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  • Issue 13 Tax invoices

    13.1 Do you have to be registered for GST to issue a tax invoice?

    Yes. To be able to issue a valid tax invoice an entity must be registered or required to be registered for GST.

    In order to be able to claim an input tax credit for a creditable acquisition that has a GST-exclusive value of above $50, a business must first hold a tax invoice. A tax invoice is the supplier's advice to the recipient about the supply and is purely documentary evidence of the recipient's input tax credit claim.

    An entity's input tax credit entitlement does not steam from a tax invoice, but from the actual purchase of the creditable acquisition. Once requested by a recipient of a supply, a supplier is obliged to issue a tax invoice and must do so within 28 days of the request. However, in order for a tax invoice to be a valid tax invoice it must meet the information requirements set out in GST law. Included in this is that if the document states the amount of GST payable on the supply, it is the correct amount. If the amount is not correct, the document issued will not be considered to be a tax invoice and the supplier may be subject to further penalties for providing false and misleading information.

    If you issue a document that purports to be a tax invoice, but which is not a tax invoice, and which contains information that is not correct, you may be liable to a penalty, under section 284-75 of the Taxation Administration Act 1953, of double the amount of tax that was payable but would not have been payable if the statement was true.

    The question of issue of tax invoices by an agent is dealt with in question 14.1.

    13.2 Is it an offence to issue a tax invoice without being registered for GST?

    Part III of the Taxation Administration Act 1953 ('the TAA') provides penalties for various offences against laws of which the Commissioner of Taxation has the general administration, which include the indirect tax laws.

    You may commit an offence if you issue a document that purports to be a tax invoice, but cannot be. This is so particularly if the recipient is misled by the document into believing that an input tax credit can be claimed for the acquisition. For example, subsection 8L(1) of the TAA provides an offence where a person who is required to make a record of a transaction makes it in such a way that it does not correctly record the transaction.

    13.3 Section 29-70 refers to a 'tax invoice for a taxable supply'. Can there be a tax invoice for a supply that is not a taxable supply?

    No. The tax invoice requirements are dealt with in section 29-70, and in regulations 29-70.01 and 29-70.02.

    A "tax invoice" is only a valid tax invoice when it is issued in respect of a taxable supply, or a supply which is in part a taxable supply. However, a tax invoice may be issued for a supply which is partly GST-free or input taxed and partly taxable.

    Goods and services tax ruling GSTR 2000/17 explains how the tax invoice requirements will deal with a wide range of commercial transactions. In relation to a 'tax invoice' issued for a non-taxable supply, the ruling says:

    Documents headed 'tax invoices' for non-taxable supplies

    85. A supplier may make both taxable supplies and supplies that are not taxable. It may not always be possible to have two sets of documents. The supplier may issue a document for a non-taxable supply that is headed with the words 'tax invoice' if the document clearly shows that the supply does not include GST.

    86. The supplier should then cross out the words 'tax invoice' or the word 'tax'. However, if this is not possible, the document should show GST as nil or zero. The tax invoice cannot include words that indicate the price is inclusive of GST as this would not be correct.

    13.4 The draft ruling on recipient created tax invoices suggests that parties must be registered before entering into the agreement

    This will be very difficult to comply with in the transitional period, as all parties to the agreement will not always be GST-registered. How will the ATO treat this situation in the transitional period?

    GSTR 2000/10 deals with recipient created tax invoices. It provides that both the recipient and the supplier must be registered for GST when a RCTI is issued.

    The relevant paragraphs from the ruling follow:

    37. In addition to the requirements in paragraph 16, certain other requirements must be fulfilled when issuing RCTIs. The descriptions of all three classes of tax invoices, determined under subsection 29-70(3) of the GST Act, that may be issued by recipients include the requirements of issuing RCTIs in paragraph 13.

    38. To issue RCTIs that belong to one or more of the three classes, the recipient and supplier must satisfy all of these requirements. That is, a document is an RCTI only if it is issued by a recipient who satisfies the requirements of the determination when the RCTI is issued.

    39. The requirements that recipients and suppliers must satisfy are intended to ensure compliance with the GST law.

    40. The recipient and the supplier must be registered for GST purposes when an RCTI is issued. A supplier or recipient who is not registered but is required to be registered does not satisfy the requirements for issuing RCTIs.5

    A recipient cannot issue an RCTI:

    a. earlier than the date of effect of their registration, or for any supply received before that date;

    b. on or after the date of effect of their cancellation of registration, or for any supply received on or after that date; or

    c. if either they or their supplier are merely required to be registered but are not registered for GST.

