Private ruling: GST - supply of digital content to recipients through a non-resident platform operator
Date of advice: 6 July 2023
Published: 28 August 2023
Ruling period: Not applicable
Date scheme commenced: Not applicable.

Ruling: Q1: Is the supply of digital content by you as an Australian content creator to the recipients (subscribers and fans) through a non-resident platform operator, GST-free under subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, only the supply of digital content to subscribers and fans outside Australia will be GST-free under subsection 38-190(1) of the GST Act. The supply of digital content to the subscribers and fans in Australia will be taxable and subject to GST as the supply will satisfy all of the requirements of a taxable supply under section 9-5 of the GST Act.

Relevant facts and circumstances: You are an Australian resident carrying on an enterprise of creating and providing digital content to subscribers/fans and registered for goods and services tax (GST). You create the content in the form of videos and photographs of yourself. You also engaged in online chatting with subscribers/fans. All content is created in Australia and supplied through a non-resident electronic distribution platform operator. (Platform) You interact with the platform directly to sell your content and subscribers/ fans from all over the world including Australia purchase your content via the platform. The subscribers/fans pay the platform for their purchase of your content and the platform collects the payments on behalf of the content creators. The platform transfers the payments collected, to the content creators after deducting their fees of XX% for the use of their platform by the content creators and storing the content. The platform does not collect the GST on behalf of the Australian content creators, and they do not charge GST on the fees charged by them to the content creators. The platform does collect the details of the purchasers based on their geolocation. The platform provided information in relation to your earnings, tips received, and the fees charged by them on a monthly basis. Terms of use for content creators You did not enter into a specific agreement with the platform operator. However, the standard terms of use for content creators says that the terms of use for creators forms part of the agreement with the platform. The terms of use for content creators provides the following: • The Standard Contract between Fan and Creator - which does not form part of your agreement with us, but which governs and sets out the terms applicable to each Fan/Creator Transaction you enter into on the platform. • We charge a fee to you of XX% of all Fan Payments made to you. The remaining YY% of the Fan Payment is payable to you. Our Fee includes the costs of providing, maintaining and operating the platform and storing your Content. • All Fan/Creator Transactions are contracts between Fans and Creators on the terms of the Standard Contract between Fan and Creator. Although we facilitate Fan/Creator Transactions by providing the platform and storing Content, we are not a party to the Standard Contract between Fan and Creator or any other contract which may exist between a Fan and Creator, and are not responsible for any Fan/Creator Transaction. • When you receive confirmation from the platform, either in the 'Statements' page of your User account or by email (or both), that the Fan/Creator Transaction has been confirmed, you must perform your part of such Fan/Creator Transaction (for example, by allowing the Fan to view the Content on your Creator account and/or providing the customised Content paid for by the Fan and/or allowing the Fan to use the fan interaction function paid for (as applicable)). You agree that you will indemnify us for any breach by you of this obligation (which means you will be responsible for any loss or damage (including loss of profit) we suffer as a result of you failing to comply with this obligation). • Your Content is not confidential, and you authorize your Fans to access and view your Content on the platform for their own lawful and personal use, and in accordance with any licenses that you grant to your Fans. • You hold all rights necessary to license and deal in your Content on the platform, including in each territory where you have Fans. • You either own your Content (and all intellectual property rights in it) or have a valid license to offer and supply your Content to your Fans. • By using the platform as a Creator, you warrant (which means you make a legally enforceable promise) that you have reported and will report in the future the receipt of all payments made to you in connection with your use of the platform to the relevant Tax authority in your jurisdiction, as required by law. • For the avoidance of doubt, you are responsible for your own Tax affairs and we and our subsidiary companies (i) are not responsible for advising you on your Tax affairs and will not be liable in respect of any general information provided on the platform in respect of Tax, and (ii) will not be liable for any non-payment of Tax by Creators.

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 9-25(5) | A New Tax System (Goods and Services Tax) Act 1999 section 11-5 | A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(1) & (3)

