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Ruling

Subject: Recipient Created Tax Invoices

Question

Will the Commissioner of Taxation (Commissioner) make a determination to permit training providers to issue recipient created tax invoices (RCTIs) to accredited professional practices that provide work related experience, education and training to the practitioners of that profession?

Answer

No. The Commissioner will not make a determination to permit training providers to issue recipient created tax invoices (RCTIs) to accredited professional practices that provide work related experience, education and training to the practitioners of that profession.

However, the Commissioner has initiated a process to issue a legislative instrument with a view to preparing a legislative determination to capture a broad class of taxpayers who fall within the circumstances outlined in the submission.

This ruling applies for the following periods:

Not Applicable

The scheme commences on:

Not Applicable

Relevant facts and circumstances

You are an independent company created by the Commonwealth Government.

You are registered for the goods and services tax (GST).

You receive funding from the Commonwealth Government for the purpose of training professionals to enter a particular area of their profession as well as on the job training for junior professionals in working in regional areas.

The nature of the training is the provision of work-related experience and education as per guidelines set by the relevant institutions in the particular profession.

You engage training providers to provide this training to professionals through the engagement of accredited professional practices of the particular profession.

The professional practices involved in this program are registered for the GST.

Under the current invoicing method, the professional practices issue tax invoices to the training providers for the services they provide.

The tax invoices issued by the professional practices to the training providers are based on the information provided by the respective training providers on the value of the supply received. It is the training providers who are able to determine the value of the supply, based on relevant information regarding the training provided, pay rates, etc. Training providers provide this information on standard forms to the professional practice to prepare the tax invoices.

At present there is a time delay of up to several months for many professional practices to issue tax invoices.

Reasons for decision

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 are 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.

The design of the GST system in Australia is that the registered supplier issues the tax invoice. It is, normally, the supplier that is liable to remit the GST. It is not the practice to give on an entity-by-entity basis what in effect would be an exemption from this requirement so as to allow responsibility for issuing a tax invoice to be transferred from the particular supplier entity to the particular recipient entity.

Subsection 29-70(3) of the GST Act refers to classes of tax invoices, rather than the granting of permission to specific entities. Consistent with this, RCTI Determinations that have already issued have been in respect of broad classes rather than particular entities.

At paragraph 53, GSTR 2000/10 makes mention of industry associations making requests. This reflects the concept of there being an identified need in a particular taxpayer community for a determination. Although the paragraph was added to in the Addendum of 27 September 2000 to include the sentence "Other registered recipients may also make requests," Determinations will only be made for broad classes rather than particular entities.

Given the above the Commissioner will not make a determination in respect of your request.

However, the Commissioner has initiated a process to issue a legislative instrument with a view to preparing a legislative determination to capture a broad class of taxpayers who fall within the circumstances you have outlined in your submission to us. This process will be in compliance with Legislative Instruments Act 2003 and the relevant ATO practice statements in that regard.

If a new legislative determination for this purpose is eventually issued, it would be placed in the ATO website at a time when it is prepared. You will need to check the website to see whether any of the existing or new legislative determinations would allow your clients to issue RCTIs.