Edited version of private ruling

Authorisation Number: 1011722203391

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Ruling

Subject: GST and tax invoices

Question 1

In the absence of valid tax invoices, is a quantity surveyor's report that is to be drawn up after the relevant transactions are made sufficient evidence for GST purposes that creditable acquisitions have been made?

Answer

No

Relevant facts and circumstances

You commenced a building project some time ago and constructed residential homes.

The only GST ever claimed and refunded was the original purchase of the land which occurred during the relevant quarter. No GST has ever been claimed on the development costs of the homes as there was never an intention to sell them, they were built for investment purposes. The homes took approximately one and a half years to build. All records related to the development of the units are in an inaccessible or have been lost. The director has also advised us that the bank is unable or unwilling to supply bank statements due to an ex-director's unwillingness to sign any authority to release the statements.

You have prepared a spreadsheet with the information you have available which identifies the large contractors used to develop the homes which shows most of them are registered for GST. You propose to obtain a quantity surveyor's report which would confirm the development costs of the units.

After initial consultation with the ATO you provided various records held.

Answer 1

Summary

In the absence of valid tax invoices, the Commissioner has discretion under subsection 29-70(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to treat as a tax invoice documents that do not meet the requirements of being a tax invoice. This power is usually exercised on documents that relate directly to the transactions such as defective tax invoices, contracts and delivery dockets. Further, please read the section below on the time limit to claiming GST input tax credits.

Detailed reasoning

The ATO Practice Statement Law Administration, PS LA 2004/11, is the policy used in the exercise of the Commissioner's discretion to treat a particular document as a tax invoice. Attachment B to PS LA 2004/11 gives examples how the Commissioner's power is exercised; the examples also illustrate what type of documents are contemplated as being 'particular documents'. The documents cited include:

· a tax invoice that has the recipient's named misspelt;

· a tax invoice erroneously made out to a company director rather than the company; and

· a cheque butt and a bank statement in conjunction with tax invoices, account statements and delivery dockets from the same regular supplier for earlier and later periods.

As you can see, the 'particular documents' that the Commissioner considers appropriate to assess in relation to his power under subsection 29-70(1) of the GST Act are, in most cases, primary documents issued by the supplier. Where the documents are secondary, such as bank statements and cheque butts, the Commissioner uses related primary documents (in the case of a regular supplier) to establish the likelihood of a creditable acquisition being made.

A quantity surveyor's report alone, drawn up well after acquisitions were said to have been made does not fit within the policy set out in PS LA 2004/11.

See the fact sheet 'Private Rulings' below for review rights on this question