    41. Each time the recipient issues a document to a supplier that it treats as an RCTI, the recipient must be reasonably satisfied that the supplier is registered for GST, on or after 1 July 2000, when the document issues. If you have a reasonable doubt that your supplier is not registered for GST when you issue an RCTI you may contact the Australian Taxation Office (this information can be accessed on or after 1 July 2000 via the internet at www.business.gov.auExternal Link, or by contacting the ABN Lookup Infoline on 13 72 26).

    13.5 Invoicing on behalf of participants in a managed agricultural project

    The operation of the tax invoice and adjustment note rules depends on the nature of the relationship between the manager or promoter, participants and third parties.

    Where the manager is acting as agent for the investors, it would be able to issue a tax invoice for the supplies it makes on behalf of the investors. Of course, some supplies may not be taxable supplies if made by small investors who are not required to register, and choose not to register for GST. In these cases the manager could provide a tax invoice for the taxable supplies- and isolate out the part of the total sale that is attributable to supplies from a non-registered supplier.

    So the tax invoice, where required, issued on behalf of each registered supplier will show the price of each taxable supply.

    Where an agent acts for more than one principal in a single dealing with a customer the tax invoice would need to show the name and ABN of each principal, and the price for each separate taxable supply. However to relieve any administrative difficulty this may cause, the Commissioner will treat a document that otherwise satisfies the requirements of subsection 29-70(1) as a tax invoice if it shows the name and ABN of the agent, and the total price for all of the taxable supplies (goods and services tax ruling GSTR 2000/17).

    13.6 Do persons using simplified accounting methods (SAMs) need to issue tax invoices?

    The obligation of a supplier under section 29-70 of the GST Act to issue a tax invoice for a taxable supply is unaffected by choosing to use a simplified accounting method.

    However, because many of the suppliers in question are small food retailers, it is unlikely that their customers will be business consumers requiring a tax invoice. This, together with the $50 value threshold under subsection 29-80(1), should in practice mean that requests for tax invoices are very limited.

    As explained on page 21 of Simplified GST Accounting Methods for Food Retailers, retailers will need to manually prepare tax invoices if necessary. In the usual case a purchaser would ask for a tax invoice at the time of the purchase.

    13.7 What should the content of a tax invoice be when issued by or on behalf of a person who adopts a simplified accounting method?

    A simplified accounting method merely provides a method for working out the net amounts of retailers to whom it applies. It is not a simplified method for working out the GST payable on a particular taxable supply.

    The tax invoice requirements for persons using a SAM are identical to those for persons who do not use a SAM. In cases where a transaction is for a greater value than $50 the issuer would need to work out whether the supply is taxable and if so the GST that is payable on the taxable supply, as well as include the other information required on the tax invoice.

    A person making an acquisition from a supplier who uses a SAM would be entitled to treat a non-complying document as a tax invoice in the same circumstances the recipient could when acquiring from a supplier who does not use a SAM.

    13.8 What is the amount to appear in a tax invoice that relates to a contract subject to a retention?

    GSTR 2000/29 deals with the attribution rules where a contract amount was subject to a retention. Only the net amount is attributable for both liability and input tax credit (ITC) purposes.

    How will a supplier issue a tax invoice for such a supply? Will the tax invoice be for the total amount (before the retention is applied) or the net amount, being the amount that will be paid to the builder or contractor?

    One particular situation arises in connection with recipient created tax invoices (RCTIs) where the payment amount is known at the time of issuing the RCTI, but the question also arises where the contractor will issue the tax invoice, for example, will claim $110,000 but only be paid and only have a liability to account for GST on $99,000. The customer will only have an entitlement to an input tax credit based on $99,000.

    Paragraphs 49 and 50 of GSTR 2000/17External Link discusses the tax invoice requirements for supplies subject to retention payments. While attribution will be delayed for that part of the consideration retained, the price of the taxable supply is still the total consideration payable including the retention payment. Therefore, there is a difference between what happens on the attribution front for input tax credit entitlements and the price shown on the tax invoice since the price shown on the tax invoice will be the amount payable on the supply, will be the full amount, not the amount net of the retention.

