Private ruling: GST and commission
Published: May 2013

Ruling: Q1: Are you liable to pay goods and services tax (GST) on the commission you receive from an Australian supplier? Advice Yes, you are liable to pay GST on the commission you receive from an Australian supplier as the commission is consideration for a taxable supply you have made under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).


Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 Reason for decision | GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if an entity: · makes the supply for consideration; and | · the supply is made in the course or furtherance of an enterprise that the entity carries on; and | · the supply is connected with Australia; and | · the entity is 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. | · All the requirements in section 9-5 of the GST Act need to be satisfied for the supply to be a taxable supply. | From the information received you satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act as: · the commission you receive from the Australian supplier is consideration for your supply of negotiating and setting up Agreements between the Australian supplier and overseas purchaser; and | · the supply is made in the course of an enterprise (business) that you carry on; and | · the supply is connected with Australia as it is done through a business that you carry on in Australia; and | · you are registered for GST. | However, your supply to the Australian supplier is not a taxable supply to the extent it is GST-free or input taxed. There is no provision under the GST Act that will make your supply to the Australian supplier GST-free or input taxed. | Your supply is therefore a taxable supply under section 9-5 of the GST Act and you are liable to pay GST on the commission which is consideration for your taxable supply.

Reasons for decision: Summary: GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if an entity: · makes the supply for consideration; and · the supply is made in the course or furtherance of an enterprise that the entity carries on; and · the supply is connected with Australia; and · the entity is 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. · All the requirements in section 9-5 of the GST Act need to be satisfied for the supply to be a taxable supply. From the information received you satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act as: · the commission you receive from the Australian supplier is consideration for your supply of negotiating and setting up Agreements between the Australian supplier and overseas purchaser; and · the supply is made in the course of an enterprise (business) that you carry on; and · the supply is connected with Australia as it is done through a business that you carry on in Australia; and · you are registered for GST. However, your supply to the Australian supplier is not a taxable supply to the extent it is GST-free or input taxed. There is no provision under the GST Act that will make your supply to the Australian supplier GST-free or input taxed. Your supply is therefore a taxable supply under section 9-5 of the GST Act and you are liable to pay GST on the commission which is consideration for your taxable supply.

Relevant facts: You carry on a commission agent business activity in Australia which involves negotiating Agreements in regard to goods that will be exported overseas in return for a commission payment. | You have provided us with a copy of an Agreement which you have with an Australian supplier. As per Agreement the Australian supplier pays you a commission for negotiating sales agreement with an overseas company.