GST and supply of property management services to a non-resident

Is the entity, a real estate agent, 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 property management services to a non-resident property owner?

Yes, the entity is making a GST-free supply under subsection 38-190(1) of the GST Act when it supplies property management services to a non-resident property owner.

The entity is a real estate agent. The entity is providing property management services to a non-resident who owns a residential property in Australia. When the entity provides the services, the non-resident property owner is not in Australia.

The non-resident property owner leases the residential property to a tenant at market rates on a regular and continuous basis. There is no private use of the property. This supply is an input taxed supply under section 40-35 of the GST Act. These are the only supplies that the non-resident makes. The non-resident is not registered for goods and services tax (GST).

The entity is registered for 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 property management service is not 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 in the table in subsection 38-190(1) of the GST Act (Item 2).

Under Item 2, a supply made to a non-resident is GST-free if: • the non-resident is not in Australia when the thing supplied is done, and under paragraph (b) • the non-resident makes the acquisition in carrying on its enterprise; and • the non-resident is not registered or required to be registered for GST.

The non-resident is not in Australia when the property management services are supplied.

The rental of the residential property is an enterprise under paragraph 9-20(1)(c) of the GST Act. Therefore, the non-resident has acquired the property management services in the carrying on of its enterprise.

The non-resident is not registered, nor is it required to be registered for GST. This is because an entity is only required to be registered if it is carrying on an enterprise and its annual turnover meets the registration turnover threshold (section 23-5 of the GST Act). The only supplies the non-resident makes are input taxed supplies of residential accommodation under section 40-35 of the GST Act. Input taxed supplies are excluded from the calculation of an entity's annual turnover under Division 188 of the GST Act. Therefore, the non-resident's annual turnover does not meet the registration turnover threshold and accordingly, the non-resident is not required to be registered.

All of the requirements for a supply to be GST-free under paragraph (b) of Item 2 are, therefore, satisfied. Accordingly, the entity is making a GST-free supply under subsection 38-190(1) of the GST Act when it supplies property management services to a non-resident property owner that is not in Australia when the services are performed.