Private ruling: GST-free services
Date of advice: 23 April 2026
Published: 13 July 2026
Ruling period: 01 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Does the supply of digital operational and payment-related services provided by Company A (you) under a service and settlement agreement constitute an enterprise for the purpose of section 9-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes. You are carrying on an enterprise as defined by section 9-20 of the GST Act. | Q2: Is GST payable under section 9-5 of the GST Act on the supply of digital operational and payment-related services made by you to a non-resident entity that is located outside Australia? | A2: No. GST is not payable on the supplies as they are GST-free under table item 2 of subsection 38-190(1) of the GST Act. | Q3: If the supply of digital operational and payment-related services made by you is GST-free as per table item 2 of subsection 38-190(1) of GST Act and the recipient has previously been charged GST, how is this corrected? | A3: If you have incorrectly charged GST to the recipient of a supply, you may make a decreasing adjustment in the Business Activity Statement (BAS) for the period in which you have reimbursed the excess GST to the recipient.

Relevant facts and circumstances: Company A (You) operates multiple business activities under their Australian Business Number (ABN) and is registered for goods and services tax (GST). You are currently carrying on a business. On 1 July 20YY you commenced a new enterprise of providing digital operational and payment-related services to non-resident entities. You have entered into a Service and Settlement Agreement with Company B, a non-resident entity located outside Australia to provide the digital operational and payment-related services. Under the agreement you provide the following services to Company B: • Payment and settlement processing services • Compliance and regulatory support services • Administrative reconciliation services • Operational reporting services • System and operational support services • Merchant management and onboarding support • Risk monitoring and transaction review services • Customer Status Confirmation You act as the sole authorised payment recipient for the supplies made by Company B. Your role is limited to providing a payment gateway interface for receiving payments from non-resident customers in relation to transactions carried out outside Australia. You do not sell any goods, engage in marketing or customer service activities, hold or manage inventory or participate in any component of the supply chain within Australia. You are currently charging GST on the services provided to Company B. Company B does not have an office, staff, or other entity presence 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 section 9-20 | A New Tax System (Goods and Services Tax) Act 1999 section 38-190 | A New Tax System (Goods and Services Tax) Act 1999 Division 93 | A New Tax System (Goods and Services Tax) Act 1999 Division 142 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision: Detailed Reasoning - Issue 1: Enterprise | Detailed Reasoning - Question 1: Does the supply of digital operational and payment-related services provided by Company A (You) under a service and settlement agreement constitute an enterprise for the purpose of section 9-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | Summary: The supply of digital operational and payment-related services to a non-resident entity is considered as activities or series of activities done in the form of a business or an adventure or concern in the nature of trade. These activities are organised, continuous and conducted in a commercial manner. On this basis the supply of these services is made in the course and furtherance of an enterprise that you carry on for the purpose of section 9-20 of the GST Act. | Detailed Reasoning - Detailed reasoning: The term 'enterprise' is defined in section 9-20 of the GST Act. Subsection 9-20(1) of the GST Act states: An enterprise is an activity, or series of activities, done: (a) in the form of a business; or (b) in the form of an adventure or concern in the nature of trade; or ... Miscellaneous Taxation Ruling MT 2006/1 The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian business number (MT 2006/1) contains the Commissioner's view on what constitutes an enterprise for the purpose of eligibility for an Australian Business Number. Paragraph 234 of MT 2006/1 distinguishes between activities done in the form of a business and those done in the form of an adventure or concern in the nature of trade. • A business encompasses trade engaged in on a regular or continuous basis. • An adventure or concern in the nature of trade includes an isolated or one-off transaction that does not amount to a business, but which has the characteristics of a business deal. | Detailed Reasoning - In the form of a business: Paragraphs 170 to 179 of MT 2006/1 discuss factors to consider when determining whether an activity or series of activities are done in the form of a business. Paragraph 178 of MT 2006/1, with reference to Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production ? lists indicators of carrying on a business: • a significant commercial activity • a purpose and intention of the taxpayer to engage in commercial activity • an intention to make a profit from the activity • the activity is or will be profitable • the recurrent or regular nature of the activity • the activity is carried on in a similar manner to that of other businesses in the same or similar trade • activity is systematic, organised and carried on in a businesslike manner and records are kept • the activities are of a reasonable size and scale • a business plan exists • commercial sales of product and • the entity has relevant