GST and the subscription for Internet information services acquired from overseas

Is the entity, a research organisation, liable to pay goods and services tax (GST) under subsection 84-10(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it subscribes to an information service that is delivered via the Internet by a non-resident overseas supplier?

No, the entity is not liable to pay GST under subsection 84-10(1) of the GST Act when it subscribes to an information service that is delivered via the Internet by a non-resident overseas supplier.

The entity is a research organisation. In the process of carrying on its enterprise, the entity subscribes to information services that are delivered via the Internet. These may include the electronic versions of international scientific journals and periodicals.

In this case, the entity acquires information, including electronic copies of journals and periodicals sent via the Internet by a non-resident overseas supplier. The acquisition of the information, including electronic copies of journals and periodicals, is solely for a creditable purpose.

The supply of the information service is not done in Australia nor is it supplied through an enterprise that the non-resident overseas supplier is carrying on in Australia.

The entity is registered for GST.

Division 84 of the GST Act applies to supplies not connected with Australia.

Subsection 9-25(5) of the GST Act provides that a supply of anything other than goods or real property is connected with Australia if either: (a) the thing is done in Australia; or (b) the supplier makes the supply through an enterprise that the supplier carries on in Australia; or (c) all of the following apply: (i) neither paragraph (a) nor (b) applies in respect of the thing; (ii) the thing is a right or option to acquire another thing; (iii) the supply of the other thing would be connected with Australia.

The supply of information, including electronic copies of journals and periodicals, sent via the Internet, is an intangible supply and not a supply of goods or real property. Furthermore, the supply is not connected with Australia as it is not done in Australia nor is it supplied through an enterprise that the non-resident overseas supplier is carrying on in Australia nor is it a right or option to acquire another thing. Therefore, the supply is appropriately considered under Division 84 of the GST Act.

Under section 84-5 of the GST Act, a supply of anything other than goods or real property that is a supply not connected with Australia, is a taxable supply if: • the recipient of the supply acquires the thing supplied solely or partly for the purpose of an enterprise that the recipient carries on in Australia, but not solely for a creditable purpose; and • the supply is for consideration; and • the recipient is 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.

Subsection 84-10(1) of the GST Act provides that where a supply is a taxable supply under section 84-5 of the GST Act, the GST amount payable on that supply is payable by the recipient of the supply.

In this case, the entity acquires the information solely for a creditable purpose. As such, section 84-5 of the GST Act does not apply and the entity is not liable to pay any GST amount under subsection 84-10(1) of the GST Act when it subscribes to an information service that is delivered via the Internet by a non-resident overseas supplier. [HISTORY: This ATO ID was amended on 25 June 2007 to reflect changes in legislation]