    While the determination under 29-25 will defer attribution of the GST payable and the input tax credit for the retention amount until paid, to claim the input tax credit for the net amount paid, the recipient must hold a tax invoice that shows the total price. This is no different from a person who accounts on a cash basis who, despite holding a tax invoice for a purchase, will only be able to claim ITCs as the consideration is provided. The tax invoice is not the source of the entitlement to attribute the ITCs- although it supports it - the attribution rules, as varied by any of the Commissioner's determinations will dictate this.

    Paragraph 50 ofGSTRExternal Link 2000/17External Linkfurther states:

    Although attribution will be delayed for that part of the consideration retained, the price of the taxable supply is the total consideration payable including the retention amount. To claim the input tax credit for the net amount paid, the recipient must hold a tax invoice that shows the total price. You can satisfy this requirement and still have the document show the net amount payable. For example, the document may set out the price less the retention amount, with a net amount payable.

    In the example provided the price of the supply must still be $110,000.

    13.9 ABN and ACN requirements on invoices - in the case of a corporate trustee, whether a trustee company name and ACN have to appear on tax invoices in addition to the trust name and ABN?

    ASIC advise that obligations to place ACNs or ARBNs on public documents are imposed upon companies (s.153(1)) and on registered Australian bodies and registered foreign companies (s.601DE). A trustee company will usually fit into one of these categories, so it must place its ACN/ARBN on public documents which it issues as trustee of the trust.

    The new regulations under the Corporations Law allow these trustees free, for Corporations Law purposes, to use either their ACN/ARBN or their ABN with their name on the public documents, provided the ABN includes the Corporations Law Number, and the quotation of the ABN is used in the same manner in which quotation of the Corporations Law number would normally occur.

    For example, a company is required to place its ACN with its name on the first page where that name appears in a document

    There is no requirement under Corporations Law for the trust to display the ACN of the trustee company on public documents. However, it could happen that a single document was both a tax invoice of a trust for the purpose of the new tax legislation and a public document of the corporate trustee of that trust

    The trust and the trustee are different "entities" and may need to be identified separately. The ABN of the trust does not identify the trustee as the trust may have different trustees from time to time. The ACN of the trustee cannot always identify the trust as the trustee might act as trustee of many trusts. However the various requirements could be dealt with by a trustee company which is trustee for a single trust showing both the trustee company's ACN and the trust's ABN.

    13.10 RCTI determinations

    Why have the Determinations re-included the indemnity from the recipient that was part of the draft ruling GSTR 1999/D5 but was deleted in the final ruling GSTR 2000/10?

    There are gaps in the numbering sequences of the Determinations. Is the ATO considering applications lodged by other industry associations? If so, will the ATO advise what requests have been received and are being processed? Has the ATO denied any applications and, if so, what are the relevant industries?

    ATO position

    Indemnities were included in recipient created tax invoice determinations if the relevant industry association asked for them to be included in the determination.

    RCTI Determinations were originally allocated random numbers prior to approval. This resulted in there being gaps in the numbering. The orderly sequence will be restored in time. Applications that did not meet the relevant requirements were denied, but secrecy and privacy legislation prohibits the ATO from commenting on particular requests which have been denied.

    Tax invoice issues

    ATO response to the issues - general comment

    There are already in existence comprehensive ATO rulings which provide either the final or proposed ATO view in relation to the laws surrounding tax invoices and goods sold or acquired through agents. These publications are referred to at relevant points in the material below.

    No technical issues outside of the scope covered in these rulings are canvassed. We consider that the rulings provide a comprehensive coverage of interpretation issues, and the issues raised are matters of common commercial practice rather than ones of interpretation. In these answers we focus on practice issues.

    13.11(a) Names on tax invoices

    A number of people are querying matters relating to the names that appear as the recipient on tax invoices. The queries relate to whether certain documents can be accepted as tax invoices for the purpose of claiming input tax credits or whether replacement documentation should be sought. The questions generally revolve around the requirement that the tax invoice must show the legal name of the recipient.

    ATO position

    We do not require that the tax invoice must show the legal name. In this regard GSTR 2000/17 provides

    57. The term 'name' is not defined in the regulations and therefore takes its ordinary meaning. The Macquarie dictionary defines it to include 'a word or a combination of words by which a person, place, or thing, a body or class, or any object of thought, is designated or known'.

    58. Therefore, the name of the supplier or recipient shown on the tax invoice may be its legal name, or the business or trading name.

