Goods and services tax: when are telecommunication supplies made under arrangements for global roaming outside Australia by an Australian resident telecommunication supplier GST-free under table item 3 of subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999?

The question addressed in this Determination was considered amongst others in issue 3 of the Telecommunications Industry Liaison Group – Issues Register (issues register). Issue 3 dealt with the GST treatment of specific telecommunication supplies. [1]

The issues register was a public ruling for the purposes of former section 105-60 of Schedule 1 to the Taxation Administration Act 1953 before 1 July 2010. The Commissioner's view in this Determination is consistent with those expressed in the issues register.

In this Determination, references to a telecommunication supplier mean a carrier or a carriage service provider as defined in the Telecommunications Act 1997 or an Internet service provider as defined in section 19 of the Online Safety Act 2021.

From 1 July 2015, the term 'Australia' was replaced in nearly all instances within the GST, luxury car tax and wine equalisation tax legislation with the term 'indirect tax zone'. The scope of the term, however, remains the same as the now repealed definition of 'Australia' used in those Acts. This change was made for consistency of terminology across the tax legislation, with no change in policy or legal effect. In this Determination, the 'indirect tax zone' is referred to as 'Australia'.

All further legislative references in this Determination are to the A New Tax System (Goods and Services Tax) Act 1999, unless otherwise indicated.

Telecommunication supplies made under arrangements for global roaming outside Australia by an Australian resident telecommunication supplier are GST-free under table item 3 of subsection 38-190(1) (item 3) when: (a) the supply is made to the subscriber who is not in Australia when the thing supplied is done; and (b) the effective use or enjoyment of the supply by the subscriber takes place outside Australia. [3]

The application of paragraph (b) of item 3 (effective use or enjoyment of the supply takes place outside Australia) is explained in Goods and Services Tax Ruling GSTR 2025/2 Goods and services tax: supplies of things (other than goods or real property) where effective use or enjoyment of the supply takes place outside Australia.

Subsection 38-190(4) extends the scope of item 3. Subsection 38-190(4) provides that a supply is taken, for the purposes of item 3, to be a supply made to a recipient who is not in Australia if: (a) it is a supply under an agreement entered into, whether directly or indirectly, with an Australian resident; and (b) the supply is provided, or the agreement requires it to be provided, to another entity outside Australia.

For the purposes of paragraph 38-190(4)(b), the word provided is to be contrasted with the term made in item 3. Consistent with the views expressed in GSTR 2025/2, the Commissioner considers that 'provided' in the context of subsection 38-190(4) is used, in relation to a supply covered by item 3, to distinguish between the contractual flow of the supply made to the recipient and, in the performance of a service (or in the doing of some thing), the actual flow to another entity outside Australia. [5]

Subsection 38-190(4) applies where a supply of global roaming services is made to an Australian business for an employee overseas. The supply is covered by subsection 38-190(4) because the supply is made to a resident entity (the Australian business) but is provided to another entity (the employee), outside Australia. The supply is therefore taken to satisfy paragraph (a) of item 3.

The Explanatory Memorandum accompanying the Bill [6] that inserted subsection 38-190(4) supports the application of subsection 38-190(4) to a supply of global roaming services outside Australia. It uses the supply of mobile telephone roaming to an Australian business with an employee overseas as an example of the types of supplies covered by that subsection.

An Australian resident company, Aus Co, has a mobile phone agreement with Aus Telco. Greg, an employee of Aus Co, travels to China for business. Greg has a work mobile provided by Aus Co that is supplied under a mobile phone agreement with Aus Telco.

While in China Greg accesses the mobile service through a Chinese telecommunication supplier (China Telco). Greg uses his work mobile to call a business contact in Australia and a business contact in China. Greg also uses his work mobile to receive a phone call from a business contact in Australia and a business contact in China.

The supply of telecommunication services made under arrangements for global roaming outside Australia by Aus Telco to Greg's employer, Aus Co, is a supply made to a resident company that is in Australia when the services are performed. The supply does not satisfy paragraph (a) of item 3 unless subsection 38-190(4) applies.

The supply of telecommunication services by Aus Telco to Aus Co is a supply under an agreement entered into with a resident. Paragraph 38-190(4)(a) is therefore satisfied.

Paragraph 38-190(4)(b) is only satisfied if the supply is provided to another entity outside Australia. The supply by Aus Telco is made to the resident employer company. However, it is the employee that is receiving the telecommunication supply when he uses his work mobile. As Greg is an individual who is outside Australia when the supply is performed, the supply is provided to another entity outside Australia. Paragraph 38-190(4)(b) is satisfied.

The supply that Aus Telco makes to Aus Co is GST-free under item 3.

Section 38-570 has no application to the telecommunication supplies as they are not made under arrangements for global roaming in Australia. [7] Diagram 1: Telecommunication supplies made and provided

This Determination applies both before and after its date of issue. However, this Determination will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Determination (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10).