Reasons for decision: Summary: Goods and Services Tax (GST) is payable on a taxable supply. Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act), 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; and d) you are registered or required to be registered for GST. However, a supply is not a taxable supply to the extent that it is GST-free or input taxed. You are carrying on an enterprise of supplying digital content to subscribers/fans through an online platform. You receive consideration for your supply from the subscribers/fans through the platform and you are registered for GST. One of the requirements of a taxable supply is that the supply should be connected with the indirect tax zone (Australia). Subsection 9-25(5) of the GST Act provides that a supply of anything other than goods or real property is connected with Australia if: a) the thing is done in Australia; or b) the supplier makes the supply through an enterprise that the supplier carries on in Australia; or c) all of the following apply: i. neither paragraph (a) nor (b) applies in respect of the thing; ii. the thing is a right or option to acquire another thing; iii. the supply of the other thing would be connected with Australia; or d) the recipient of the supply is an Australian consumer. To satisfy whether your supply of content will be connected with Australia, you need to meet one of the listed elements in subsection 9-25(5) of the GST Act. Since you make the supply through your enterprise carried on in Australia, your supply will satisfy paragraph 9-25(5)(b) of the GST Act. | Detailed Reasoning - Supply of content to subscribers/fans and not to the platform: You supply content to subscribers/fans based both in Australia and outside Australia. According to the terms of use for content creators, every transaction you enter into with subscribers/fans is a contract between you and the subscribers/fans on the terms of the Standard Contract between you and the subscribers/fans. You do not enter into a contract with the platform and the platform facilitates the transaction between you and the subscribers/fans by providing the platform and storing your content. The Standard Contract you enter with the subscribers/fans does not form part of your agreement with the platform but governs and sets out the terms applicable to each transaction with subscribers/fans you enter into on the platform. The content you supply is not confidential, and you authorise your subscribers/fans to access and view your content on the platform for their own lawful and personal use and in accordance with any licenses you grant to your subscribers/fans. You either own your content (and all intellectual property rights in it) or have a valid license to offer and supply your content to your subscribers/fans. Based on the terms of the use for content creators, it is our view that you do not make your supply of content to the platform, rather you make the supply directly to your subscribers/fans using the platform on the terms of the Standard Contract as explained above. The supplies made to subscribers/fans in Australia will satisfy all of the requirements of section 9-5 of the GST Act as the supplies are connected with Australia and therefore those supplies will be subject to GST. The supply of content will not be an input taxed supply under the GST provisions. However, the supply of content made to subscribers/fans outside Australia may satisfy the GST-free provisions. | Detailed Reasoning - GST-free supply of content: Subsection 38-190(1) of the GST Act provides that the supplies of things other than goods or real property for consumption outside of Australia will be GST-free. Item 2 in the table in subsection 38-190(1) of the GST Act provides that a supply that is made to a non-resident who is not in Australia when the thing supplied is done is GST- free where: 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-resident's c) enterprise but is not registered or required to be registered. Your supply of content provided to non-resident subscribers/fans is neither supply of work physically performed on goods located in Australia nor the supply connected with real property situated in Australia. Hence, your supply of content will satisfy the requirements of item 2(a) in the table in subsection 38-190(1) of the GST Act. | Detailed Reasoning - GST and your total earnings: The platform has provided the details of your total earnings based on the geolocation of the subscribers/fans. They have also provided you with a breakdown of earnings received from Australian subscribers/fans. Your total earnings comprise the income from the following: 1) Chat messages 2) Subscription 3) Tips 4) Earnings from any other supplies such as postings. The taxable supplies you make to your subscribers/fans in Australia include the amount deducted by the platform for their fees. As part of the service provided to you, the platform is collecting the consideration from your subscribers/fans in Australia and crediting the amount to your nominated account after deducting their fees. Regardless of the deduction of their fees, you are liable to report GST on the total earnings from Australian subscribers/fans and not the net earnings credited to your account. You are required to work out your total earnings from Australian subscribers/fans for your supply of content from the date you are registered or required to be registered for GST. | Detailed Reasoning - GST and Tips earned: Tips received by you in relation to your supply of content are treated as consideration for a supply for GST purposes. It does not matter whether the tips are paid voluntarily. Goods and Services Tax Ruling GSTR 2006/9; supplies (GSTR 2006/9) provides, amongst other things, the definition of consideration. Paragraph 107 of states: 107. The definition of consideration in section 195-1 states: consideration, for a supply or acquisition, means any consideration within the meaning given by sections 9-15 and 9-17, in connection with the supply or acquisition. Hence, consideration for a supply is defined as being any consideration in connection with a supply. Consideration in section 9-15 relevantly means: (1) Consideration includes: (a) any payment, or any act or forbearance, in connection with a supply of anything; and (b) any payment, or any act or forbearance, in response to or for the inducement of a supply of anything. (2) It does not matter whether the payment, act or forbearance was voluntary... The Commissioner takes the view that the words 'in connection with the supply or acquisition' in section 195-1, and the phrases 'in connection with a supply of anything' and 'it does not matter whether the payment, act or forbearance was voluntary' in section 9-15 mean that there does not have to be an enforceable relationship for there to be a sufficient nexus between the supply and a payment. Nor does the consideration have to be agreed in advance. Example 2 of GSTR 2006/9 explains further about the tips paid by recipients of the supply voluntarily. It states: 109. A restaurant run by a sole trader accepts tips from its customers, including tips on bills paid by credit card. These tips are unsolicited and are in addition to the price stipulated by the restaurant in the bills presented to the customers. The sole trader does not pass these tips on to the restaurant's employees. 110. The tips are voluntary payments made in connection with the restaurant supplies made by the sole trader to its customers. Although there is no obligation on the customers to make these payments, the tips form part of the consideration for the restaurant supplies by the sole trader to its customers. 111. On the other hand, if the sole trader passes the tips on to the restaurant's employees, the payments are not for the restaurant supplies by the sole trader. The tips constitute income of the restaurant employees and such payments are not subject to GST as the employees are not carrying on an enterprise for GST purposes. If the bill is paid by credit card and the amount of a tip is marked on the payment slip the restaurateur would need to demonstrate that the tip is passed on to the employee. In this case, you are carrying on an enterprise and registered for GST and the tips you receive from your subscribers/fans via the platform will form part of the consideration for your supply of content. Therefore, you are liable to pay GST on the tips received from your subscribers/fans via the platform. | Detailed Reasoning - GST and fees paid to the platform: You are entitled to claim GST credit for your creditable acquisitions. Section 11-5 of the GST Act states; You make a creditable acquisition if: (a) you acquire anything solely or partly for a creditable purpose; and (b) the supply of the thing to you is a taxable supply; and (c) you provide, or are liable to provide, consideration for the supply; and (d) you are registered, or required to be registered. The fees charged by the platform for using their platform and storing your content will be a sperate transaction between you and the platform. The platform has confirmed that the fees charged by them do not include GST. This means that the supply of service provided by the platform to you is not a taxable supply. Therefore, you are not entitled to claim GST on the fees paid to the platform. | Detailed Reasoning - Conclusion:: 1) You are required to report GST on the total earnings (from Australian subscribers/fans) and not the net earnings credited to your nominated account. 2) Your total earnings would include Tips received via the platform from your Australian subscribers/fans. 3) You are not entitled to claim GST credit on the fees charged by the platform.