    A name needs to provide a reasonably clear and accurate indication of who it is. For identifying entities and distinguishing between particular entities we would rely primarily on the ABN. This is one of the reasons for the ABN of the issuer to be shown on all tax invoices.

    13.11(b) Variations of names

    In a case where the recipient is a company, say Melbourne Corporate Office Services Pty Ltd. What variations of the legal name can be accepted as authorising the input tax credit claim:

    • Melbourne Corporate Office Services
    • Melbourne Office Services Pty Ltd
    • Melbourne Corporate Offices Pty Ltd
    • Melb Corp Office Services P/L

    ATO position

    Whether a name is clear and unambiguous word or a combination of words by which the recipient is designated or known depends on what is shown on the document compared with what the legal, business or trading names of the enterprise are. As a guide, the first and third dot points provide a clear indication as to whom the recipient is, the fourth also does because 'corp' is a well-known contraction of 'corporate', but the second is misleading.

    13.11(c) Misspelt names

    What happens if the name of the recipient is misspelt. If it is apparent who the recipient is, can the input tax credit be claimed?

    ATO position

    The answer to this question would depend on how misspelt the name is. A minor transposition or single missing letter would not create ambiguity As mentioned above, the question is whether the name of the recipient is clearly indicated. For example, if 'Melburne Corporate Office Services' is shown the spelling error is hardly noticeable, but what does Melburne Croproate Offic Srevces convey to the reader's mind?

    13.11(d) Invoices issued to group entities

    In a number of situations invoices are routinely addressed to a single entity in a group (but not a GST group) that holds the group bank account. What is necessary in these circumstances to prove that the acquisition is by a particular group entity with the named entity acting as an agent in the transaction?

    Assumptions relating to this issue

    The company group in question reports annually to shareholders on a consolidated basis.

    The entity holding the bank account ('the banker') is the channel for all receipts and payments by each member of the company group.

    The ordering system in the member companies in the group requires that supplies are physically delivered to the entity that is going to sell or consume them, but directs all invoices and claims for payment to the banker. The banker at no time acquires either physical possession of, or property in, the supplies delivered to the associated companies in the group. The acquisitions are clearly made through the banker as agent.

    ATO response

    The GST law on tax invoices as they affect agents is discussed in paragraphs 35 to 40 of taxation ruling GSTR 2000/17External Link. Further discussion on agents may be found in paragraphs 87 to 91 of taxation ruling GSTR 2000/29External Link regarding supplies and acquisitions through agents who provide the information required by suppliers and recipients for attribution purposes. Goods and services tax ruling GSTR 2000/37External Link has an in-depth look at agency relationships generally and in particular the application of the special rules in Division 153 of the A New Tax System (Goods and Services Tax) Act 1999 in regard to agents and insurance brokers. It should be noted that this last document is still a draft release and does not have the status of the final ATO view on the subject.

    13.11(e) Discretion to treat non-complying documents as tax invoices

    It would be very helpful if the ATO could issue some guidelines on the practicalities of tax invoices, perhaps the circumstances where the ATO, or individual auditors, will exercise the discretion contained in the final part of section 29-70.

    ATO response

    Paragraphs 38 and 39 of taxation ruling GSTR 2000/17 discuss two specific examples where the Commissioner will treat as a tax invoice a document that is not a tax invoice. These are where multiple supplies are made through an agent, and situations where an input tax credit is claimed without knowing that the tax invoice supporting it doesn't fully satisfy subsection 29-70 (1), eg an incorrect ABN is shown. The latter is conditional upon the taxpayer accepting the invoice exercising reasonable care and good faith.

    It is not practical to set out general circumstances where the ATO will exercise the discretion contained in subsection 29-70(1). There are so many permutations of situations in the sales and purchasing cycles of businesses that any such list would be of limited value.

    As in the company group situation discussed earlier, our prime consideration is the integrity of the New Tax System. The legislation and regulations supporting the tax invoice regime are very specific and have been introduced for a clear purpose, and that is to provide accountability in a self-assessment environment and a clear audit trail of transactions for a multi-staged tax such as the GST. To significantly depart from their requirements would be counter-productive to tax reform initiatives, and it is certainly not fair to the majority of taxpayers who have put a lot of effort and expense into positioning themselves to comply with the new rules.

