Hi,
I am seeking clarification with regards to whether GST is to be charged on an invoice I need to send to an Australia registered company for the delivery of Employer of Record (EOR) services outside of Australia.
My company provides EOR solutions to businesses overseas who don’t have a legal entity in the country that they are hiring employees. As Employer of Record, we become the legal employer of the worker. The worker gets the work orders directly from my client and my client manages the day-to-day management of the worker. My invoice covers the salary cost of the worker + a management fee.
The client of mine is based in Australia and doesn't have an entity in Malaysia. The client is using my EOR services provided to hire employees in Malaysia.
I have two questions:
1. Do I in this instance need to charge GST or not? The ATO website says the following:
A supply of a service is GST-free if the: recipient of the service is outside Australia, and use of the service is outside of Australia. I am not sure if this specific scenario satisfies both of these requirements?
- The recipient of the service is based within Australia as my client is an Australia registered company.
- The service I offer (EOR services) and what my clients pay a Management Fee for, is used outside of Australia (in Malaysia).
My invoice is comprised of two components:
- Salary of the worker
- EOR Management Fee
2. If GST is chargeable, do I charge it on the EOR Management Fee only or do I also need to charge GST on the salary amount? I assume because I am simply passing through the salary amounts (acting as a pass-through for payment)I generally would not charge GST on the salary amounts, but only on the management fee?
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