Do you need to register for the goods and services tax (GST) and charge GST as a non-resident business providing accounting services to an Australian GST registered business?
An entity is required to register for the GST if it is carrying on an enterprise and it meets the registration turnover threshold. An entity is required to charge GST if it makes a taxable supply. In the event a supply is not taxable then no GST needs to be charged. See below under the heading ' Reasons for decision' for further information. This ruling applies for the following period : Year ending 30 June 20XX The scheme commences on: 25 May 20XX
You are not registered for GST. You are an overseas resident and carry on your enterprise wholly overseas. You are a non-resident business owner intending to provide services to an Australian business that has an ABN and is registered for GST. Your business is situated outside Australia and the service will be provided remotely (through internet/online mode). In relation to your business, you do not have a permanent establishment, workers, or agents in Australia.
A New Tax System (Goods and Services Tax) Act 1999 section 9-5 A New Tax System (Goods and Services Tax) Act 1999 section 9-25 A New Tax System (Goods and Services Tax) Act 1999 section 9-26 A New Tax System (Goods and Services Tax) Act 1999 section 9-27
GST is payable on a taxable supply. Section 9-5 of the A New Tax System (Goods and Services tax) Act 1999 (GST Act) provides that you make a taxable 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 the indirect tax zone; and (d) you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. (* denotes a term defined under section 195-1 of the GST Act). For the purpose of paragraph 9-5(c) of the GST Act, subsection 9-25(5) provides that a supply of anything other than goods or real property would be connected with the indirect tax zone if: (a) the thing is done in the indirect tax zone; or (b) the supplier makes the supply through an enterprise that the supplier carries on in the indirect tax zone; or (c) if the thing is a right or option to acquire another thing, the supply of the other thing would be connected with the indirect tax zone; or (d) the recipient of the supply is an Australian consumer . An Australian consumer
is defined as an Australian resident entity that is not registered for GST; or if registered, does not acquire the thing supplied solely or partly for the purpose of its enterprise. Under section 9-26 of the GST Act, the supply of anything other than goods or real property by a non-resident would not be connected with the indirect tax zone even if the thing is done in Australia provided: • the supplier does not make the supply through an enterprise that the supplier carries on in the indirect tax zone; and • the recipient is an Australian-based business recipient.
Section 9-27 of the GST Act provides that an entity carries on its enterprise in the indirect tax zone if one or more of its employees, officers or agents are in the indirect tax zone carrying on the entity's enterprise from a fixed place or from one or more places in the indirect tax zone for more than 183 days in a 12-month period. You are a non-resident that do not have any employee, officer or agent carrying on your enterprise in the indirect tax zone. As such, you are not carrying on your enterprise in the indirect tax zone and will not make the supply of services to the Australian business through an enterprise carried on in the indirect tax zone. Your client is an Australian-based business recipient. Therefore, the supply of services by you to the client will not be connected with Australia. Paragraph 9-5(c) of the GST Act will not be satisfied. Accordingly, you will not make a taxable supply to the client.
As the supplies described in this ruling are not considered to be connected with Australia the consideration you receive for your accounting services will not be taken in consideration to calculate the GST registration threshold. Therefore, under the circumstances described in this ruling you are not required to be registered for GST and you will not be required to remit GST on those supplies.