GST - supply of content

1 Is the supply of content by you to a non-resident entity, GST-free?

: Yes Question 2 If the answer to question 1 is yes, are you required to register for GST? Answer: Yes This ruling applies for the following : DD MM YYYY The scheme commenced on: DD MM YYYY

You are carrying on an enterprise of supplying content to non-resident entity located outside Australia and you are not registered for goods and services tax (GST) Most of the xx of your content are based outside Australia and a small percentage of xx are from Australia. The non-resident entity does not have a presence in Australia. You receive xx% of income from the non-resident for tips and per minute performances, and yy% for any xx subscription. Your total income from the supply of content is higher than the GST registration threshold. However, the income received from the xx from Australia is less than GST registration threshold. The agreement with the non-resident entity provides the following: Nature of relationship & responsibilities a)          The parties expressly acknowledge and agree that the performer (you) is providing content to the non-resident and the non-resident is acquiring content from you for distribution through their xx and systems to users of their xx. (Members) b)          The non-resident is responsible for providing and maintaining the systems to diffuse such content to members.

c)          xx are responsible for producing content and uploading it subject to the terms and conditions of this agreement. Use of non-resident's system a)          Subject to the terms and conditions of this agreement, you may use non-resident's systems to generate revenues from your live xx and content. b)          You will have the right to set up and negotiate pricing with members at your discretion, if you comply with the minimum pricing parameters as determined by the non-resident. c)          Minimum pricing parameters remain entirely under the non-resident's control and discretion. d)          You have the right to negotiate with the non-resident your percentage split of revenues from live xx. Ownership of content a)          When you upload or transmit any content onto or through the non-resident's systems, you will assign to non-resident all rights, title and interest in all such uploaded content.

b)          Non-resident shall own all such uploaded content and will have the sole discretion to use any such uploaded content in any way it so chooses, including but not limited to in any medium and in any promotion, distribution, advertising, sales or marketing, both during and after the term of this agreement. Your separate business a)          At all times while using non-resident's xx and systems, xx shall have their own business licence, pay their own taxes, and take all other actions necessary and required to operate as their own separate and distinct business. b)          Operators must pay all taxes required to be paid by them to any country, state or local government. c)          xx shall not be deemed or treated as an employee of the non-resident for any purpose. d)          Nothing contained in this agreement shall be deemed or construed by the parties to create the relationship of employer and employee, co-ventures, partners or any other type of business association, other than as independently contracting parties.

A New Tax System (Goods and Services Tax) Act 1999 section 9-5 A New Tax System (Goods and Services Tax) Act 1999 section 9-20 A New Tax System (Goods and Services Tax) Act 1999 section 23-5 A New Tax System (Goods and Services Tax) Act 1999 section 38-190 A New Tax System (Goods and Services Tax) Act 1999 section 188 -15 A New Tax System (Goods and Services Tax) Act 1999 section 188-20 Does Division 165 apply to this private ruling? Division 165 of the A New Tax System (Goods and Services Tax) Act 1999 is a general 'anti-avoidance' rule that can apply in certain circumstances if you or another entity obtains a GST benefit from a scheme that you entered into or carried out for the main purpose of obtaining a GST benefit or allowing another to obtain one. It may also apply in some cases whe

Detailed reasoning Goods and Services Tax (GST) is payable on a taxable supply. Under section 9-5 of the GST Act, you make a taxable supply if: a)          you make the supply for consideration; and b)          the supply is made in the course or furtherance of an enterprise that you carry on; and c)          the supply is connected with the indirect tax zone; and d)          you are registered or required to be registered for GST. However, a supply is not a taxable supply to the extent that it is GST-free or input taxed. You are carrying on an enterprise of supplying content to a non-resident, an online platform located outside Australia and receive consideration. The supply is connected with Australia as it is made through the enterprise carried on in Australia. The issues need to be determined are whether you are required to be registered for GST and the supply you make to the non-resident will be GST-free under the GST Act. GST-free supply of content Subsection 38-190(1) of the GST Act provides that the supplies of things other than goods or real property for consumption outside of Australia will be GST-free.

Item 2 of the table in subsection 38-190(1) of the GST Act (item 2) provides that a supply that is made to a non-resident who is not in Australia when the thing supplied is done is GST- free where: a.          the supply is neither a supply of work physically performed on goods situated in Australia when the work is done, nor a supply directly connected with real property situated in Australia; or b.          the non-resident acquires the thing in carrying on the non-resident's enterprise but is not registered or required to be registered. Under item 2, either a or b should be satisfied. The requirement that the non-resident in item 2 is not in Australia when the thing supplied is done is a requirement that the non-resident or recipient is not in Australia in relation to the supply when the thing supplied is done. In your circumstances, the supply is made to a non-resident entity that does not have an Australian presence and therefore this requirement is met.

