Edited version of private advice

Authorisation Number: 1051748522777

Date of advice: 2 September 2020

Ruling

Subject: GST and supplies made from your website

Question 1

Do you need to collect GST on the referral fees received from the Australian company under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when referring visitors to the site owned or operated by the Australian company under the Agreement?

Answer

Yes, you need to collect GST on the referral fees received from the Australian company as your supply of referral services to the Australian company is a taxable supply under section 9-5 of the GST Act when you refer visitors to the site owned or operated by the Australian company under the Agreement.

Question 2

Do you need to collect GST under the GST Act when you receive income from the non-resident company for the related advertisements that the non-resident company puts on your website?

Answer

No, you do not need to collect GST when you receive income from the non-resident company for the related advertisements that the non-resident company puts on your website as your supply 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 facts

You are an Australian resident and reside in Australia. You are registered for GST.

You own a website and from that website you run a travel blog. In the travel blog you give information "advice/tips" on travelling, such as where to stay, things to do, guides on different areas all over the world.

You essentially earn your income from supplies made to an Australian company and to a non-resident company.

Australian company

The Australian company runs a booking engine and is registered for GST.

You have entered into an Agreement with the Australian company in which you agreed to make links and/or promotional content available to your users in order to refer visitors of your website to the site of the Australian company. You have provided us with a copy of the Agreement.

You have links to the Australian company throughout your website on suggestions on where to stay. Someone will come along a page on your website and then they will click on a link that sounds appealing to them and from there the Australian company takes over to convert to a sale or an enquiry. You are paid a commission/referral fee from the Australian company from that booking, once the booking has checked out.

You only received a referral fee from the Australian company if a booking is made and checked out as you are on a revenue share mode. You do not do any hard sales pitches on your site. It is all purely informational. You do not receive an income for purely having the links on your website.

Non - resident company

The non-resident company is not registered for GST. You have an agreement with the non-resident company and have provided us with a copy.

The non-resident company is an ad management service that places ads such as videos or banners within your content and your sidebar. Your income is earned when someone sees these ads and or clicks on these ads.

The non-resident company does not have a representative in Australia that is involved with your supply.

Your supply is neither connected with work performed on goods located in Australia nor is it directly connected with real property in Australia.

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

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.

Question 1

GST is payable on a taxable supply. Under section 9-5 of the GST Act you make a stable supply if:

a)    You make the supply for consideration; and

b)    The supply is made in the course or furtherance of an enterprise that you carry on; and

c)    The supply is connected with Australia; and

d)    You are registered or required to be 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 referral services to HC satisfies paragraph 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 a business that you carry on; and

c)    the supply is connected with Australia as your supply is made through a business that you carry on in Australia; and

d)    you are registered for GST.

However, your supply of referral services is not a taxable supply to the extent that it is GST-free or input taxed.

Your supply of referral services is not input taxed. Further your supply of referral services is not GST-free as your Agreement is with a company located in Australia and the supply is provided to that company under the Agreement.

Accordingly, your supply of referral services to the Australian company is a taxable supply under section 9-5 of the GST Act. You therefore need to collect GST on the taxable supply.

Question 2

GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the GST Act where all the paragraphs in section 9-5 of the GST Act are satisfied and the supply is neither GST-free nor input taxed under the GST Act.

Your supply of the website advertising space to the non-resident company satisfies the requirements in paragraphs 9-5(a), 9-5(b), 9-5(c) and 9-5(d) of the GST Act as:

a)    your supply is made for consideration;

b)    the supply is made in the course or furtherance of your business;

c)    the supply is connected with Australia because it is made through an enterprise (business) that you carry on in Australia; and

d)    you are registered for GST.

However, your supply is not a taxable supply to the extent that it is GST-free or input taxed.

Your supply of the website advertising space is not input taxed. We need to determine whether your supply satisfies the GST-free provisions.

GST-free supply

Section 38-190 specifies the circumstances where the supply of things other than goods or real property for consumption outside Australia is GST-free. Of relevance to your supply of website advertising space made to the non-resident company is item 2 in the table in subsection 38-190(1) (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.

Only one of the paragraphs in item 2 needs to be satisfied.

The requirement that the non-resident in item 2 is not in Australia when the thing supplied is done is a requirement that the non-resident is not in Australia in relation to the supply when the thing supplied is done.

Based on the facts provided, the supply of the website advertising space made by you to the non-resident company satisfy the precondition and paragraph (a) of Item 2 because:

·         you supply website advertising space to a non-resident entity that is not in Australia (and has no representative in Australia) in relation to your supply when the supply is done; and

·         the supply of website advertising space is neither a supply of work physically performed on goods situated in Australia, nor a supply directly connected with real property situated in Australia.

However, your supply is GST-free under item 2 to the extent that subsection 38-190(3) of the GST Act does not apply to the supply.

Subsection 38-190(3) of the GST Act

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; and

c)    for a supply other than an input taxed supply - none of the following applies:

                      i.        the other entity would be an Australian-based business recipient of the supply, if the supply had been made to it;

                     ii.        the other entity is an individual who is provided with the supply as an employee or officer of an entity that would be an Australian-based business recipient of the supply, if the supply had been made to it; or

                    iii.        the other entity is an individual who is provided with the supply as an employee or officer of the recipient, and the recipient's acquisition of the thing is solely for a creditable purpose and is not a non-deductible expense.

From the facts given, subsection 38-190(3) of the GST Act does not apply to your supply made to the non-resident company as you are not required to provide your supply to another entity in Australia.

Your supply is made and provided to the non-resident company. Your supply to the non-resident company is therefore GST-free under paragraph (a) of item 2.

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