Issue
Is the entity, a telecommunications service provider, 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 data and satellite data transmission services to a non-resident company which is not in Australia?
Decision
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 data and satellite data transmission services to a non-resident company which is not in Australia.
Facts
The entity is a telecommunications service provider. The entity supplies both data and the satellite transmission of the data via its satellite facilities in Australia, to a non-resident company which is not in Australia.
The data originates in Australia and is used by the non-resident company outside Australia to monitor the performance of equipment used in Australia.
The non-resident company is not in Australia when the satellite data transmission services are supplied. It does not conduct business in Australia and has no representative in Australia. The supply is not provided, nor required to be provided under an agreement with the non-resident company, to another entity in Australia.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Under section 38-190 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 data and satellite data transmission 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 made to non-residents who are not in Australia when the thing supplied is done. 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 either • it is not a supply of work physically performed on goods situated in Australia when the work is done; or • it is not a supply directly connected with real property situated in Australia.
In this case, the non-resident company is not in Australia when the satellite data transmission services are supplied. The supply of the data and the service of transmitting the data by satellite is neither a supply of work physically performed on goods situated in Australia nor a supply 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 Item 2 when it supplies and transmits data via satellite to a non-resident entity which is not in Australia.