Q: M company is an Australian company, which owned by Australian shareholder and UK shareholder equally. The UK shareholder carries on a similar business in the UK under the same branding that the Australian company carries on in Australian. The Australian company has engaged the services of a digital marketing agency to do some advertising design. It has on charged some of the cost of the design to the UK company for design services. Is the on-charging of the design for UK company subject to GST?
A: The on-charging portion of the fee would be the work done for the UK company while the Australian company acting as a conduit. This supply made to the Australian company as agent for the UK company is taken to have been made not to the Australian company but to the UK company, which would be a GST-free supply (item 2 of the table in GST Act s 38-190(1)). Therefore, the on-charge would not be subject to GST.