| Disclaimer This edited version has been archived due to the length of time since original publication.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. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011743919941
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: GST and RCTIs for e-commerce transactions
Question
Can you issue recipient created tax invoices (RCTIs) for taxable supplies made to you by sellers for procuring job applicants for the recipient.
Answers
Yes, the Commissioner will allow you to issue RCTIs pursuant to subsection 29-70(3) of the GST Act provided the specific requirements in RCTI 2000/23 are satisfied.
Relevant facts
You operate various websites for referral of services.
You have created a virtual marketplace for referrals.
Suppliers do not know the value of fees charged and you are the only entity that can calculate and determine the value of the referral services supplied.
You have created a user friendly software system which provides up to date information on a timely basis and means you can produce and send RCTIs to respective sellers without delay. Furthermore you are the one who has access to the immediate cost of supply which is to be accounted to the relevant seller.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Subsection 29-70(1)(a)
A New Tax System (Goods and Services Tax) Act 1999 Subsection 29-70(3)
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 an RCTI (in which case it must be issued by the recipient).
Subsection 29-70(3) of the GST Act defines an RCTI as 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.
The Commissioner has made determinations in relation to classes of tax invoices that can be issue by the recipient of a taxable supply. If an entity is covered by one of these classes of tax invoices, it is not required to apply to the Commissioner for approval to issue RCTIs. However, the recipient and the supplier must satisfy all the requirements for issuing RCTIs.
The Commissioner has issued RCTI Determination 2000/23, which permits the recipient of a taxable supply of referral services to issue a tax invoice for a taxable supply of referrals. I have enclosed a copy of RCTI Determination 2000/23 for your information.
Clause 4 of RCTI Determination 2000/23 states:
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.
The terms 'calculation process', 'referrals' and 'service provider' are defined in clause 6 of RCTI Determination 2000/23 as follows:
Calculation process means any process used by the recipient to calculate the commission or payment to the service provider;
Referrals mean the activity of publicising and promoting an entity and/or the goods and services of that entity with the aim of directing potential clients to that entity. This includes but is not restricted to services such as direct referrals, the display of promotional pamphlets and the inclusion of a hyperlink on a website;
Service provider means the entity providing referrals to the recipient.
You advised that you are the party that determines the value of referral services made. The recipients do not know the value of their referral services until you determine the value using a market place and calculation process. The fees that you charge clients are not based on a set rate.
Hence, you meet the requirements of clause 4(i) of RCTI Determination 2000/23. That is, you establish the value of the referral services after the supply is made using a calculation process.