Edited version of private ruling

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Ruling

Subject: tax invoices

Question

Will your suppliers be issuing you with valid tax invoices when they complete and submit their invoices via your proposed invoicing system?

Answer: Yes

Relevant facts and circumstances

You operate a business that acts as an intermediary between your clients and your suppliers.

Your clients provide you with details of work that need to be completed. You then organise quotes from your suppliers. Once a quote from a supplier has been approved, it is converted into a purchase order.

Under your current system, your suppliers submit their invoices to you via email. These invoices are often incorrect or incomplete and therefore you spend a lot of time correcting invoices and requesting adjustment notes.

In order to streamline the accounting process you have proposed implementing changes that will allow your suppliers to complete and submit their invoices on your computer system.

The proposed invoicing system will operate as follows:

· details of approved purchase orders will be entered into the invoicing system by you

· the supplier will then access the system via the internet, using a unique username and password

· once logged in, the supplier will select the relevant purchase order to create their invoice

· the following fields will be pre-filled into the invoice: date, purchase order number, company name, ABN, contact details

· the invoice will also contain all of the other necessary information in order to comply with the requirements for a tax invoice

· the supplier will enter their own invoice number, and the amounts they wish to be billed

· the amounts fields will contain upper limits based on the details of the purchase order, and the supplier will not be able to enter an amount that exceeds these upper limits

· the supplier will then be able to preview and print a copy of the invoice for their records

· once the supplier is satisfied that the invoice is complete they will submit the invoice by clicking a 'generate' button

· the invoice will automatically be emailed to your accounts department, and will also auto-populate your computerised accounting file.

Relevant legislative provisions

Subsection 29-70(1) of the A New Tax System (Goods and Services Tax) Act 1999

Section 195-1 of the A New Tax System (Goods and Services Tax) Act 1999

Regulation 29-70.01 of the A New Tax System (Goods and Services Tax) Regulations 1999

Detailed reasoning

A tax invoice is defined in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) as a document that complies with the requirements of subsection 29-70(1) of the GST Act.

Subsection 29-70(1) of the GST Act provides that a tax invoice for a taxable supply:

· must be issued by the supplier, unless it is a recipient created tax invoice

· must set out the ABN of the supplier (or the recipient if it is a recipient created tax invoice)

· must set out the price of the supply

· must contain such other information as the regulations specify, and

· must be in the approved form.

Regulation 29-70.01 of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) specifies the additional information that a tax invoice (other than a recipient created tax invoice) must contain. As a minimum, the tax invoice must contain the following additional information:

· the words 'tax invoice' stated prominently

· the date of issue of the tax invoice

· the name of the supplier, and

· a brief description of each thing supplied.

If the total amount payable for the supply or supplies to which the tax invoice relates is more than $1000 (GST inclusive), the tax invoice must also contain the following information:

· the name of the recipient

· the address or the ABN of the recipient, and

· for each description of the thing supplied,

· the quantity of the goods or the extent of the services supplied.

In addition, where the GST to be paid is:

· exactly one-eleventh of the total price, the tax invoice must show the GST amount separately or provide a statement such as 'total price includes GST', or

· less than one-eleventh of the total price, the tax invoice must show the GST amount and the total amount excluding GST for the supplies.

· Where the tax invoice relates to both a taxable supply and either a GST-free or input taxed supply, the tax invoice must:

· clearly identify each taxable supply

· show the total amount of GST to be paid, and

· show the total amount payable for the supplies.

Goods and Services Tax Ruling GSTR 2000/17 further discusses the information requirements for a tax invoice. Paragraph 18 of GSTR 2000/17 provides that a document will be in the approved form for a tax invoice if it includes the information required by the GST Act and GST Regulations (as outlined above). Paragraph 24 of GSTR 2000/17 provides that a tax invoice may be issued in electronic form. That is, a tax invoice in electronic form is a tax invoice for GST purposes.

In regards to issuing an invoice, the Commissioner of Taxation considers that an invoice is issued when the supplier 'sends' the invoice to the recipient. The date when the invoice issues is the date that the invoice is electronically transmitted, posted, couriered, hand delivered or is sent by similar method.

You have proposed implementing changes that will allow your suppliers to complete and submit their invoices on your computer system. The proposed invoicing system will operate as follows:

· details of approved purchase orders will be entered into the invoicing system by you

· the supplier will then access the system via the internet, using a unique username and password

· once logged in, the supplier will select the relevant purchase order to create their invoice

· the following fields will be pre-filled into the invoice: date, purchase order number, company name, ABN, contact details

· the invoice will also contain all of the other necessary information in order to comply with the requirements for a tax invoice

· the supplier will enter their own invoice number, and the amounts they wish to be billed

· the amounts fields will contain upper limits based on the details of the purchase order, and the supplier will not be able to enter an amount that exceeds these upper limits

· the supplier will then be able to preview and print a copy of the invoice for their records

· once the supplier is satisfied that the invoice is complete they will submit the invoice by clicking a 'generate' button

· the invoice will automatically be emailed to your accounts department, and will also auto-populate your computerised accounting file.

The invoices created by this system will be valid tax invoices provided that the five requirements of subsection 29-70(1) of the GST Act are met. The first of these requirements is that the invoice is issued by the supplier. In your case, the supplier issues the invoice when they submit the invoice to you by clicking the 'generate' button and the invoice is automatically emailed to your accounts department. As the issuer of the invoice is your supplier, the first requirement is satisfied. Note that the date the invoice is issued is the date that it is electronically transmitted to you via email.

You have advised that the invoice will contain all of the information necessary to comply with the requirements for a tax invoice. Therefore, the invoice created will be expected to set out the ABN of the supplier and the price of the supply, and contain such other information as the regulations specify. Provided that the invoice contains all of this information, the second, third and fourth requirements will be met.

The fifth requirement is that the invoice is in the approved form. As is outlined above, an invoice is in the approved form for a tax invoice if it includes the information required by the GST Act and GST Regulations. You have advised that the invoice will contain all of the necessary information. Therefore, the fifth requirement will be met.

As all five requirements set out in subsection 29-70(1) of the GST Act will be met, the invoices created will be valid tax invoices. Therefore, your suppliers will be issuing you with a valid tax invoice when they complete and submit their invoice via your proposed invoicing system.

Note that as it is the supplier who completes and issues the invoice, these invoices are not considered to be recipient created tax invoices. This is not altered by you setting upper limits in the amounts fields to prevent the supplier from entering amounts higher than those agreed upon in the approved quote and purchase order.

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