Private ruling: Agency relationship
Published: June 2012
Ruling period: Not applicable
Date scheme commenced: Not applicable

Ruling: Q1: For the purposes of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), are you acting as an agent, where you facilitate the provision of information supplied by different government agencies? If the answer to Question 1 is 'No', are you acting as an agent where you amend your terms and conditions of the agreements you have with your customers to include an express statement confirming that you are appointed as your customers' agent for the purposes of acquiring such information from the relevant government agency on behalf of your customers? If you are acting as agent of your customers in acquiring such information from the relevant government agency (either as an implied agent or by amending your terms and conditions) are you liable to account for GST on amounts paid to you by your customers as a reimbursement of fees charged by government agencies for the information? | A1: No, where the information supplied by government agencies to you are, in turn, supplied by you to your customers, you are not acting as an agent of your clients. It does not matter whether your customers access such information directly via the facilities of your computer system you make available to your customers. You still are not acting as an agent of your customers. No, where you amend your terms and conditions in your agreements with your customers to include an express statement confirming that you are appointed as an agent of your customers for the purpose of acquiring information from the relevant government agencies, you are still not acting as an agent of your customers. As you are not acting as an agent of your customers for the purpose of acquiring information from the relevant government agencies, and where the payments you make to those government agencies form part of the consideration for a taxable supply you make to your clients, you have an obligation to account for GST on the total consideration received from your customers.

Relevant facts and circumstances: You are carrying on an enterprise and are registered for the goods and services tax (GST). You have entered into agreements with government agencies to access information maintained by them. Such information is referred to, hereinafter, as Information Products (IP). An agreement you have entered with a government agency (Agency) is attached to this ruling request as a sample agreement (Agreement). This Agreement forms an integral part on which this ruling decision is based. The Agreement states in its recitals that the Agency's objective is to implement measures to enhance the delivery of IP to customers through a network of information brokers. The Agreement identifies you as an "information broker" and defines "customers" as the customers of the information broker (that is, your customers). You have been selected as an information broker by the Agency and the Agency has agreed to provide you with access to IPs so that you can supply such IPs to your customers as per the Agreement. Access to IP in the Agency's possession is through your computer system, which is identified as an Information Broker's System (computer system). The Agreement provides your customers to perform searches in relation to IPs using your computer system. Your computer system is used for ordering and receipt or transmission of IP between the Agency and you and between you and your customers. According to the Agreement you are solely liable for the payment of all fees due to the Agency for IPs obtained from the Agency through your computer system and it makes no reference to your customers in any contractual capacity. The customers referred to in the Agreement are your customers and not those of the Agency. And, the supplies you make to your customers are not supplies made by the Agency to your customers. The Agreement imposes conditions about the usage of the IPs obtained which are applicable to whosoever accesses the IPs in the possession of the Agency. Contractually, and in accordance with the Agreement, it is your responsibility to ensure the integrity of any access made to the Agency's data base and the Agency has no contract with your customers to enforce such integrity other than through other legal means. You have entered into agreements with your customers whereby you provide access via your computer system for your customers to access IPs. You invoice your customers independently and base the amounts you invoice on your costs which include the amounts you have to pay the Agency.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 - Division 153.

Reasons for decision: Summary: Whether or not you act as an agent of your "customers" when you acquire IPs from the Agency is a question of fact. Therefore, the facts you have presented to us need to be considered to determine whether you have an agency relationship with your customers. Where a supplier makes a taxable supply, section 9-70 of the GST Act states that the amount of GST payable on the taxable supply is 10% of the value of the taxable supply. However, it is recognised that in the course of providing services to a client as a principal, the service provider may incur expenses on a client's behalf on a particular matter where they are acting as an agent, or 'standing in the shoes' of the client. In these circumstances, no GST is payable upon the subsequent reimbursement by the client (principal) to the service provider (agent) as the supply to which the disbursement relates is supplied by the supplier (a Third Party) to the principal and not the agent. In order to establish whether you act as an agent of your customers when acquiring IPs from the Agency, it is necessary to examine the principles of agency relationships. Goods and Services Tax Ruling GSTR 2000/37 (GSTR 2000/37) is about agency relationships and the application of the law. The term 'agent' is not defined in the GST Act and therefore it takes its ordinary meaning. The Macquarie Dictionary provides several definitions of 'agent'. The relevant definition in the context of this ruling is one where it states that an agent is a person acting on behalf of another. The terms 'agent' and 'principal', in relation to the GST Act are explained in paragraph 10 of GSTR 2000/37 as follows. 10. An intermediary may be authorised by another party to do something on that party's behalf. Generally, the intermediary is called an agent. The party who authorises the agent to act on their behalf is called the principal. …. Paragraph 11 of the GSTR 2000/37 explains the legal relationship between an agent, the principal and third parties. 11. For commercial law purposes, an agent is a person who is authorised, either expressly or impliedly, by a principal to act for that principal so as to create or affect legal relations between the principal and third parties. You have an Agreement with the Agency to access the information maintained in their respective agencies (that is, IPT). The definition of a 'customer' is provided under the definitions in the Agreement you have with the Agency as your customer and includes your customer's employees, servants and agents. Thus, customers are clearly and unambiguously referred to in the agreement as your customers and are not the customers of the Agency. Further, the Agreement is between you and the Agency and not in any way between the Agency and your customers. You access IP through your computer system which is linked to that of the Agency. Under the Agreement you can allow your customers to access IPs using your computer system. Irrespective of whether you or your customers access the IPs, you are legally liable to provide consideration to the Agency for IPs so obtained. The Agreement, under the heading 'Payment of fees', explicitly states that the Agency will invoice you and that you are liable for fees specified in such invoices. The next clause of the Agreement holds you responsible for any breaches of the previous clause and provides the Agency with remedies for such breaches. Further, the Agency has no agreement or contract with your customers. In essence, therefore, you are making a separate supply to your customers for which these customers are liable to provide consideration to you. Further, the broader nature of the Agreement between you and the Agency indicates that the licence to access information maintained by the Agency is expressly given to you and not to your customers. Any further permission you have given, or give, to your customers to access information held by the Agency through your computer system is governed by separate agreements you have with your customers subject to various restrictions placed by the Agency. When considering the Agreement you have with the Agency and those you have entered into with your customers in the context of supplies you make to your customers, it is clear that you obtain information from the Agency as a principal and, as a recipient of supplies. The Agreement also makes it clear that the purpose of appointing you to access IPs is for you to obtain IPs as a reseller of such IP to your customers. The fact that you allow your customers to access the IPs direct via your computer system does not alter this arrangement. In this regard, you are not 'standing in the shoes' of your customers to effect an agency relationship between you as an agent, your customers as principals, and the Agency as a third party. Consequently, you are not acting as an agent for your customers when you facilitate the provision of IPs to your customers. Whatever terms and conditions you may agree to between yourself and your customers that may state that you act as an agent of your customers, do not alter the fact that you are still bound by the Agreement you have with the Agency. The Agency is the supplier and you are the recipient according to the Agreement you have with the Agency. Your customers are not considered as "principals" in the Agreement. Therefore, as long as you are bound by the current Agreement you have with the Agency, you cannot be considered, either expressly or impliedly, as an agent of your customers. You are not acting as an agent of your customers and therefore whatever that is paid by your customers to you is consideration of supplies you made to them.

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.