(upbeat music)
-: An international cybersecurity company, CB,
has no fixed place of business in Australia.
They send some employees to Australia for seven months
to share some cybersecurity expert knowledge and techniques
with local Australian cybersecurity firms
in return for a fee, one of the GST implications for CB.
GST potentially applies to transactions
that are connected with the indirect tax zone.
The term indirect tax zone
is basically a reference to Australia.
As far as the supply of goods is concerned,
the supply will be regarded
as connected with the indirect tax zone
if the goods are delivered in the indirect tax zone,
made available in the indirect tax zone,
removed from the indirect tax zone,
or brought into the indirect tax zone.
A supply of real property
will be connected with the indirect tax zone
if the real property is located in it.
As far as supplies of services
and intangibles are concerned,
they are connected with the indirect tax zone
if the supply is done in the indirect tax zone.
However, note that an exception applies
to cross border business to business supplies
of services and intangibles,
in that they are not deemed to be connected
with the indirect tax zone.
As far as the supply of services and intangibles being done
in the indirect tax zone is concerned,
contractual rights are considered done
where the agreement is made.
In contrast, services are considered done
in the location where they are performed.
Another way that supply of services
or intangibles can be connected with the indirect tax zone
is if the supplier is made through an enterprise
that the supplier carries on in the indirect tax zone.
This will be the case if an individual, employee or agent
carries on an enterprise in a fixed place
in the indirect tax zone.
Where there is no fixed place in the indirect tax zone,
it will also apply where the enterprise is carried on
or intended to be carried on for at least 183 days
in a 12 month period in the indirect tax zone.
CB sent employees on contracted work in Australia
for seven months.
CB will be regarded as carrying on an enterprise
in the indirect tax zone,
and so the supply will be connected
with the indirect tax zone.
This is because the employees carried on an enterprise
in the indirect tax zone for more than 183 days
in a 12 month period.
There are also other circumstances
where supplies of services and intangibles
are connected with the indirect tax zone,
this includes where the supply is a right
or option to acquire another thing connected
with the indirect tax zone,
where the recipient is an Australian consumer,
and where regarding telecommunication services,
the enjoyment is in the indirect tax zone.
Exports of goods that are consumed
outside the indirect tax zone are GST-free.
This law is designed to promote Australian international
competitiveness.
The export must be made no later than 60 days
after the receipt of any consideration,
or if earlier, no later than 60 days
after the issue of the invoice.
Services and intangibles are also GST-free
if they are considered exports.
This will be the case when their supply
is connected with goods or property
located outside the indirect tax zone,
when they are made to non-residents
that are not located in the indirect tax zone,
or are enjoyed outside the indirect tax zone.
When goods are imported into Australia,
they will typically be taxable importations.
This will be the case when a taxpayer imports the goods
into the indirect tax zone
and enters the goods for home consumption.
Entry for home consumption refers to the goods
passing customs.
When there is a taxable importation,
10% GST is payable by the Australian recipient
on the value of the taxable importation,
which includes not only the customs value of the goods,
but also costs of inwards transport, freight insurance,
loading costs, and customs duties.
For instance, Jack lives in Australia
and buys a European clothes dryer from an overseas seller
for $1,500 including all costs,
Jack will be liable to pay GST of $150.
However, taxable importations
that are imported for a creditable purpose
by a registered entity constitute a creditable importation.
In such an instance,
the importer is entitled to an input tax credit
to offset the GST liability from the taxable importation.
Some imports are non-taxable importations,
meaning they are not subject to GST when imported.
This will apply to goods that are GST-free, input taxed,
as well as others such as low value imports.
Low value imports are goods that cost
under a thousand dollars,
and overseas suppliers now may be subject
to GST on these transactions,
which is generally passed on to the Australian consumer.
For instance, Jill lives in Australia
and buys a Malaysian medical aid from an overseas seller
for $2,000, including all costs.
As the medical aid is a GST-free item,
Jill will not be liable to pay any GST.
To recap, transactions connected with the indirect tax zone
include the supply of goods,
the supply of real property,
and the supply of services and intangibles.
Such supply transactions are potentially subject to GST,
though exports are generally GST-free.
Taxable importations result in a GST liability
for the Australian recipient.
Though when used for a creditable purpose
by a registered entity,
there can be an offsetting input tax credit.
Non-taxable importations such as GST-free goods
are not subject to GST when imported.