Your supply of content provided to the non-resident is neither a supply of work physically performed on goods located in Australia nor the supply connected with real property situated in Australia. Hence, your supply of content will satisfy the requirements of item 2(a) of the table in subsection 38-190(1) of the GST Act. Under the agreement, you make the supply of your content to the non-resident, and they acquire the content to distribute through their platform to their members. Furthermore, you will assign to the non-resident all rights, title and interest in all the uploaded content through their platform. The non-resident will have the sole discretion to use any such uploaded content by you in any way they choose. Therefore, it is considered that the supply of content by you is provided to the non-resident and not to any of members of the non-resident. Limitation of item 2 However, a supply covered by item 2 will not be GST-free if the provisions of subsection 38-190(3) of the GST Act are met. Subsection 38-190(3) of the GST Act provides that the supply will not be GST-free if:

(a)          it is a supply under an agreement entered into, whether directly or indirectly, with a non-resident; and (b)          the supply is provided, or the agreement requires it to be provided, to another entity in Australia; and (c)          for a supply other than an input taxed, none of the following applies: (i)        the other entity would be an Australian-based business recipient of the supply, (ii)        the other entity is an individual who is provided with the supply as an employee or officer of an entity that would be an Australian-based business recipient of the supply. (iii)        the other entity is an individual who is provided with the supply as an employee or officer of the recipient, and the recipient's acquisition of the thing is solely for a creditable purpose and is not a non-deductible expense.

The supply of content by you to the non-resident is made under an agreement entered into directly with a non-resident entity. Therefore, paragraph (a) of subsection 38-190(3) of the GST Act is satisfied. However, the supply of content is not provided to another entity in Australia as per the agreement. The non-resident supplies the content acquired from you to their members in Australia as the supplier of the content. As your supply of content is not provided by you to another entity in Australia, it is not excluded from being GST-free under item 2 of the table in subsection 38-190(3) of the GST Act. Question 2 Summary You are required to be registered for GST as your annual turnover has exceeded the GST registration turnover threshold. Detailed reasoning Section 23-5 of the GST Act provides that you are required to be registered for GST if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold of $75,000 or above.

Section 9-20 of the GST Act provides, amongst other things, that an enterprise is an activity or series of activities done in the form of a business; or in the form of an adventure or concern in the nature of trade; or on a regular or continuous basis in the form of a lease, licence or other grant of an interest in property. You are carrying on an enterprise of supplying your content to a non-resident and receiving consideration for the supply. Your annual turnover from the supply of content exceeded the GST turnover threshold of $75,000. Therefore, you are required to be registered for GST as per section 23-5 of the GST Act. GST turnover calculation In calculating the GST turnover, you are required to include the sum of the values of all the supplies that you have made or likely to make during a 12-month period. Subsections 188-15(3) and 188-20(3) of the GST Act provide that certain supplies are disregarded when calculating your current and projected GST turnover. Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover

: GSTR 2001/7 explains, amongst other things, the supplies that are disregarded in calculating the current and projected GST turnover. Paragraph 14 of GSTR 2001/7 states: 14. The following supplies are excluded from the calculation of current GST turnover and projected GST turnover: •                    supplies that are input taxed; •                    supplies that are not for consideration (and are not taxable supplies under section 72-5); •                    supplies not made in connection with an enterprise that you carry on; •                    supplies that are not connected with Australia; •                    supplies of rights or options that are connected with Australia because of paragraph 9-25(5)(c) (unless the right or option is supplied to an Australian consumer, is not GST-free and relates to the acquisition of an intangible); •                    supplies (other than those mentioned in the immediately preceding two dot points) of a right or option to use commercial accommodation in Australia where the supplies are not made in Australia and are made through an enterprise that the supplier does not carry on in Australia;

•                    supplies made from one member of a GST group to another member of that GST group; and •                    GST free supplies made by a non-resident supplier that are not made through an enterprise they carry on in Australia. As explained in question 1, your supply of content to the non-resident is GST-free under item 2 of the table in subsection 38-190(1) of the GST Act. GST-free supplies are not excluded in the list of supplies that are disregarded when calculating the GST turnover. This means GST-free supplies are included in the calculation of current and projected GST turnover. Additional information When you need to register You must register for GST: •                     when your business or enterprise has a GST turnover (gross income from all businesses minus GST) of $75,000 or more (the GST threshold) •                     when you start a new business and expect your turnover to reach the GST threshold (or more) in the first year of operation. •                     if you're already in business and have reached the GST threshold