GST and training services supplied to a non-resident

Is the entity, a consultancy organisation, making a GST-free supply under 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), when it supplies training services to a non-resident?

Yes, the entity is making a GST-free supply under Item 2 when it supplies training services to a non-resident.

The entity is a consultancy organisation. The entity supplies training services to a non-resident. The training services involve instruction to employees of the non-resident. These training services are held outside 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 services 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 2 which deals with supplies that are made to a non-resident outside of Australia. Paragraph (a) of Item 2 provides that a supply is GST-free where: • it is made to a non-resident who is not in Australia when the thing supplied is done; and • it is not a supply of work physically performed on goods situated in Australia when the work is done; and • it is not a supply directly connected with real property situated in Australia.

In this case, the training services are held outside of Australia. Therefore, the non-resident is not in Australia in relation to the supply, when the service is performed. As the training services involve instruction to employees the training services are not work physically performed on goods. Additionally, as the services are carried on overseas, the supply is not directly connected with real property situated in Australia. As such, the supply satisfies paragraph (a) of Item 2.

Therefore, the entity is making a GST-free supply under section 38-190 of the GST Act when it supplies training services to a non-resident.