    If we start with the integrity of the New Tax System, all that can be said is that we will adhere to the principle in paragraph 40 of GSTR 2000/17, that a taxpayer who exercises reasonable care and acts in good faith will not be disadvantaged. The circumstances can only be determined on a case by case basis, and any exercise of the Commissioner's discretion depends very much on individual circumstances. For example, we would not expect to be exercising the discretion for a taxpayer on a continuing or permanent basis. If the taxpayer, having had one experience with a supplier, now knows that supplier's documents are not proper tax invoices, we would expect that the taxpayer would be insisting on future proper documentation or taking steps to make withholdings from payments to the supplier. If there is an ongoing problem with the supplier, it begs the question why the taxpayer would continue to deal with him or her, unless it is a sole supplier of the particular goods or services.

    The tax invoice is fundamental to the effective operation of GST, and the ATO will examine cases of deliberate non-compliance with the tax invoice provisions.

    An ATO Practice Statement has recently been issued dealing with the remission, under Section 298 in Schedule 1 to the Taxation Administration Act 1953, of administrative penalties that are imposed by Section 288 of that Schedule. One of the offences subject to these penalties is failing to issue a tax invoice (Section 288-45 in Schedule 1 to Taxation Administration Act 1953).

    The ATO will be applying the policy contained in the Practice Statement in appropriate circumstances.

    If a taxpayer has a problem and wants us to consider exercising the subsection 29-70(1) discretion, he or she should write to the ATO requesting that we do so, and provide the following information in support of the request:

    The name and address of the supplier, and his or her ABN if known.

    The name, address and ABN of the recipient.

    Name and contact phone number of the recipient.

    The date of the transaction.

    Description of the nature of the supply.

    Brief purpose of the supply (eg capital acquisition, trading stock, raw materials, supply of services, etc)

    The amount paid or payable for the supply.

    Brief details of what documentation is held by the recipient to evidence the supply (for example, copy of order, bill of lading, delivery note, cheque requisition and the like).

    If the client does apply for exercise of the discretion, there are two things which must be understood:

    No undertaking can be given that the request will be accepted.

    Any approval given is limited to the individual supply only. It cannot be applied to subsequent supplies made by the supplier involved if the recipient chooses to continue to trade with that supplier. If they do elect to keep trading with that supplier, it follows that they would need to seek exercise of the discretion on every occasion that the supplier refuses to issue a tax invoice for a supply. No undertaking can be given that the ATO will continue to support such arrangements beyond the first time without a good reason to do so.

    13.12(a) Some software programs show an amount labelled 'WEG' which represents combined GST and wine equalisation tax ('WET') on invoices the software produces for use by small wine makers. Is this practice acceptable?

    Generally, an entity must hold a tax invoice to claim an input tax credit for a creditable acquisition, and the maximum amount of the input tax credit is generally the amount of GST payable on the supply (which amount does not include wine equalisation tax).

    A tax invoice is a document that sets out certain things required by GST law. Among other things, the total amount of GST payable on the supply to which the tax invoice relates must be shown. An exception to this general rule occurs in the case where the tax invoice only shows taxable supplies and the GST payable on those supplies is exactly 1/11th of the total price. In this case a statement to the effect that the total amount payable includes GST may be shown instead of the GST amount.

    A document that shows the 'WEG' amount (meaning a combined amount of GST plus WET) in place of the GST amount does not meet the tax invoice requirements since the total amount of GST on the tax invoice is not shown. It also tends to mislead acquirers into inadvertently claiming an excessive input tax credit by implying an input tax credit is available for the WET, which is not the case. We have consistently advised that this practice is unacceptable and without the appropriate statement regarding the amount of GST on the supplies the document is not a valid tax invoice and does not give rise to an input tax credit entitlement.

    13.12(b) Is it satisfactory for tax invoices to simply include a reference to 'GST included in total' where the supply involves some combination of GST-free, input taxed and taxable supplies?

    Generally, an entity must hold a tax invoice to claim an input tax credit for a creditable acquisition. A tax invoice is a document that sets out certain things required by GST law. Where some of the acquisitions on a tax invoice are GST-free goods, the tax invoice must clearly identify each taxable supply and state the total amount of GST payable.

    A document that includes a statement to the effect that the total amount payable includes GST for the supply (as required by paragraph 29-70.01(4) of the A New Tax System (Goods and Services Tax) Regulations 1999) would not meet the tax invoice requirements where not all the things supplied bear 1/11 GST in the price, or where the tax invoice relates to a combination of GST-free/input taxed and taxable supplies.

