Private ruling: GST and supply provided to a non-resident under agreement between residents
Date of advice: 1 December 2016
Published: May 2017

Ruling: Q1: Is the supply of information from Entity D (you) under an agreement with a resident entity, where the information is provided to an entity outside Australia, a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, it is GST-free.

Relevant facts and circumstances: You the Institution are registered for GST. You have agreed to provide information of data collected for Entity A, a non-resident. Entity A has a wholly owned subsidiary in Australia that is an Australian company (Entity B) and registered for GST. Entity B is the Sponsor under the agreement and also signed the agreement with you and you are to provide the information to Entity A via the web. Entity B has subcontracted with another Australian company (Entity C) to carry out the management of the work. The payment to you is to be made by a related entity of Entity C based outside of Australia. Entity C is registered for GST 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 subsection 38-190(1), and | A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(4).

Reasons for decision: Summary: You make a taxable supply where you satisfy section 9-5 of the GST Act. The section provides you make a taxable supply if: (a) you make the supply for consideration; and (b) the supply is made in the course or furtherance of an enterprise that you carry on; and (c) the supply is connected with the indirect tax zone (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. You will make a taxable supply when you make a supply of the information and you receive consideration, the supply is made in the course of the enterprise you carry on, the supply is connected with Australia as it is done in Australia, and you are registered for GST. However, the supply is not taxable to the extent it is GST-free or input taxed. There are no provisions that would result in the supply being input taxed however consideration needs to be given to the GST-free provisions under section 38-190 of the GST Act that provides for supplies of things other than goods or real property for consumption outside of Australia. In particular, item 3 in the table in subsection 38-190(1) of the GST Act (Item 3) that provides for supplies used and enjoyed outside Australia as follows. A supply: (a) that is made to a recipient who is not in Australia when the thing supplied is does; and (b) the effective use or enjoyment of which takes place outside the Australia other than a supply of work physically performed on goods situated in Australia when the thing supplied is done, or a supply directly connected with real property situated in the Australia. However, as you have entered into an agreement with an Australian resident, Entity B, subsection 38-190(4) of the GST Act is relevant. This subsection provides that a supply is taken, for the purposes of item 3 in that table, to be a supply made to a recipient who is not in Australia if: (a) it is a supply under an agreement entered into, whether directly or indirectly, with an Australian resident; and (b) the supply is provided, or the agreement requires it to be provided, to another entity outside Australia. Therefore, as you have entered into an agreement with Entity B, an Australian resident, to provide your supply of information to Entity A, who is outside of Australia, your supply will be GST-free under Item 3 due to the operation of subsection 38-190(4) of the GST Act.