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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1012748233303

Ruling

Subject: GST and total receipts

Question 1

1. When your clerk deducts their commission from your total fee receipts, including in that deduction a GST component, are you required to include in your GST return what your clerk has deducted as commission (the clerk's fees)?

Answer

Yes

Question 2

2. Should the GST payable on your clerk's fee be added to the input tax credits owing to you by the ATO?

Answer

Yes

The scheme commences on:

The scheme has commenced

Relevant facts and circumstances

You are registered for the goods and services tax.

You operate, at the bar, through a barrister's clerk.

The clerk organises briefs, sends out accounts and pays fees into your bank account. The clerk also deducts their fees from your fee receipts, including in that deduction a GST component.

In addition the clerk pays amounts on your behalf such as telephone and subscriptions which include a GST component.

In your application for a ruling you informed us of the following:

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 sections 9-40, 9-70, 11-15, 11-20, 11-25.

Reasons for decision

Question 1

When your clerk deducts their commission from your total fee receipts, including in that deduction a GST component, are you required to include in your GST return what your clerk has deducted as commission (the clerk's fees)?

Detailed reasoning

The GST Act provides at section 9-40 that you must pay the GST payable on any taxable supply that you make.

In this case you informed us that you made taxable supplies the total proceeds of which were $xxxx.xx.

Section 9-70 of the GST Act provides that the amount of GST on a taxable supply is 10% of the value of the taxable supply. Further section 9-75 of the GST Act explains that the value of a taxable supply is the price x 10/11.

As stated above you have to pay GST on all taxable supplies that you make. This means that you have to include all receipts obtained from making taxable supplies in your GST return including the commission your clerk deducted, as their payment, from your total receipts at label G1 of your activity statement.

Question 2

Should the GST of $xx.xx payable on your clerk's fee of $xxx.xx be added to the input tax credits owing to you by the ATO?

Summary

Yes

Detailed reasoning

Section 11-20 of the GST Act provides that you are entitled to input tax credits for any creditable acquisition that you make.

Section 11-25 of the GST Act provides that the amount of the input tax credit for a creditable acquisition is an amount equal to the GST payable on the supply of the thing acquired.

You make a creditable acquisition under section 11-5 of the GST Act if you acquire anything solely or partly for a creditable purpose, the supply of the thing to you is a taxable supply, you provide, or are liable to provide, consideration for the supply and you are registered, or required to be registered.

Section 11-15 of the GST Act provides that you acquire a thing for a creditable purpose to the extent that you acquire it in carrying on an enterprise. The acquisition will not be creditable to the extent that it relates to the making of input taxed supplies or is of a private or domestic nature. 

This means that as you acquired the clerk's services for a creditable purpose you are therefore entitled to an input tax credit of $xx.xx on your clerk's fee of $xxx.xx.


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