1 Do the services provided by you via on-line platform to overseas customers meet requirements set out under Subsection 38-190 of the A New Tax System (Goods and Services Tax) Act 1999 ?
Yes. Question 2 Is income received from such services GST-free income? Answer Whatever, money/consideration you received from your overseas customer for your supply of online classes will not contain an amount of GST. This ruling applies for the following period; Year ending 30 June 20XX The scheme commences on: 1 July 20XX
You are registered for GST. You are running an enterprise, based in Australia. Due to COVID-19 pandemic, you have been planning to move some of your classes online. Those online classes will either be pre-recorded or live and will be taught/conducted in your studio. Your customers can then have access to those online classes/recordings via various platforms, such as Zoom and/or YouTube. Most of your online customers will be from overseas (because Australian based customers still prefer physical in-studio classes to online ones.
A New Tax System (Goods and Services Tax) Act 1999 subsections 38-190(1) & 3
GST -free supply Relevant to your supply of online classes is item 2 (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 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. From the facts given, your supply of online classes is made to your overseas customer, for which you receive consideration paid by the customer to you in accordance with the agreed terms. The overseas customer is the recipient of your supply. Paragraph (a) of item 2 Based on this, your supply of online digital content satisfies paragraph (a) of item 2 as:
• your supply of online digital content is made to the overseas customer, a non-resident who is not in Australia in relation to your supply when the supply is done; and • your supply of online digital content 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. There is no need to consider paragraph (b) as paragraph (a) is satisfied. However, paragraph (a) of item 2 is limited by subsection 38-190(3) of the GST Act. 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. Based on the information given, subsection 38-190(3) does not apply to your supply as you are supplying and providing the online content to the overseas non-resident. Your supply of online classes to the non-resident is therefore GST-free under item 2 in the table in subsection 38-190(1) of the GST Act. Where a supply is GST-free, no GST is payable on the supply. Whatever, consideration you received from your overseas customer for your supply of online classes will not contain an amount of GST.