Private ruling: GST and supply of services to a non-resident
Date of advice: 1 October 2016
Published: October 2016

Ruling: Q1: Is the supply of marketing and advertising services by the Australian company to the non-resident company GST-free under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? Advice Yes, the supply of marketing and advertising services by the Australian company to the non-resident company is a GST-free supply under paragraph (a) of 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 38-190

Reasons for decision: Detailed Reasoning - Detailed reasoning: Note : Where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in subsection 195-1 of the GST Act. GST is payable on a taxable supply. Under section 9-5 of the GST Act, an entity makes a taxable supply if: a) the supply is made for consideration; and b) the supply is made in the course or furtherance of an enterprise that the entity carries on; and c) the supply is connected with Australia; and d) the entity is registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. Your supply of marketing and advertising services to the non-resident company satisfies paragraphs 9-5(a) to 9-5(d) of the GST Act as: a) you make the supply for consideration; and b) the supply is made in the course of an enterprise that you carry on in Australia; and c) the supply is connected with Australia as the supply is made through an enterprise that you carry on in Australia; and d) you are registered for GST. However your supply of marketing and advertising services is not a taxable supply to the extent that it is a GST-free or input taxed supply. There is no provision under the GST Act that makes your supply of marketing and advertising services an input taxed supply. GST-free supply Relevant to your supply of marketing and advertising services to the non-resident company is item 2 in the table in subsection 38-190(1) of the 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. From the information received, the requirements in paragraph (a) of item 2 are satisfied when you supply the marketing and advertising services to the non-resident company as: • the non-resident company and is not in Australia in relation to the supply; and • 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 The supply is GST-free to the extent that it is not negated by subsections 38-190(2), 38190(2 A) and 38-190(3) of the GST Act. Limits to item 2 Based on the information received, subsections 38-190(2) and 38-190(2A) of the GST Act are not applicable. 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. Based on the information received, subsection 38-190(3) of the GST Act is not applicable as you are not required to provide the marketing and advertising services to another entity in Australia. | Summary: The supply of marketing and advertising services by you to the non-resident company is a GST-free supply under paragraph (a) of item 2.

Relevant facts: You are an Australian company and registered for the goods and services tax (GST). | You recently entered into a new Agency Agreement with a non-resident company that is incorporated outside Australia and a non-resident provider of online programs. You are referred to as 'Agent' and the non-resident company as 'Principal' in the Agency Agreement. | The executed Agency Agreement provides the following: | • the Principal and the Agent wish to enter into an Agency relationship whereby relationship wherein the Agent will promote, advertise and market the Principal's on line programs. | • You will act as Agent for the Principal when concluding membership applications. Any payments received by the Agent in respect of these transactions belong to Principal and are held on Trust for Principal. | • It is agreed that all program content and delivery is provided by the Principal. Furthermore, the Principal is delivering the service to the successful membership applicants and is the party deemed to be liable and responsible for any disputes. | • Agent is authorized to conclude membership applications with individuals on behalf of Principal. | You advertise and deliver the internet based programs developed by the non-resident company from your website.