Private ruling: GST and prepaid SIM cards
Published: October 2014

Ruling: Q1: Is the supply of the card by X to customers GST-free under item 4 of subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No. The supply of the card to customers is a non-taxable supply of vouchers under section 100-5 of the GST Act.

Relevant facts and circumstances: The card is designed for making and obtaining supplies whilst overseas. Customers can purchase the card locally. A and X have entered into a distribution agreement in relation to the sale of the card to Australian customers. X has not been appointed as agent in relation to the sale and has been accounting for GST on the basis that it is not an agent. While X is not a provider of supplies, it has acquired the rights to supply access to supplies to its customers. You request that if the Commissioner forms the contrary view, that is, that X is acting as agent in relation to the sale, that the Commissioner confirm that X does not have a liability in relation to the sale of the card. A customer who purchases a card will be able to use the card outside of Australia. Under the terms and conditions relating to the customer's purchased of the cards from X you note that X has acquired the rights for customers to access certain supplies provided or procured by A.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 100-5 | A New Tax System (Goods and Services Tax) Act 1999 section 100-25 | A New Tax System (Goods and Services Tax) Act 1999 section 38-190

Reasons for decision: Summary: Summary The supply of the card by X to customers is a non-taxable supply of vouchers under section 100-5 of the GST Act Detailed reasoning For similar supplies to this, for GST purposes it is often submitted that the supply made is one of rights. Broadly, the Commissioner is of the view that the supply made is one of a services (or goods and services) rather than the rights to those things. X's customers will not purchase the cards for the rights, but rather with a view to actually use the things that are provided. However the Commissioner's view is predicated on what is the prevalent supply currently; the facts presented in this case differ, it is considered that the cards meet the requirements of section 100-25 of the GST Act: Section 100-5 of the GST Act confers non-taxable status to supplies of vouchers by the issuer and by intermediaries.