Private ruling: GST and the supply of services to a non-resident entity
Published: June 2012

Ruling: Q1: Is the supply of services by an Australian company (you) to a non-resident entity (NRe), to review applicants for its committee, subject to GST? | A1: No. The supply of services to review the applications by you to the NRe is GST-free.


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 under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which states: You make a taxable supply if: (a) you make the supply for *consideration (b) the supply is made in the course or furtherance of an *enterprise that you *carry on (c) the supply is *connected with Australia, and (d) you are *registered, or *required to be registered, for GST. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. (* denotes a defined term in section 195-1 of the GST Act) The facts indicate that the supply of your services to the NRe satisfies the requirements under paragraphs 9-5(a), 9-5(b), 9-5(c) and 9-5(d) of the GST Act because the supply is made for consideration; the supply is made in the course or furtherance of your business; the supply is connected with Australia because it is made through an enterprise (business) that you carry on in Australia and/or done (performed/provided) in Australia; and you are registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. From the facts provided, the supply of your services is not input taxed. We need to determine whether the supply satisfies the GST-free provisions. GST-free Section 38-190 of the GST Act specifies the circumstances where the supply of things other than goods or real property for consumption outside Australia is GST-free. Of relevance to the facts provided is item 2 in the table in subsection 38-190(1) of the GST Act (Item 2). Goods and Services Tax Ruling GSTR 2000/31, Goods and Services Tax Ruling GSTR 2003/7, Goods and Services Tax Ruling GSTR 2004/7, and Goods and Services Tax Ruling GSTR 2005/6 address this matter. Under Item 2, a supply is GST-free where it is: (a) a supply that is made to a * non-resident who is not in Australia when the thing supplied is done, and: (b) 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 (c) the * non-resident acquires the thing in * carrying on the non-resident's * enterprise, but is not * registered or * required to be registered. (* denotes a defined term in section 195-1 of the GST Act) The scope of Item 2 may be limited by subsection 38-190(3) of the GST Act (discussed below). It is noted that the limitations by subsections 38-190(2A) and subsection 38-190(2) of the GST Act are not applicable as the acquisition of your services is not related (directly or indirectly) to the making of input taxed supplies of real property situated in Australia that would be wholly or partly input taxed; and you are not supplying a right or option, respectively. Subsection 38-190(3) of the GST Act states: Without limiting subsection (2), a supply covered by item 2 in that table is not 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. On the basis of the facts provided, the supply of your services to NRe will satisfy the precondition and paragraph (a) of Item 2 because: · you supply the services to NRe, who is a non-resident entity that is not in Australia (and has no representative in Australia) in relation to your services; and · the supply of these services is neither a supply of work physically performed on goods situated in Australia, nor a supply directly connected with real property situated in Australia. We note that if you determine that NRe acquires your services in carrying on its enterprise, and is neither registered nor required to be registered for GST in Australia, the requirements of paragraph (b) of Item 2 would also be satisfied. Furthermore, based on the facts provided, the supply of your services will not be excluded from being GST-free under subsection 38-190(3) of the GST Act because the supply is not provided to another entity in Australia. We do not consider that the nature of the supply of your services is such that they are supplied to the interviewees. Accordingly, the supply of services to review the applications by you to the NRe is GST-free under Item 2.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: An Australian company (you) is registered for goods and services tax (GST). | You may enter into a contract with a non-resident entity (NRe) to review applicants for its committee. | NRe will advertise worldwide so applications will be received from all over the world. | As the applications may be in several languages, you will be sub-contracting consultants who are bilingual and trilingual to assist in ranking the applications in hard copy and interviewing the highest ranked candidates. Most of the consultants will be located in Australia. The interviews will be by teleconference with all interviewers, except one, located in Australia. The interviewees will be located in their home countries. | Payment will be in foreign dollars from NRe. | Additional information received | NRe does not have offices in Australia. There are no references to an Australian representative in any of its documentations. You will be contracted by, and deal directly with, the NRe's head office located overseas. | The committee reports to the governing body of the NRe. The committee meets overseas. | The NRe will send us electronic versions of the candidates' applications. The applications will include Curricula Vitae (CVs) from the candidates. These are the candidates' property in the sense that each CV belongs to the candidate and can not be transferred or sold to anyone else. You will print and review the applications. The second stage will involve interviewing the candidates. | There is no reference in the documents which requires the services to be provided to any entity in Australia.