We recently sought advice on the charging of GST on domain sales to
overseas residents from our accountant and received the following
advice, most of this relates to services other than domain names but
will probably of interest to many people on the list:


Quote "
s38-190 of the GST Act sets out "export" services which are GST-Free.
There are a few categories of supply that qualify - the two that are
relevant are:

Item 2 - supply to a non-resident who is not in Australia at the time
of supply, the non-resident acquires the supply in carrying on a
business that is not required to be registered for GST, and the supply
is not "work physically performed on goods situated in Australia when
the work is done".

Item 3 - Supply to anyone (including residents) who are not in
Australia at the time of supply, the "use or enjoyment" of the supply
takes place outside Australia, and the supply is not "work physically
performed on goods situated in Australia when the work is done".

Item 2 only covers supplies to non-resident businesses, Item 3 is a
little more broad and would cover non-business websites as well.  The
question is what is covered by "work physically performed on goods".
There has been a ruling issued (GSTR 2003/7) that addresses the
meaning of this term and that ruling states that use of the supplier's
goods in delivering the service is not caught by the term and and is
GST-Free.  The example they give is of a supplier's computer in
Australia from which software is downloaded over the internet - this
is GST-Free if the person buying is outside Australia (and intends to
use the software outside Australia).  This should adequately cover the
hosting of dedicated servers.

There is also some doubt as to whether programming a website would
constitute work being "physically" performed.  In the ruling it refers
to the work having to physically alter the goods and programming
doesn't do that.  So creation and maintenance of websites should also
be GST-Free even though they are on Australian servers.


In the course of checking this I came across an ATO "Interpretive
Decision" (ie ATO opinion) ID 2001/575 that states that the supply of
Domain Names to a non-resident is also GST-Free.  You should change
your pricing on these for overseas customers.
"


Andrew


On Thu, May 20, 2004 at 02:53:13PM +1000, Chris Disspain wrote:
> All,
> 
>  
> 
> There have been a number of postings on the DNS list concerning GST and overseas registrars. I have seen various
> opinions expressed concerning this. I thought it appropriate to inform the list of the current position.
> 
>  
> 
> The issue is far from being as clear cut as some have assumed. There are various reasons for this and I do not intend to
> go into detail here but for example there are questions such as:-
> 
> What is the actual service provided by the registrar? The domain name licence is granted by auDA so is the registrar
> acting as an agent for auDA and if so ..
> 
> Where is the service provided from? 
> 
>  
> 
> auDA has, for some time, been engaged in high level discussions with the International GST section of the ATO about this
> issue. As there are no straight forward answers in the GST regulations, no conclusion has yet been reached but as a
> result of our discussions, auDA is now in the process of applying to the ATO for a formal ruling on the GST treatment of
> overseas registrars.
> 
>  
> 
> Whilst you are all, of course, welcome to continue to debate this issue on the DNS list please be aware that auDA cannot
> take any action to either change or support the status quo until such time as we have received the ruling from the ATO. 
> 
>  
> 
> Regards,
> 
>  
> 
> Chris Disspain
> 
> CEO - auDA
> 
> ceo§auda.org.au
> 
> www.auda.org.au
> 
>  
> 
>  
> 

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