Note: If you're looking for information on Employer taxes in the Australia click here.
AGENCY TAX SUMMARY FOR AUSTRALIA
As an agency, your agreement is with RecruitiFi. RecruitiFi has no physical presence in Australia, thus the supply is not connected with Australia, and is not subject to GST. Payments from RecruitiFi will not include GST, nor does the Agency need to provide GST payments to the ATO for Australian hires.
The Australian Taxation Office has reviewed our terms and business model and has provided the following guidance.
RecruitiFi is considered a non-resident organization in Australia, having no physical presence or employees based in Australia.
Under subsection 38-190(1) of the GST Act, a supply of anything other than goods or real property is GST-free if it is made to a non-resident who is not in Australia when the thing supplied is done; AND
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 supplied in carrying on its enterprise but is not registered or required to be registered.
Since RecruitiFi is not located in Australia at the time an Australian recruitment agency supplies their candidates, and the agency is not supplying work physically performed on goods or real property in Australia, all services provided by the agency are GST-free under the above subsection 38-190(1).
But I have a contract with the Employer, and they're in Australia. Shouldn't I be charging GST to the Employer?
Again, this situation has been reviewed by the ATO, and technically, Agencies are not directly contracted with any Employers for the purposes of Australian taxes. The Employers are contracted with RecruitiFi and pay RecruitiFi for the services. All Agencies are also contracted with RecruitiFi (which is an Australian non-resident organization), and RecruitiFi pays the Agencies as consultants.
Even if an Employer and an Agency had a prior relationship, the RecruitiFi Terms supersede their previous contracts for the duration of their engagement through RecruitiFi.
Whether the Employer is located in the Australia does not factor into the tax situation. This lengthy example from the ATO describes how contractual flow of services overrule actual flow of services in relation to supply.
Since I'm providing the services in the U.S., is there U.S. sales tax?
All Agency services are received by RecruitiFi in New York state. Services are not taxed in New York, so there is no need to collect or pay local sales tax in the U.S.
Tags: Tax, Taxes, GST, Australia, Goods & Services Tax, Agencies, Agency