    A document that purports to be a tax invoice when it does not meet the requirements and leads the acquirer to assume more GST has been paid than is the case is potentially misleading and the issue of such a document may constitute an offence. However, this risk can be avoided if on the face of the document it is made unambiguously clear that there is no GST on the supply. Ideally, the words 'tax invoice' or 'tax' (if the document is actually an invoice), should be deleted or crossed out.

    It would be sufficient, however, if the document which is solely for a GST-free supply includes a statement to the effect that there is no GST for the supply. A document that includes a mere statement to the effect that the total amount payable includes GST is likely to be misleading in many cases and is not acceptable.

    1 Section 32-5 of the ITAA 1997 denies a deduction, under section 8-1 of that Act, for providing entertainment. However, section 32-20 provides an exception where the entertainment is provided by way of a fringe benefit.

    13.13 Single tax invoice made out for supplies to multiple entities

    A supplier issues a single tax invoice for a supply made in the name of a single recipient but the goods are drawn upon by multiple entities that are not members of a GST group. The question is whether the multiple entities hold valid tax invoices so that they are entitled to input tax credits in these circumstances.

    Example:

    A delivery of a single tanker load of fuel is made to a fuel depot where several different entities running bus services, who are not part of a GST group, draw fuel from the depot. The fuel supplier may not know who the multiple recipients are, may not know how much of the supply is destined for each of those recipients or may be unwilling to deal with more than one entity in relation to the supply. For this reason it issues a single tax invoice in the name of one entity for the whole supply.

    End of example

    Contributed by CPAA

    ATO response

    It is presumed that by some method, each of the entities drawing the fuel is able to determine how much of the fuel drawn from the fuel depot (including from the tanker load covered by this tax invoice) is attributable to their business operations. They will be looking to claim input tax credits for their share of the creditable acquisitions covered by valid tax invoices, including the single tax invoice supplied in relation to this tanker load.

    Agency

    One threshold question would be to determine whether the entity in whose name the acquisition of fuel is made is in fact an agent of the entities drawing on that fuel. If an agency arrangement exists, the tax invoice need show only the agent's details (para 36 of GSTR 2000/17). Also each recipient can claim an input tax credit if the agent holds the one tax invoice. The ATO would want to see that there is a basis of apportionment in place which reflects actual usage of that common acquisition by each registered entity and that the total input tax credits claimed do not exceed the amount of GST paid in tax invoices held by the agent. Each recipient should have records that explain their portion of the acquisition and the amount of consideration provided.

    The factors that indicate an agency relationship are dealt with in GSTR 2000/37 at paragraph 28 and subsequent paragraphs.

    No agency

    If there is no agency relationship between the entity invoiced by the fuel supplier and the entities that are the users of the fuel, then strictly the supplier must issue a separate tax invoice to each recipient as required by sub-section 29-75(2). Obviously that will cause extra cost and effort for the supplier and may be impossible to determine if the basis of apportionment of the acquisition is not known at the time of supply or not known to the supplier. For example, the basis of apportioning the consideration for fuel supplied may depend on actual fuel drawn by each entity in a particular tax period and this may vary from period to period. It will not be known at the time of supply.

    In these circumstances the ATO will accept that the single tax invoice will be a valid tax invoice under subsection 29-70(1) provided the ultimate recipients are able to be identified from the name of the entity to which the tax invoice is made out and provided there is an agreement between all entities drawing on that acquisition about the basis of allocation of the input tax credits relating to that tax invoice.

    13.14 CPD enrolment/professional membership renewal forms

    CPAA raised a subsidiary query about the requirement for a supplier to issue a tax invoice in circumstances where educational providers and professional associations, such as CPAA, issue CPD enrolment forms with an accompanying message that, once completed by the enrolee/attendee, a photocopy of the enrolment form will suffice as a tax invoice. The invoice is effectively generated by the recipient. It may not include terms like GST-inclusive price on the invoice. Does this document satisfy the requirements of a tax invoice? Is this considered to be issued by a supplier or, alternatively, at what point (if any) is it considered to be a RCTI?

    Contributed by CPAA

    ATO response

    Background

    Further to the ATO response that was provided in the March Draft TPIP issues log, guidance was sought as to whether the Commissioner's discretion would be exercised to treat course registration forms as tax invoices, even though some of the required information is not included at the time of issue. Subsequent to the March meeting, TPIP member Associations have similarly queried whether the Commissioner's discretion would also be exercised to treat membership renewal forms as tax invoices.

