• Tax invoices and MOG changes

    A tax invoice is a document that is issued by the supplier and satisfies certain requirements, unless it is a recipient created tax invoice (an RCTI is issued by the recipient).

    It is important that agencies ensure they hold tax invoices for purchases made during and after MOG changes so they can claim GST credits (if entitled). Tax invoices from suppliers must correctly record, amongst other things, the agency's identity and/or ABN.

    Names on tax invoices

    A tax invoice or RCTI must include information to establish the identity of the supplier, and the recipient where applicable.

    A tax invoice or RCTI that shows a legal name or a registered business name will satisfy the requirement to provide sufficient information to clearly ascertain the identity of the Government organisation.

    Prior to 28 May 2012, government organisations and businesses could record 'trading names' on the Australian Business Register (ABR). A trading name is an unregistered business name. That is, a trading name is a 'business' name that is used by a government organisation (or an entity) in carrying on an enterprise and is not registered under the national business names registration system – administered by the Australian Securities and Investments Commission (ASIC).

    Trading names that were displayed in the ABN Lookup before 28 May 2012 will continue to be displayed up to 1 November 2018, but can no longer be updated and new trading names cannot be added.

    A Government organisation that has a trading name which is displayed in the ABN Lookup prior to 12 May 2012 can use the trading name in a tax invoice or RCTI as information to establish its identity up to 1 November 2018.

    Example 1: Invoices issued with details of the losing agency for sales made to the gaining agency

    Agency A is affected by a MOG change and becomes a losing agency, they have outstanding orders placed with Suppliers Ltd that relate to the operation of the transferred functions. Suppliers Ltd makes sales under those orders to Agency B, the gaining agency. Agency B then uses the goods purchased in operating the transferred functions and is liable to make payments to Suppliers Ltd. Agency B is entitled to the GST credits for the goods purchased. Supplier Ltd issues Agency B with a document that satisfies all the requirements of a tax invoice but it only contains sufficient information to work out the identity and ABN of Agency A, the losing agency.

    This document is therefore not a tax invoice and Agency B cannot use it to claim the GST credits.

    Example 2: Invoices issued by the losing agency for sales made by the gaining agency

    After MOG change comes into effect, Agency C (the losing agency) will continue to process all sales relating to the transferred functions made by Agency D (the gaining agency) for a number of months.

    Comp Ltd, a GST registered recipient of the sales, can claim GST credits on their purchases. Agency C issues Comp Ltd with a document that satisfies all the requirements of a tax invoice but does not contain sufficient information to work out the identity and ABN of Agency D. The document contains the identity and ABN of Agency C.

    End of example

    The document is therefore not a tax invoice and Comp Ltd cannot use it to claim the GST credits.

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    Treating a document as a tax invoice

    A supplier issues a document to a recipient. The document does not contain all the information required of a tax invoice. The recipient may treat the document as a tax invoice if:

    • it would be a tax invoice but for the missing information; and
    • the missing information can be found in other documents given to the recipient by the supplier.

    However, if the recipient finds the missing information from a source which is not another document given to it by the supplier, the recipient cannot rely on this information for the purposes of treating the (first mentioned) document as a tax invoice.

    Tax invoices and discretion

    We have the discretion under the GST law to treat some documents as tax invoices even though they do not meet all the requirements of a tax invoice.

    When MOG changes occur, gaining agencies can request that we exercise the discretion to treat documents satisfying all the requirements of a tax invoice except that they contain the losing agency’s identity and ABN as tax invoices. This applies to documents that are issued or to be issued by:

    • suppliers to a losing agency for sales made to the gaining agency
    • the losing agency for sales made by the gaining agency.

    The gaining agency should follow the procedures within their jurisdiction in relation to requesting the exercise of our discretion to treat certain documents as valid tax invoices.

    In the situations described in Example 1, the losing and gaining agencies should also ask the suppliers to take steps to use the identity and ABN of the gaining agency in future tax invoices.

    Losing and gaining agencies should inform recipients to sales they make relating to the transferred functions that:

    • the documents are not tax invoices and cannot be used to claim GST credits
    • the gaining agency is the party to the sales
    • the gaining agency already has or will request that we exercise the discretion to treat the documents as valid tax invoices.

    When the decision to exercise the discretion is received, the affected documents issued during the period specified in the decision will be treated as valid tax invoices.

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    RCTIs and discretion

    When MOG changes occur, the losing agency and various suppliers may have entered into recipient-created tax invoice (RCTI) agreements that specify certain sales to be made by the suppliers to the losing agency for use in operating the transferred functions.

    After the MOG change comes into effect, those suppliers then make sales to the gaining agency. The gaining agency is liable to make payments to the suppliers and can claim GST credits. In these circumstances the losing agency may continue to issue documents with its ABN or identity for sales made to the gaining agency under the RCTI agreements (entered into by the losing agency and the suppliers). Those RCTI agreements will no longer be valid as the losing agency is no longer the recipient of the supply. Therefore, the documents are not RCTIs and the gaining agency cannot use them to claim GST credits even if they contain the identity or ABN of the gaining agency.

    The gaining agency can request we exercise the discretion to treat the documents as valid RCTIs. In making the request, the gaining agency should follow the procedures within their jurisdiction in relation to the exercise of our discretion to treat certain documents as valid tax invoices.

    The losing and gaining agencies should inform those suppliers that the documents are not RCTIs and that the gaining agency:

    • is the recipient of the sales
    • has already or will request that the ATO exercises the discretion to treat the documents as RCTIs.

    When the decision to exercise the discretion is received, the affected documents issued during the period specified in the decision will be treated as valid RCTIs. The gaining agencies should also take steps to enter into new RCTI agreements with the suppliers as soon as practicable.

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      Last modified: 22 May 2014QC 22915