GST obligations for resident or non-resident entities
You may have GST obligations if you are a resident or non-resident entity who is a:
- prime contractor who has entered into a contract with the US Government to supply goods or services related to the Joint Defence Facility Pine Gap (Pine Gap)
- subcontractor who has entered into a contract with a prime contractor to supply goods or services related to Pine Gap.
The goods and services you supply related to Pine Gap will generally be connected with Australia and meet the other requirements to be taxable supplies. However, in some cases they may be GST-free or not connected with Australia.
You should consider registering for GST before commencing the contract in Australia.
Supplies connected with Australia
Goods
A sale of goods related to Pine Gap is connected with Australia if the goods are any of the following:
- delivered or made available in Australia to the purchaser
- removed from Australia
- brought to Australia – provided the seller either imports the goods or installs or assembles the goods in Australia.
If you need more information, our ruling GSTR 2018/2 explains when supplies of goods are connected with Australia.
Example: supply of goods
ABC Ltd is contracted by the United States (US) Government as a non-resident prime contractor to supply goods to be delivered to Pine Gap for A$1,000,000. The supply of goods in question is not GST-free.
ABC Ltd purchases the goods from OZ Pty Ltd, a resident business for $800,000 to fulfill the prime contract with the US Government.
OZ Pty Ltd supplies the goods to ABC Ltd by delivering the goods in Australia and making them available to the US Government representative at Pine Gap.
This transaction involves two supplies of the goods - ABC Ltd's supply to the US Government and OZ Ltd's supply of the goods to ABC Ltd.
Both ABC Ltd’s supply to the US Government and OZ Pty Ltd's supply to ABC Ltd are connected with Australia and subject to GST as the other requirements to be a taxable supply are satisfied. This is because the goods that are the subject of both supplies are delivered in Australia (Pine Gap).
Both ABC Ltd and OZ Pty Ltd must register for GST to meet their obligations.
End of exampleServices
A supply of a service related to Pine Gap is generally connected with Australia if any of the following applies:
- the service is done in Australia
- the seller makes the sale through an enterprise they carry on in Australia.
An exception applies for supplies of services by a non-resident subcontractor to the non-resident prime contractor where:
- the supplies are done in Australia
- the prime contractor makes the acquisition in carrying on their enterprise outside Australia.
Therefore, supplies done in Australia (that is, performed in Australia) by the non-resident sub-contractor to the non-resident prime contractor may not be connected with Australia. If so, they will not be subject to GST.
However, supplies of services done in Australia by a non-resident prime contractor to the US Government are connected with Australia. The exception does not apply as in these specific circumstances the US Government will not be making the acquisition in carrying on an enterprise. The definition of enterprise under the GST law specifically includes the activities of Australian government related entities but not non-commercial activities of foreign government entities.
If you need more information, our ruling GSTR 2019/1 explains whether supply of anything other than goods or real property are connected with Australia.
GST-free supplies
Even if a supply is connected with Australia, it will not be subject to GST if it is GST-free.
The supply of services to a non-resident who is not in Australia is GST-free if either of the following applies:
- the service is not
- work physically performed on goods situated in Australia when the work is done, or
- directly connected with real property
- the service is acquired in the course of an enterprise by the non-resident who is not registered or required to be registered for GST.
Whilst the US Government is a non-resident, in these specific circumstances the US Government will not be making the acquisition in carrying on an enterprise. Therefore, supplies to the US Government of work physically performed on goods situated at Pine Gap will not satisfy either requirement to be GST-free.
For more information about supplies of services to non-residents outside Australia, and supplies used or enjoyed outside Australia, see:
- GSTR 2004/7 Goods and services tax: in the application of items 2 and 3 and paragraph (b) of item 4 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999
- when is a 'non-resident' or other 'recipient' of a supply 'not in Australia
- when the thing supplied is done'?
- when is 'an entity that is not an Australian resident' 'outside Australia when the thing supplied is done'?
- GSTR 2005/6 Goods and services tax: the scope of subsection 38-190(3) and its application to supplies of things (other than goods or real property) made to non-residents that are 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.
Example: supply of services
ABC Ltd is contracted by the US Government as a non-resident prime contractor to provide services, consisting of the repair and maintenance of goods held by the US Government at Pine Gap, for $1,000,000. ABC Ltd subcontracts this supply to XYZ Pty Ltd, a resident company, for $800,000.
There are 2 supplies being made under this example:
- ABC Ltd's supply to the US Government
- XYZ Pty Ltd's supply to ABC Ltd.
Supply by ABC Ltd
The services supplied by ABC Ltd are done in Australia by XYZ Pty Ltd and as a result are connected with Australia. The US Government does not acquire the service for the purpose of their enterprise therefore the exception to when supplies of services are connected with Australia does not apply.
ABC Ltd's supply is not GST-free as the services are:
- physically performed on goods situated in Australia when the work is done, and
- not acquired by the US Government for the purpose of an enterprise.
ABC Ltd must register for GST to meet their obligations.
Supply by XYZ Pty Ltd
XYZ Pty Ltd's supply of services to ABC Ltd of repairing the goods at Pine Gap owned by the US Government is connected with Australia because the services are supplied through an enterprise XYZ Pty Ltd carries on in Australia.
XYZ Pty Ltd's supply is not GST-free as:
- the services are physically performed on goods situated in Australia when the work is done, and
- ABC Ltd is required to be registered for GST.
XYZ Pty Ltd must register for GST to meet their obligations.
End of exampleRegistration for non-resident contractors
It is likely as a non-resident Pine Gap contractor you will need to register for standard GST registration.
For more information on working out your GST turnover and how to register for GST see GST-for-non-residents and non-resident businesses and GST.
For the duration of your contract, you will also need to lodge a business activity statement (BAS) to report your GST and claim GST credits if applicable.
As you cannot lodge your BAS electronically from outside Australia, you may need to engage an Australian registered tax agent.
Registration for resident contractors
Registering for GST provides further information for resident prime contractors and subcontractors to meet their GST obligations including working out your GST turnover and claiming GST credits.
Contact us
If you're a non-resident contractor, and you don't use a resident tax agent, you can contact us using our Individuals - complex advice request form.
If you're a contractor and you're a resident or use a resident tax agent , you can contact us using Online services for business or Online services for agents and selecting:
- Communication tab and the either Secure mail or Practice mail
- then select New
- in the Topic field, select View more topics from the dropdown list
- in the Other topics list, select GST
- Complete all the required details and click submit.