    At paragraph 26 of GSTR 2000/17, the Commissioner has indicated that he will exercise his discretion under subsection 26-70(1) to treat certain offer documents as a tax invoice if they contain as statement along the lines that 'the document will be a tax invoice for GST when you make a payment.' This paragraph is intended to apply to documents that otherwise meet all the requirements of section 29-70, including the information in the Regulations, other than the fact that the document does not relate to a taxable supply that has been made at the time of issue.

    Where the recipient has a choice between supplies on offer, suppliers will generally be unable to comply with subsection 29-70(1) as they will not know the extent of the supply and therefore the price of the supply. In any other case where this information is known, suppliers should comply with the subsection 29-70(1) requirements expressed in GSTR 2000/17.

    Any proposal that the Commissioner should exercise his discretion to treat membership renewal and course registration forms as tax invoices, where the supply has not been made at the time of issuing the renewal notice or registration form and where other required information may not be included, would involve a considerable extension to the concession made in paragraph 26 of GSTR 200/17. It would be relevant to consider why the particular entity or industry is unable to issue a document that complies with subsection 29-70(1).

    However, recognising problems faced by these suppliers, it may be appropriate to exercise the Commissioner's discretion under subsection 29-70(1) in relation to membership renewal and course registration forms in the following circumstances:

    • The price of the supply cannot be known by the supplier at the time of issue because the recipient has a choice between supplies on offer;
    • The document is sent to an identified recipient (such as a member of the professional association) on a pre-printed form that contains the name and address of the recipient;
    • If the document provides for taxable and non-taxable supplies (such as Division 81 fees and charges), it needs to provide clear information to enable the recipient to calculate the price of the supply and identify the corresponding GST amount included in that price. For instance, the following could be outlined in a form for membership renewal:

    Tick box

    Item

    Amount (net of GST)

    GST

    Amount incl GST

    x

    Membership fee - level 1

    $500.00

    $50.00

    $550.00

     

    Membership fee - level 2

    $900.00

    $90.00

    $990.00

    x

    State license fee

    $47.00

    0

    $47.00

     

    Interest group

    $60.00

    $6.00

    $66.00

     

     

     

     

     

     

    TOTAL (recipient completes)

    $547.00

    $50.00

    $597.00

    In this example, the recipient chooses membership fee (level 1) and the state license fee (Division 81 fee):

    • The document, when completed, meets the requirements of regulation 29-70.01 (in essence, the recipient completes the tax invoice);
    • All other information requirements under subsection 29-70(1) are met when the form is completed and it includes the following or similar statement:
      • 'This document will be a tax invoice for GST purposes when fully completed and payment made.'
       
    • The recipient retains a copy of the completed document for the same period that he or she would have needed to if the document was a tax invoice issued by the supplier on the day it was issued to the supplier by the recipient.

    13.15 Tax invoices and representatives of a GST group

    Issue

    Can the Tax Office please give guidelines about the nature of tax invoices that should be held to give the representative of a GST group an entitlement to claim an input tax credit for an acquisition made by a member of the GST group other than the representative member.

    The Tax Office has issued guidelines at paragraphs 77 & 78 of GSTR 2000/17 about the format of tax invoices to be issued by the members of a GST group but I am not aware of any guidelines about the tax invoices that must be held to permit attribution of input tax credits.

    ATO response

    Under section 48-45 of the GST Act, a representative member is entitled to the input tax credit for a creditable acquisition which a member of its GST group makes. This provision merely gives the representative member the entitlement to the input tax credit. It does not alter the fact that the group member makes the creditable acquisition, nor does it alter the fact that the group member is the recipient of the supply which gives rise to the creditable acquisition. As such, where the recipient's details are required on a tax invoice, it is the group member's details that must be shown, and not those of the representative member.

    The primary purpose of the tax invoice is to substantiate an acquisition that an entity makes. The fact that another entity, namely the representative member, is entitled to the input tax credit does not change the nature of the information required to substantiate the acquisition. Accordingly, when a member of a GST group makes a creditable acquisition, the information required on the tax invoice does not differ from that which would have been required had the group member not been a member of a GST group.

      Last modified: 22 May 2014QC 28063