GST and supply of insurance brokerage services to an overseas entity

Is the entity, an Australian resident insurance broker, 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), when it supplies insurance brokerage services to a non-resident insurer and receives a commission for those services?

Yes, the entity is making a GST-free supply under item 2 in the table in subsection 38-190(1) of the GST Act when it supplies insurance brokerage services to a non-resident insurer and receives a commission for those services.

The entity is an Australian resident insurance broker. The entity is supplying insurance brokerage services to a non-resident insurance company that is not in Australia when the insurance brokerage services are provided.

The entity charges a commission to the non-resident insurance company for the service of writing the policies on its behalf.

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 insurance brokerage 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 in the table in subsection 38-190(1) of the GST Act (Item 2) which deals with supplies that are made to a non-resident outside of Australia.

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 under paragraph (a): • 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 entity is supplying insurance brokerage services to a non-resident insurer that is not in Australia when the insurance brokerage services are provided. Furthermore, although the insurance brokerage services relate to insurance policies for goods situated in Australia, it is not a supply of work physically performed on goods situated in Australia, nor is it directly connected with real property situated in Australia. As such, the supply satisfies the requirements in paragraph (a) of Item 2.

Therefore, the entity is making a GST-free supply under Item 2 when it supplies insurance brokerage services to a non-resident insurer that is not in Australia when those services are provided and receives a commission for those services.