Private ruling: GST and supply of SMS and email notification services
Date of advice: 13 July 2020
Published: August 2020

Ruling: Q1: Is the supply of SMS and Email notifications services you made to Company A a GST-free supply under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: You are required to register for GST under section 23-5 of the GST Act. However, its supplies of SMS and Email notifications services to Company A is a GST-free supply under item 2 in the table in subsection38-190(1) of the GST Act. | Q2: Is the supply of SMS notifications services you made to Company B a GST-free supply under the GST Act? | A2: You are required to register for GST under section 23-5 of the GST Act. However, its supplies of SMS notifications services to Company B 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: 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. | Detailed Reasoning - Questions 1 and 2: GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the GST Act if: 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 SMS and Email notification 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 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) under section 23-5 of the GST Act you are required to register for GST if you carry on an enterprise and your annual turnover reaches the GST registration threshold of A$75,000 (A$150,000 for non-profit organisation). You advised that for the last financial year your turnover was $75,000. In this instance you are required to register 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 the non-resident 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. | Detailed Reasoning - Supplies to Company A: From the facts given, your supply of SMS and Email notification services satisfy paragraph (a) of item 2 as: · your supply of services is made to Company A, a non-resident company who is not in Australia in relation to your supply when the 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. However, paragraph (a) of item 2 is limited by subsection 38-190(3) of the GST Act. Based on the information given subsection 38-190(3) of the GST Act does not apply to your supply since you are not required to provide the services to an entity in Australia. Accordingly, your supply of services to Company A is GST-free under paragraph (a) of item 2. | Detailed Reasoning - Supplies to Company B: From the facts given, your supply of SMS notification services satisfies paragraph (a) of item 2 as: · your supply of services is made to Company B, a non-resident company who is not in Australia in relation to your supply when the 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. However, paragraph (a) of item 2 is limited by subsection 38-190(3) of the GST Act. Based on the information given subsection 38-190(3) of the GST Act does not apply to your supply since you are not required to provide the services to an entity in Australia. Accordingly, your supply of services to Company B is GST-free under paragraph (a) of item 2.

Relevant facts: You are an Australian company and currently you are not registered for GST. For the last financial year your turnover was above A$75,000. | You supply SMS and Email notifications to two non-resident companies, Company A and Company B. This is one by providing a software system which the companies used to send SMS and Email notifications to end users. | SMS notifications are provided to the companies via a onetime set up using Application Programming Interface (API) connectivity to a web applications system while email services are provided through web portal interface with access using set up login ID and password. | Set ups are done remotely from your server systems and companies' backend server systems to allow the two applications to connect and communicate. API keys and command are provided to client and they will enter the keys and command to their backend system to complete the setup, thus allowing an automated process of SMS and email delivery. | Companies can remotely access both the SMS and email services via their backend server systems as long as internet access are available. SMS and email will then be remotely delivered via your system to the clients' members mobile phone as SMS or email. | You do not make any supplies to Australian companies. | There is no one in Australia that is involved when you make your supplies to the two companies. | Company A and Company B do not carry on any business activity in Australia and do not have any representatives or subsidiary company in Australia that is involved with your supplies. You are not required under the agreements to provide the supplies to anyone in Australia. | You do not assist the Company A and Company B in sending their campaigns and notifications and you do not have any form of contact with their members. | the supplier makes the supply for consideration; and | the supply is made in the course or furtherance of an enterprise that the supplier carries on; and | the supply is connected with Australia; and | the supplier is registered or required to be registered for GST.