Private ruling: GST and international services
Published: June 2015

Ruling: Q1: Is the supply that you make to ABC Co under the Service Agreement GST-free under item 2 in the table in subsection 38 190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) (item 2)? | A1: Yes. The supply of your services to ABC Co in the circumstances described is GST-free under item 2. This is because: • the supply of your services is made to a non-resident who is not in Australia when your services are done • the supply of your 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 in accordance with paragraph (a) of item 2, and • the supply does not involve a supply of a right or option to acquire another thing; does not relate to making input taxed supplies of real property; and there is no agreement with ABC Co to provide your services to another entity in Australia. Hence, the supply of your services is not excluded from being GST-free under item 2.

Relevant facts and circumstances: You carry on a business of providing outsourced marketing and promotional services to manufacturers in a particular industry. You are registered for GST. ABC Co is a foreign company and is not a resident of Australia for tax purposes. It is your understanding that ABC Co is not currently registered for GST. ABC Co carries on a business of manufacturing a particular product in Country X and is attempting to develop its business in the Australian market. You and ABC Co entered into the Service Agreement. Under the Service Agreement you are required to provide services relating to marketing and promoting the ABC brand in Australia, Country Y and Country Z. You do not acquire goods from ABC Co in any capacity and would only be promoting the brand. Under the Service Agreement: • You do not have a general power to conclude contracts so as to bind ABC Co without obtaining specific authority from ABC Co in advance. • You make all services under the Service Agreement to ABC Co and not to any other entity in Australia. • While you are required to take instructions from ABC Co under the Service Agreement you exercise the day-to-day control over how to discharge your services. • You are remunerated by way of fixed regular payments with further incentive styled commissions on meeting specified criteria. • You, including your sole director X, are able to provide services to other producers subject to giving notice and obtaining ABC Co's approval, although such approval cannot be unreasonably withheld. This approval does not apply in respect of clients outside of that particular industry. Your engagement with ABC Co requires you and your employees to work approximately X days a week. You perform the services under the Service Agreement in Australia. You do not receive any direct financial support from ABC Co regarding the carrying on of your business (other than the remuneration provided for under the Service Agreement for services required to be provided and reimbursements relating to travel and accommodation incurred in discharging the services). ABC Co has not provided any loans to you nor does it hold an equity interest in you. ABC Co does not lease or otherwise own premises in Australia and is not registered with Australian Securities and Investments Commission (ASIC) or any other business registration authority. X provides services (in the capacity as director) to another company unrelated to ABC Co. X's appointment has been recognised and approved by ABC Co under the Service Agreement.

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 Subsection 38-190(1). | A New Tax System (Goods and Services Tax) Act 1999 s ubsection 38-190(2). | A New Tax System (Goods and Services Tax) Act 1999 s ubsection 38-190(2A). | A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-190(3). | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1. | Income Tax Assessment Act 1936 Section 6-1.