Private ruling: Goods and services tax (GST) and collecting monies for something services
Published: February 2013

Ruling: Q1: Is GST payable by you on the monies you collect for something services? | A1: No.

Relevant facts and circumstances: You are a certain entity. Your director has developed a mobile phone application to assist with a certain activity. When a consumer places a call, connecting with the service providers, they are automatically charged at a rate per minute for the services. Service providers pay a fee to an entity that is related to you in return for utilising the mobile phone application. You collect the service provider fees on behalf of the service providers. You hold these monies in trust for the service providers for a certain amount of time then you distribute them to the service providers that provided the services. The service providers and consumers may be in Australia or overseas.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1) | A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 paragraph 9-25(5)(a) | A New Tax System (Goods and Services Tax) Act 1999 paragraph 9-25(5)(b) | A New Tax System (Goods and Services Tax) Act 1999 section 9-40 | A New Tax System (Goods and Services Tax) Act 1999 section 38-190

Reasons for decision: Summary: GST is not payable by you on the monies you collect for something services as these monies are not consideration for a supply made by you. | Detailed Reasoning - Detailed reasoning: GST is payable by you on your taxable supplies. You make a taxable supply where you satisfy the requirements of 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: § you make the supply for *consideration; and § the supply is made in the course or furtherance of an *enterprise that § you *carry on; and § the supply is *connected with Australia; and § you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. (*Denotes a term defined in section 195-1 of the GST Act) The monies you collect from consumers for the something services are not consideration for a supply that you make. These monies are consideration for supplies made by the service providers to the consumers. You merely collect these monies on behalf of the service providers that are entitled to these monies and distribute these monies to the service providers. You are merely acting as a payment conduit. Hence, you do not satisfy the requirement of paragraph 9-5(a) of the GST Act. As you do not satisfy all of the requirements of section 9-5 of the GST Act, you do not make a taxable supply in return for the monies in question. Hence, GST is not payable by you on the monies in question. | Detailed Reasoning - Additional information: Each service provider would need to determine whether it has a GST liability on the monies in question. A supply of a service is connected with Australia if the service is performed in Australia or the supply is made through an enterprise the supplier carries on in Australia. A supply of a service that is consumed overseas may be GST-free under section 38-190 of the GST Act. The location of the consumer needs to be considered to determine whether consumption takes place overseas. Goods and Services Tax Ruling GSTR 2004/7 provides guidance on section 38-190 of the GST Act.

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