ATO Interpretative Decision
ATO ID 2004/872 (Withdrawn)
Goods and Services Tax
GST and Compulsory Third Party Insurance arranged by motor vehicle dealershipsFOI status: may be released
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This ATO ID is withdrawn as it is a simple restatement of law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 29 February 2008
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a motor vehicle dealership, required to issue a tax invoice under subsection 29-70(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) or section 153-15 of the GST Act, to its customer in relation to the supply of compulsory third party (CTP) insurance where the entity:
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- pays the CTP insurance premium on behalf of the customer, and
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- then recoups that amount through the invoice provided to that customer?
Decision
No, the entity is not required to issue a tax invoice under subsection 29-70(2) of the GST Act or section 153-15 of the GST Act to the customer in relation to the supply of CTP insurance where it pays the CTP insurance premium on behalf of the customer and then recoups that amount through the invoice provided to that customer.
Facts
The entity is a motor vehicle dealership. As a service to the customer, the entity registers the new vehicle and pays for the registration and the CTP insurance premium on behalf of the customer.
The supply of the motor vehicle is a taxable supply under section 9-5 of the GST Act.
The entity does not have the authority nor is it acting as an agent of either the insurer or the motor vehicle registration authority to supply CTP insurance to the customer. The motor vehicle registration authority supplies the CTP insurance as agent for the CTP insurer.
The registration including the CTP insurance premium is in the name of the customer.
The entity recoups the amount for the registration and CTP insurance premium in the invoice to the customer.
Reasons for Decision
Under subsection 29-70(2) of the GST Act it is the supplier that is required to issue a tax invoice for a taxable supply. Under section 153-15 of the GST Act, the agent can issue the tax invoice. Therefore, the entity is only required to issue a tax invoice if it is the supplier, or is acting as agent for the supplier, of the CTP insurance to the customer.
When the entity sells a new vehicle to the customer it is making a taxable supply of that vehicle to the customer under section 9-5 of the GST Act.
When a vehicle is registered there are two supplies being made, the supply of the CTP insurance and the supply of the registration of the vehicle.
As a service to the customer, the entity registers the new vehicle on behalf of the customer. The entity does not have the authority nor is it acting as an agent of either the insurer or the motor vehicle registration authority to supply CTP insurance to the customer. The entity merely facilitates the registering of the motor vehicle and pays for the CTP insurance premium.
The supply of CTP insurance is still being made to the customer by the motor vehicle registration authority, as agent for the insurer. The supply is not being made to the entity.
As the entity is not the supplier of the CTP insurance or acting as agent for the supplier, it is not required to issue a tax invoice to the customer under subsection 29-70(2) of the GST Act or section 153-15 of the GST Act.
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
subsection 29-70(2)
section 153-15
Related Public Rulings (including Determinations)
Goods and Services Tax Ruling GSTR 2000/17
Keywords
Goods and services tax
GST invoices
Tax invoices
ISSN: 1445-2782
| Date: | Version: | |
| 27 October 2004 | Original statement | |
| You are here → | 29 February 2008 | Archived |