knowledge or skill. Paragraph 179 of MT 2006/1 states that there is no single test to determine whether a business is being carried on. Whilst each case might turn on its own particular facts, the determination of the question is generally the result of a process of weighing all the relevant indicators. The activities carried out by you as part of the supply of digital operational and payment-related services are considered as activities done in the form of business. Therefore, the supply of digital operational and payment-related services is made in the course or furtherance of an enterprise that you carry on. | Detailed Reasoning - Additional information: An Australian Business Number (ABN) is issued to an entity and not issued to a specific activity of an enterprise. An ABN entitlement is assessed at the entity level and an entity may carry on many enterprises or activities. Paragraph 155 of MT 2006/1 states: An entity is ordinarily only entitled to one ABN even though the activities or series of activities it conducts may amount to several separate enterprises. It is the entity and not the enterprise that is entitled to an ABN. The entitlement to an ABN is determined by reference to whether the entity is carrying on an enterprise, not whether each individual activity constitutes a separate enterprise. Further 'Enterprise' covers a range of activities and may include more than one business or commercial activity carried on by the same entity. | Detailed Reasoning - Issue 2: Supplies of things, other than goods or real property, for consumption outside the indirect tax zone (Australia) | Detailed Reasoning - Question 2: Is GST payable under section 9-5 of the GST Act on the supply of digital operational and payment-related services made by you to a non-resident entity that is located outside Australia? | Summary: GST is not payable on the supply of digital operational and payment-related services by you as the supply would satisfy the requirements of table item 2 of subsection 38-190(1) of the GST Act. | Detailed Reasoning - Detailed reasoning: GST is payable on a taxable supply. A supply is taxable under section 9-5 of the GST Act 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 Australia; and (a) 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. Based on the information provided, your supply of services to the recipient satisfies paragraphs (a) to (d) of section 9-5 of the GST Act. That is: • your supply of services is made for consideration; • the supply of your services is made in the course or furtherance of your enterprise that you carry on in Australia; • the supply of your services is connected with Australia, and • you are registered for GST. There is no provision in the GST Act where your supply of services is input taxed. It remains to be determined whether the supply is GST-free. | Detailed Reasoning - GST-free supply: Under section 38-190 of the GST Act, certain supplies of things other than goods or real property, for consumption outside Australia, are GST-free. If the requirements of one of the items in subsection 38-190(1) of the GST Act are met, the supply is GST-free, provided subsection 38-190(3) of the GST Act does not negate that GST-free status. Relevant to your supply of services to the non-resident entity located outside of Australia is table item 2 of subsection 38-190(1) of the GST Act (item 2). Item 2 provides that a supply made to a non-resident is GST-free if it is a supply that is made to a non-resident who is not in Australia when the thing supplied is done, and: (a) the supply is neither a supply of work physically performed on goods situated in Australia when the work is done, nor a supply directly connected with real property situated in Australia; or (b) the non-resident acquires the thing in carrying on the non-residents enterprise but is not registered or required to be registered for GST. Under item 2, either (a) or (b) should be satisfied. The requirement that the non-resident in item 2 is not in Australia when the thing supplied is done is a requirement that the non-resident or recipient is not in Australia in relation to the supply when the thing supplied is done. In your circumstances, the supply is made to a non-resident entity that does not have an Australian presence and therefore this requirement is met. Your supply of digital operational and payment-related services provided to the non-resident is neither a supply of work physically performed on goods located in Australia nor the supply connected with real property situated in Australia. Hence, your supply will satisfy the requirements of table item 2(a) of subsection 38-190(1) of the GST Act. Limitation of item 2 However, a supply covered by item 2 will not be GST-free if the provisions of subsection 38-190(3) of the GST Act are met. Subsection 38-190(3) of the GST Act provides that the supply will not be GST-free if: (a) it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and (b) the supply is provided, or the agreement requires it to be provided, to another entity in Australia; and (c) for a supply other than an input taxed, none of the following applies: (i) the other entity would be an Australian-based business recipient of the supply, (ii) the other entity is an individual who is provided with the supply as an employee or officer of an entity that would be an Australian-based business recipient of the supply. (iii) the other entity is an individual who is provided with the supply as an employee or officer of the recipient, and the recipient's acquisition of the thing is solely for a creditable purpose and is not a non-deductible expense. The supply of digital operational and payment-related services by you to the non-resident is made under an agreement entered into directly with a non-resident entity. Therefore, paragraph (a) of subsection 