ATO Interpretative Decision

ATO ID 2004/530 (Withdrawn)

Goods and Services Tax

• This ATO ID is a straight application of the law and does not contain an interpretative decision.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Does the entity, an agricultural company, satisfy the requirements in the A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No.1) 2000 of 10 May 2000 (RCTI Determination), to issue recipient created tax invoices (RCTIs) when:

•

it has acquired a business from a company that had RCTI agreements in place with its suppliers, and

•

the entity has not entered into new written RCTI agreements with those suppliers?

Decision

No, the entity does not satisfy the requirements to issue RCTIs as defined in subsection 29-70(3) of the GST Act, as the entity does not have written RCTI agreements with those suppliers.

Facts

The entity is an agricultural company. The entity has acquired an agricultural products business from another company but did not take over the company itself. The business is carried on by the entity and operates under its own Australian business number (ABN).

In acquiring the agricultural products business the entity has become a recipient of taxable supplies of agricultural products and determines the value of those products after the supply is made using a quantitative process.

The company that the entity acquired the business from had written RCTI agreements in place with its suppliers. The entity has not entered into new written RCTI agreements with the suppliers.

The entity is registered for goods and services tax (GST).

Reasons for Decision

The RCTI Determination sets out the requirements that the recipient of agricultural supplies must satisfy to issue RCTIs.

Paragraph 3(a) of the RCTI Determination provides that a recipient of a taxable supply may issue a tax invoice for a taxable supply of agricultural products, where the recipient:

•

determines the value of those products after the supply is made using a qualitative or quantitative process, and

•

satisfies the requirements set out in Clause 4 of the RCTI Determination.

The entity is a recipient of taxable supplies of agricultural products and it determines the value of these supplies, after receiving them, using a quantitative process. Therefore, if the requirements set out in Clause 4 of the RCTI Determination are satisfied, the entity will be able to issue RCTIs.

Paragraph 4(f) of the RCTI Determination provides that the recipient must issue the tax invoice, pursuant to a written agreement that the recipient has with the supplier, which specifies the supplies to which it relates and contains the following terms:

(i)

the recipient can issue tax invoices in respect of the supplies

(ii)

the supplier will not issue tax invoices in respect of the supplies

(iii)

the supplier acknowledges that it is registered for GST when it enters into the agreement and that it will notify the recipient if it ceases to be registered, and

(iv)

the recipient acknowledges that it is registered when it enters into the agreement and that it will notify the supplier if it ceases to be registered for GST or if it ceases to satisfy any of the requirements of the determination.

The written agreement must be between the supplier and the recipient. Although the previous owner of the agricultural business had agreements with the suppliers, the entity that now carries on the business is a separate entity and it does not have written agreements with the suppliers.

Therefore, the requirement that there must be a written agreement between the recipient and the supplier is not satisfied. The entity does not satisfy the requirements in the RCTI Determination to issue RCTIs.

Other References:
A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No.1) 2000 of 10 May 2000
paragraph 3(a)
clause 4
paragraph 4(f)

Keywords
Goods and services tax
GST primary production
GST agriculture
GST invoices
Recipient created tax invoices
Tax invoices

Business Line:  GST

Date of publication:  25 June 2004

ISSN: 1445-2782