Private ruling: GST and supply of software development services to a non-resident
Date of advice: 6 December 2017
Published: April 2018

Ruling: Q1: Is GST payable on your supply of services to X where you provide (render) these services to Y? | A1: No. Your supply of these services under such circumstances is GST-free under item 2 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) (item 2), as: ● software development services are not supplies of goods or real property; and ● the customer in question is a non-resident who is ‘not in Australia’ for the purposes of item 2; and ● the supply of the software development services is not a supply of work physically performed on goods situated in Australia when the work is done nor a supply that is directly connected with real property situated in Australia; and ● although you provide (render) these services to a third party who is in Australia: ● the third party would have been an Australian-based business recipient of the services you supply if it had instead contracted you to supply the services to it, rather than X contracting you to supply these services; and ● the supply you make is not input taxed (The exclusion at subsection 38-190(3) of the GST Act does not apply); and ● the exclusions at subsections 38-190(2) and 38-190(2A) of the GST Act do not apply. An entity is an Australian-based business recipient of a supply made to it if: (a) the entity is registered for GST; and (b) the enterprise of the entity is carried on in Australia; and (c) the entity’s acquisition of the thing supplied is not solely of a private or domestic nature.

Relevant facts and circumstances: You are registered for GST in Australia. There is a contract between you and X (an overseas based company) (the client) to provide software development services to a third party, Y. Individual A, as your employee, is the specified personnel in the contract. You invoice X for the services provided by Individual A. X then invoices Y. You are not involved in any contract negotiations between X and Y. You simply supply the employee’s services to X. Y is based in Australia and individual A performs their role from their home in Australia. Y is registered for GST.

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 38-190