manufacturing company. The arrangement you will have with the overseas company is to refer potential customers to the overseas company. The customer will purchase the product directly from the overseas company and will be the importer of the product in Australia. For consideration for your referral services you will receive a commission from the overseas company. The overseas company is not registered for GST and does not carry on any business activity in Australia.

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