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Edited version of your private ruling

Authorisation Number: 1012226515748

Ruling

Subject: GST and Recipient Created Tax Invoices

Question 1

Are you, entitled to issue recipient created tax invoices?

Answer

Yes, you can issue RCTI's where you meet the requirements of clause 5 of RCTI 2000/27, or para 13 of GSTR 2000/10, when your turnover exceeds $20 Million.

Relevant facts and circumstances

You, are registered for GST and have a projected turnover that is not expected to exceed $20 million in the next 12 months but will exceed that level in the following 12 months.

You currently report your GST obligations on a quarterly basis.

You operate in the building and construction business and make taxable supplies of construction services. You are currently beginning a new construction project.

Your contractors will issue you with invoices for the work that they have done and you will review their work and the invoices. This review process can result in a variation to the invoice and you pay the modified amount to the contractor.

You have asked whether you can issue Recipient Created Tax Invoices, (RCTI's) to the contractors to increase the efficiency of your operations and because you ultimately determine the value of the supply that is made by the contractor.

In addition most of the invoices are for payments that are made on a progressive basis.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 29-70 and

A New Tax System (Goods and Services Tax) Act 1999 Division 188.

Reasons for decision

Paragraph 29-70(1)(a) of the A New Tax System (Goods and Services Tax) Act 1999 (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 (in which case it must be issued by the recipient).

A recipient created tax invoice is defined in subsection 29-70(3) of the GST Act as:

Goods and Services Tax Ruling GSTR 2000/10 outlines the circumstances in which a recipient is entitled to issue RCTIs under three specific classes of supplies. The Commissioner has determined that the three types of supplies for which tax invoices can be issued by a recipient of a taxable supply are relevantly:

Tax invoices that come within any of these three classes can be issued by recipients without notifying or applying to the Commissioner.

In your case your current turnover and your projected turnover is below the turnover threshold of $20 million. Therefore you are currently not eligible to issue tax invoices under the class of supplies set out in GSTR 2000/10. In addition it is noted that you currently report for GST quarterly and not monthly.

However, the Commissioner has also made a number of specific determinations under subsection 29-70(3) of the GST Act for certain classes of tax invoices that may be issued by the recipient of a taxable supply that are not listed in GSTR 2000/10.

In accordance with RCTI 2000/27, a recipient of a taxable supply of construction work or related goods and services may issue a tax invoice for the supply where the recipient:

Clause 5 of RCTI 2000/27 contains the following requirements that must be satisfied by a recipient of a taxable supply before the recipient can issue RCTIs:

As you are a recipient of taxable supplies of construction work or related goods and your turnover is less than $20 million and more than $1 million you may issue RCTI's under RCTI 2000/27 where you meet the requirements of clause 5.

When your projected turnover exceeds $20 million and you report monthly, you will be eligible to issue RCTI's as you will fall within a class that is eligible to issue RCTI, being class three. However you will need to refer to paragraph 13 of GSTR 2000/10 which sets out a number of requirements to be met when issuing RCTI's under this class. In addition you will not be required to notify the Commissioner that you intend to issue RCTI's but will be able to begin issuing them.


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