GST and supplies made to resident of an external Territory

Is the entity, a training provider, making a GST-free supply under subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it provides training to an organisation in an external Territory?

Yes, the entity is making a GST-free supply under subsection 38-190(1) of the GST Act when it provides training to an organisation in an external Territory.

The entity is a training provider. In this case, the entity is providing training to an organisation in an external Territory. The entity's supply is neither a supply of work physically performed on goods situated in Australia when the thing supplied is done; nor is it a supply directly connected with real property situated in Australia.

The entity is registered for goods and services tax (GST).

Under section 38-190 of the GST Act, certain supplies of things other than goods or real property, for consumption outside of Australia, are GST-free. As a supply of training is not considered to be a supply of goods or real property, its GST status is appropriately considered under section 38-190 of the GST Act.

Of most relevance to this case is item 3 in the table in subsection 38-190(1) of the GST Act (Item 3) which deals with supplies that are used or enjoyed outside of Australia. Item 3 provides that a supply is GST-free where: • it is made to a recipient who is not in Australia when the thing supplied is done; and • it is effectively used or enjoyed outside of Australia; and • it is not a supply of work physically performed on goods situated in Australia when the thing supplied is done; and • it is not a supply directly connected with real property situated in Australia.

'Australia' is defined in section 195-1 of the GST Act to exclude any 'external Territory'. As such, the entity is making a supply to a recipient who is not in Australia when the thing supplied is done, because the recipient is located in an external Territory which is not considered to be part of Australia for the purposes of the GST Act.

In addition, as the training is provided in the external Territory, the supply is also used outside of Australia. Furthermore, the supply is not of work physically performed on goods situated in Australia when the thing supplied is done; nor is it directly connected with real property situated in Australia.

Therefore, as the supply satisfies all of the requirements in item 3, it is GST-free. [NOTE: The residency of the recipient of the supply is not relevant in determining the status of a supply under Item 3.]