Issue
Is the entity, an Australian engineering company, 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 supplies engineering services on site for a construction project that is situated outside Australia?
Decision
Yes, the entity is making a GST-free supply under subsection 38-190(1) of the GST Act when it supplies engineering services on site for a construction project that is situated outside Australia.
Facts
The entity is an Australian engineering company.
The entity is supplying engineering services on a construction project situated outside Australia. The project involves the construction of plant that is real property. The engineering services are provided on the construction site outside of Australia.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Under subsection 38-190(1) of the GST Act, certain supplies of things other than goods or real property, for consumption outside Australia, are GST-free. As the supply of engineering services is not considered to be a supply of goods or real property, its GST status is appropriately considered under subsection 38-190(1) of the GST Act.
Item 1 in the table in subsection 38-190(1) of the GST Act (Item 1) provides that a supply of a thing other than goods or real property is GST-free if the supply is directly connected with goods or real property situated outside Australia.
In this case, the entity is providing engineering services on site for a construction project that is situated outside Australia. The project involves the construction of plant. As the plant is real property, the services are directly connected with real property situated outside of Australia. Therefore, the supply satisfies Item 1.
As such, the entity is making a GST-free supply under Item 1 when it supplies engineering services on site for a construction project situated outside Australia.