Private ruling: GST and supply of services to a non-resident
Date of advice: 5 January 2018
Published: May 2018

Ruling: Q1: Are you required to be registered for the goods and services tax (GST) under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, you are required to be registered for GST under section 23-5 of the GST Act | Q2: If the answer to question 1 is yes, is your supply of services to the overseas company a GST-free supply under the GST Act? | A2: Yes, your supply of services to the overseas company is a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act.


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 23-5 | A New Tax System (Goods and Services Tax) Act 1999 section 38-190

Reasons for decision: Summary: Under section 23-5 of the GST Act you are required to be registered for GST if: a) you are carrying on an enterprise; and b) your GST turnover meets the registration turnover threshold. You reach the GST registration turnover threshold if your: ● 'current GST turnover' (turnover for the current month and the previous 11 months) totals $$$ or more ($150,000 or more for non-profit organisations), or ● 'projected GST turnover' (total turnover for the current month and the next 11 months) is likely to be $$$ or more ($150,000 or more for non-profit organisations). Your GST turnover is your gross business income (not your profit) and incudes supplies that are connected with Australia and GST-free supplies. Under the Agreement, your projected GST turnover will be more than $$$. In this instance you are required to be registered for GST. You can register online or call us to register for GST as your expected turnover is more than the GST registration threshold. You have to register within 21 days of reaching the GST turnover threshold. You can register for GST: ● online via the business portal ● by phone on 132866 ● through your registered tax agent or BAS agent. GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the GST Act if: a. the supplier makes the supply for consideration; and b. the supply is made in the course or furtherance of an enterprise that the supplier carries on; and c. the supply is connected with Australia; and d. the supplier 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 of the above must be satisfied for your supply of services to be a taxable supply. From the information given, your supply of services satisfies paragraphs (a) to (d) of section 9-5 of the GST Act as: a) you make your supply for consideration (expected income and expenses the overseas company has agreed to reimburse to you); and b) the supply is made in the course of a business that you carry on; and c) your supply is connected with Australia as it is made through a business that you carry on in Australia; and d) you are required to be registered for GST. However, your supply of services is not a taxable supply to the extent that it is GST-free or input taxed. There is no provision under the GST Act that makes your supply of services input taxed. GST-free supply Relevant to your supply of services is item 2 in the table in subsection 38-190(1) of GST Act (item 2). Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident is GST-free if it is a supply that is made to a non-resident that 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-resident's enterprise, but is not registered or required to be registered for GST. Only one of the paragraphs in item 2 needs to be satisfied. Paragraph (a) of item 2 From the fact given, your supply of services satisfy paragraph (a) of item 2 as: ● your supply of services is made to a non-resident company that is not in Australia in relation to your supply at the time your supply is done; and ● your supply of services 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 Your supply of services is GST-free under paragraph (a) of item 2 to the extent that it is not negated by subsection 38-190(3) of the GST Act. As paragraph (a) is satisfied there is no need to consider paragraph (b) of item 2. Subsection 38-190(3) of the GST Act Subsection 38-190(3) of the GST Act provides that without limiting subsection 38-190(2) or (2A), a supply covered by item 2 in that table is not 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 supply – none of the following applies: i. the other entity would be an Australian-based business recipient of the supply, if the supply had been made to it; 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, if the supply had been made to it; or 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. From the facts given, subsection 38-190(3) of the GST Act does not apply to your supply of services are you are not required to provide your supply to another entity in Australia. Your supply of services is therefore GST-free under paragraph (a) of item 2.

Relevant facts: You have entered into a written Agreement with a company located outside Australia where you agreed to deliver services to the overseas company. | You currently are not registered for GST. | There will be no third party in Australia that will be involved with your supply to the overseas company and you are not required to provide your supply to anyone in Australia. The overseas company does not carry on any business activity in Australia and will not have any representative in Australia that will be involved with your supply. | According to the Agreement, your expected annual income for the twelve months starting from the date you start your work will be above $$$. | The overseas company has agreed to reimburse you for actual costs of travel, lodging and meals that are incurred while providing the services. All major expenses such as flights and hotels will be approved by the overseas company in advance of incurring hat expense. | The services are 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. | Reasons for decision: Note : Where the term ‘Australia’ is used in this document, it is referring to the ‘indirect tax zone’ as defined in section 195-1 of the GST Act.