Issue
Is the entity, a supplier of exhibition management services, making a GST-free supply under section 38-190 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies exhibition space in Australia to a non-resident?
Decision
No, the entity is not making a GST-free supply under section 38-190 of the GST Act when it supplies exhibition space in Australia to a non-resident as they are making a supply of 'real property' for GST purposes.
Facts
The entity provides exhibition management services for exhibitions that are held in Australia. In the course of carrying out these activities, the entity supplies exhibition space to resident and non-resident recipients.
The recipients are charged a fee for the exhibition space according to the size of the stand.
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 of Australia, are GST-free. The entity is supplying exhibition space in Australia to a non-resident recipient. This supply is not the supply of goods however it needs to be determined whether it is a supply of real property.
'Real property' is defined in section 195-1 of the GST Act to include: • any interest in or right over land; or • a personal right to call for or be granted any interest on or right over land; or • a licence to occupy land or any other contractual right exercisable over or in relation to land.
Therefore, supplies such as leases and licences to occupy property are supplies of 'real property' for GST purposes. Paragraph 53 of Goods and Services Tax Ruling GSTR 2003/8 states that the supply of a right, that is the supply of real property for GST purposes, is a supply that is outside the operation of section 38-190 of the GST Act.
The supply of exhibition space by the entity to a non-resident recipient may only be considered under section 38-190 of the GST Act where it is not the supply of a licence to occupy real property.
Although not tested in Australia, the term 'a licence to occupy land' has been the subject of litigation in foreign jurisdictions. In particular, Miller Freeman World-wide plc (No. 2). [1998] BVC 2197 explained that in examining a transaction, the substance and reality of the supply must be considered. In this case, it was held that in substance and reality, what the appellant supplied to an exhibitor in return for consideration was the right to occupy a space at the venue of the supplier. Whilst the supplier also engaged in activities to ensure that potential customers attended, this merely increased the value of the right to occupy but not the nature of the supply itself.
The entity makes the supply of exhibition space for consideration that is calculated by reference to the size of the recipients space in the exhibition rather than any specific rights associated with the exhibition.
Therefore, the supply is a supply of real property as defined in section 195-1 of the GST Act. The entity is not making a GST-free supply under section 38-190 of the GST Act when it supplies exhibition space in Australia to a non-resident.