38-190(3) of the GST Act is satisfied. However, the supply of digital operational and payment-related services is not provided to another entity in Australia as per the agreement. As your supply of digital operational and payment-related services is not provided by you to another entity in Australia, it is not excluded from being GST-free under item 2 of the table in subsection 38-190(3) of the GST Act. | Detailed Reasoning - Issue 3: Correcting GST errors | Detailed Reasoning - Question 3: If the supply of digital operational and payment-related services made by you Company A are GST-free as per table item 2 of subsection 38-190(1) of GST Act and the recipient has previously been charged GST, how is this corrected? | Summary: If you have incorrectly charged GST to the recipient of a supply, you may make a decreasing adjustment in the Business Activity Statement (BAS) for the period in which you have reimbursed the excess GST to the recipient. In accordance with Division 142 of the GST Act if a GST-free supply is incorrectly treated by the supplier as subject to GST and the supplier charges their customer GST and reports GST on the supply in their BAS, the GST remains payable unless and until the supplier refunds the GST to their customer. Additionally, under Division 93 of the GST Act, any entitlement to a refund of excess GST ceases to be payable unless it is taken into account in an assessment within 4 years. | Detailed Reasoning - Detailed reasoning: The object of Division 142 of the GST Act is to ensure that excess GST is not refunded if this would give an entity a windfall gain. Generally, the Division 142 of the GST Act operates so that the supplier is not entitled to a refund of an amount of excess GST where the supplier has passed on to another entity (the recipient) and has not reimbursed the recipient for the passed-on GST. Under subsection 142-5(1) of the GST Act 'excess GST' is an amount of GST that has been taken into account in an entity's assessed net amount and is in excess of what was payable by the entity in the relevant tax period prior to taking into account or applying the provisions of Division 142 of the GST Act. In relation to refunding the excess GST, section 142-10 of the GST Act provides that the excess GST that has been passed on to a recipient is taken to have always been payable unless and until the recipient has been reimbursed for the passed-on excess GST. This means that an amount of excess GST will only be refundable if: • it has not been passed on to the recipient, or • it has been passed on to the recipient and the recipient has been reimbursed. The Commissioner's view on the meaning of the terms 'passed on' and 'reimburse' for determining whether section 142-10 applies to an amount of excess GST is explained in Goods and Services Tax Ruling GSTR 2015/1: the meaning of the terms 'passed on' and 'reimburse' for the purposes of Division 142 of the A New Tax System (Goods and Services Tax) Act 1999 (GSTR 2015/1)'. Paragraph 17 states: | Detailed Reasoning - Excess GST passed on: 17. If the excess GST has been passed on to the recipient, section 142-10 applies to treat the excess GST as always having been payable, and payable on a taxable supply, until the excess GST has been reimbursed to the recipient. Once section 142-10 ceases to apply, the supplier can claim a refund of the excess GST. Paragraph 110 of GSTR 2015/1 further states: 110. For example, where the supplier mischaracterises a supply by incorrectly treating an input taxed or GST-free supply as a taxable supply, the costs of the GST will generally be embedded in the price of the supply, and be passed on to the recipient. In this case, where you have incorrectly treated the supply of services to the recipient as a taxable supply and have not refunded the relevant amount of GST that should not have been charged, it is considered that excess GST has been passed-on to the recipient. Consequently, consistent with the view in paragraph 17 of GSTR 2015/1, section 142-10 of the GST Act applies and you are not entitled to the refund of the excess GST and the excess GST is treated as always having been payable on the supply. However, where you refund the recipient the excess GST, you will be entitled to a refund of excess GST as it is no longer considered to have passed-on to the recipient. You can then claim a refund for the amount of excess GST by making a decreasing adjustment in the BAS for the period in which you have reimbursed the excess GST to the recipient. Additionally, a further limitation to refunding the excess GST is in force under Division 93 of the GST Act. Any entitlement to a refund of excess GST ceases to be payable unless it is taken into account in an assessment within 4 years.

Does IVA apply to this private ruling?: Part IVA of the Income Tax Assessment Act 1936 contains anti-avoidance rules that can apply in certain circumstances where you or another taxpayer obtains a tax benefit, imputation benefit or diverted profits tax benefit in connection with an arrangement. | If Part IVA applies, the tax benefit or imputation benefit can be cancelled (for example, by disallowing a deduction that was otherwise allowable) or you or another taxpayer could be liable to the diverted profits tax. | We have not fully considered the application of Part IVA to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part. | If you want us to rule on whether Part IVA applies, we will need to obtain and consider all the facts about the arrangement which are relevant to determining whether Part IVA may apply. | For more information on Part IVA, go to our website ato.gov.au/gaar. | Reasons for decision: These reasons for decision accompany the Notice of private ruling for Company A. | This is to explain how we reached our decision. This is not part of the private ruling.