Edited version of your private ruling

Authorisation Number: 1012592307750

Ruling

Subject: Recipient created tax invoices

Questions

1. Will the Commissioner allow you, an unregistered entity, to issue recipient created tax invoices irrespective of the registration status of your suppliers?

2. What do you need to record on recipient created tax invoices?

3. When you register for goods and services tax (GST), will the information you need to record on recipient created tax invoices change?

4. Can you make the recipient created tax invoice available to your suppliers via logging in to their accounts on the website?

5. Can you format the recipient created tax invoices showing the prior 24 months commissions earned with the latest month on the top?

6. Can you have your trading name on the recipient created tax invoices instead of your company name?

Answers

1. The Commissioner will not allow you to issue recipient created tax invoices without satisfying all the requirements as specified under the relevant determination.

2. For all the other questions, see the reasons for the decision below.

This ruling applies for the following periods:

N/A

The scheme commences on:

N/A

Relevant facts and circumstances

· You are a company carrying on an internet based business.

· You have an Australian Business Number (ABN).

· You are not registered for the goods and services tax (GST).

· Your current turnover is less than $75,000.

· You receive referral services from other entities that lead to publicising and promoting your business and directing potential client to you. Generally these referrals come to you via a hyperlink in the website of your supplier.

· Some of the suppliers of referral services are registered for the GST and others are not.

· You establish the value of the services after the supply is made to you using a calculation process.

· You use the calculation process to determine the commission or payment to the service provider.

Relevant legislative provisions

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

Reasons for decision

Question 1

Recipient created tax invoices (RCTI) can only be issued where both the purchaser and the seller are registered for the GST and satisfy the requirements laid down in A New Tax System (Goods and Services Tax) Act 1999 Classes of recipient Created Tax Invoice Determination (No. 1) 2000 or any other RCTI Determinations issued subsequently. In this case, you are not registered for the GST. Therefore, you cannot issue RCTIs.

Please note that RCTIs can only be issued by a purchaser if:

· the purchaser and the seller are both registered for GST

· the sales for which the purchaser can issue a RCTI are agreed to in writing by the purchaser and the seller either in a separate written agreement specifying the sales to which each agreement relates or embedding this information or specific terms, as outlined in the legislative instrument, in the tax invoices they issue

· the agreement is current and effective when the RCTI is issued

· the goods or services being sold under the agreement are of the type that the Commissioner has determined can be invoiced using RCTIs

As you are not registered for the GST, you cannot issue tax invoices, either as a supplier or as a recipient in cases where the invoice is initiated by the recipient. The invoices and other documents you use in your business are not matters that are of concern under the GST legislation but may have consequences under other areas of Australian tax administration.

Questions 2 to 6

The following answers are of a general nature relating to RCTIs.

Question 2 - What needs to be recorded on an RCTI?

Whether a tax invoice is issued by a supplier or by a recipient (which would then be a RCTI), it must meet all of the following requirements for it to be valid:

· The supplier's identity and the Australian business number (ABN)

· A brief description of what is sold, including the quantity (if applicable) and the price of what is sold.

· The extent to which each sale is a taxable sale - this can be shown separately or, if the GST to be paid is exactly one-eleventh of the total price, as a statement such as 'total price includes GST'.

· The date the document is issued.

· The amount of GST (if any) payable for each sale.

· If the document was issued by the recipient and the GST is payable for any sale - that the GST is payable by the supplier.

· That the document was intended to be a tax invoice or an RCTI if it was issued by the recipient.

· If the total price of the sale is $1,000 or more, or if the document was issued by the recipient, the recipient's identity or ABN should be able to be clearly ascertained.

Question 3 - Will the information that needs to be recorded on an RCTI change when the recipient registers for the GST?

RCTIs can be issued, among other conditions, only by a GST registered recipient of a taxable supply.

Question 4 - Can the RCTI be made available to the supplier via logging to their accounts on the website?

How a registered recipient eligible to issue RCTIs delivers them to the recipient's supplier is a matter for the recipient.

Question 5 - Format of the RCTI

The format of the RCTI is a matter for the recipient and the supplier as long as the required information (given above) is included.

Question 6 - Trading name on RCTIs

What name is included on an RCTI is not a matter for compliance as long as the RCTI clearly identifies the supplier and the recipient and their identities are easily ascertainable.

Additional information

RCTI Determinations are made under subsection 29-70(3) of A New Tax System (Goods and Services Tax) Act 1999 ('the GST Act'). This subsection states as follows:

'A recipient created tax invoice is a*tax invoice belonging to a class of tax invoices that the Commissioner has determined in writing may be issued by the*recipient of a*taxable supply.'

(Items marked with an asterisk are defined in section 195-1 of the GST Act)

Paragraph 10 of Goods and Services Tax Ruling GSTR 2000/10 (GSTR 2000/10), which deals with RCTIs, lists three broad classes of tax invoices in relation to which RCTI agreements may be entered into. These classes are established by the first Determination made pursuant to subsection 29-70(3) of the GST Act. The first such class is tax invoices for taxable supplies involving the determination of the value of agricultural products (and any by-products) subsequent to and dependent upon quantitative or qualitative analysis of the supply.

The second such class is tax invoices for taxable supplies made to registered government related entities.

The third such class is tax invoices for taxable supplies made to a registered recipient that (a) has an annual turnover, including input taxed supplies, of at least $20 million or (b) is a member of a GST group, or a member of a GST joint venture in which another member of the group, or another participant in the joint venture has such a turnover.

However, the Commissioner, from time to time, does initiate processes for the issuance of legislative instruments where the circumstances of a broad class of recipients of taxable supplies merit a legislative determination. The issuance of a legislative instrument in that regard will be in compliance with Legislative Instruments Act 2003 and the relevant ATO practice statements current at that time.

One such determination is the A New Tax System (Goods and Services Tax) Act 1999 Classes of recipient Created Tax Invoice Determination (No. 23) 2000. Clause 4 of this determination states that:

A tax invoice that belongs to a class of tax invoices for a taxable supply of referrals may be issued by an entity that is the recipient of that taxable supply where the recipient:

(i) Establishes the value of those services after the supply is made using a calculation process; and

(ii) Satisfies the requirements set out in Clause 5.

We have enclosed a copy of the Determination is enclosed for your information.

We have also enclosed the following documents which may be of use to you.

1. GST for small business

2. Goods and Services Tax Ruling - Goods and services tax: recipient created tax invoices (GSTR 2000/10)

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).