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Ruling

Subject: GST: Recipient created tax invoice

Question

Will the Commissioner make a determination to permit you to issue recipient created tax invoices (RCTIs) to your suppliers?

Decision:

No.

Facts:

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

You carry on an enterprise of buying and selling rights to create certificates.

The suppliers are registered for GST.

Under your agreement with the suppliers, you will pay the registered suppliers for those rights. But you (the recipient of supply) will determine the value of each supply.

You advised your GST turnover is less than $20 million.

You are not a government entity and do not trade in agricultural or agricultural by-products.

Reasons for decision:

The design of the GST system in Australia is that the registered supplier issues the tax invoice as they are liable to remit the GST. However, subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) allows a recipient of a taxable supply to issue a tax invoice (known as the recipient created tax invoice) in certain circumstances. The subsection states:

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)

The Australian Taxation Office (ATO) has outlined its view on RCTI in Goods and Services Tax Ruling 2000/10 (GSTR 2000/10).

Paragraph 8 of GSTR 2000/10 outlines some of these circumstances where it is appropriate for the recipient to issue RCTI. Based on the information provided, your acquisitions satisfy the conditions outlined in paragraph 8 of GSTR 2000/10. You (the recipient) determine the values of the taxable supplies.

However, under subsection 29-70(3) of the GST Act the RCTI determinations are only made to cover the classes of tax invoices that may be issued by a recipient of a taxable supply. For example paragraph 10 of GSTR 2000/10 lists three classes of tax invoices that the Commissioner has determined, may be issued by the recipient of a taxable supply. They 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.

· Tax invoices for taxable supplies made to registered government related entities.

· 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.

Based on the information provided, you do not belong to any of the above three classes of entities which the Commissioner has determined in GSTR 2000/10 that can issue RCTI for the taxable supplies.

Subsection 29-70(3) of the GST Act allows the Commissioner to determine in writing to classes of tax invoices rather than particular entities. Consistent with this view, a number of RCTI Determinations have already been issued to cover other broad classes of tax invoices following requests made by industry groups. These determinations are listed on the ATO websites: www.ato.gov.au.

A review of the various RCTI determinations indicates that you cannot issue RCTI to your suppliers even though they are made in circumstances where it is appropriate for the recipient to issue RCTI (as explained in paragraph 8 of GSTR 2000/10). The supplies (to you) do not belong to any of the classes which the Commissioner has determined under subsection 29-70(3) of the GST Act.

However, you may make a formal request to the Commissioner to determine under subsection 29-70(3) of the GST Act to allow a new class of tax invoices for the taxable supplies. Paragraph 53 to 55 of GSTR 2000/10 outlines the procedures for making these requests.

If a new legislative determination is made under subsection 29-70(3) of the GST Act, it will be placed on the ATO website at a time when it is prepared. You will need to check the website to see whether any of the legislative determinations would allow you to issue RCTIs to your suppliers.