Edited version of your written advice

Authorisation Number: 1051480381245

Date of advice: 8 February 2019

Ruling

Subject: Goods and services tax and recipient created tax invoices

Question

Whether the agreement between the applicant and its suppliers, for the applicant to issue RCTIs, will continue to be valid in circumstances where some of its suppliers also issue a tax invoice, but who do not give those invoices to the applicant?

Answer

Yes, the agreement between the applicant and its suppliers for the applicant to issue RCTIs will be valid, as long as the tax invoices issued by its suppliers are not either physically or electronically issued, by which we mean, given or delivered by the supplier to the recipient.

The scheme commences on:

The date of issue of the notice of private ruling.

Relevant facts and circumstances

The application for a private ruling is made by the representative member of a GST group.

You are applying for a private ruling in the following terms:

"Notwithstanding paragraph 13(e)(ii) of GSTR 2000/10, if a supplier does issue a tax invoice in respect of supplies ·which an agreement under paragraph 13 relates, that agreement will continue to be valid provided that the supplier does not at any time give the tax invoice to the recipient."

Several of the entities deal with their suppliers using various versions of electronic invoicing methods. In these situations, it is more practical for the entity to issue RCTIs. Where applicable, the appropriate agreements and protocols have been put into place for GST purposes.

These retail entities have been relying on Goods and Services Tax: Recipient Created Tax Invoice Determination 2017 for Agricultural Products, Government Related Entities and Large Business Entities (RCTI 2017/6) to issue RCTIs as they are large business entities.

Some of the suppliers are using accounting systems that require the generation of a document that triggers the accounting system to record sales, debtors etc. This would ordinarily take the form of an invoice or delivery docket because the suppliers deal with a range of customers, some of whom are dealing electronically (where the customer may issue RCTIs) and others who are dealing in the traditional manner with the supplier issuing a tax invoice to the customer.

There is a possible situation where there is a tax invoice created by the supplier and a recipient created tax invoice created and issued by the entity. The tax invoices generated or created by the suppliers’ accounting system are not sent, given or delivered (either physically or electronically).

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 29-70

Reasons for decision

The situations in which an RCTI can be issued are determined by the Commissioner (subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

The Commissioner has authorised the use of RCTls for three general situations as well as specific industry transactions where RCTIs can be used. In your scenario, you have been relying on RCTI 2017/6 in issuing RCTIs to your suppliers.

Paragraph 9 of RCTI 2017/6 requires that the written agreement between the recipient and its suppliers must contain the condition that ‘the supplier will not issue tax invoices in respect of the supplies’.

In addition, paragraph 13 of GSTR 2000/10 Goods and services tax: recipient created tax invoices (GSTR 2000/10) lists the requirements for a RCTI to be effective. One of the elements that must be met is paragraph 13(e)(ii):

(ii) the supplier will not issue tax invoices in respect of the supplies;

You have informed the Commissioner that the GST group which you represent, issues recipient created tax invoices to its suppliers. If any of those suppliers were to issue a tax invoice (by which we mean to give or deliver whether physically or electronically to the recipient), that would contravene subparagraph 13(e)(ii) of GSTR 2000/10. The effect of this is that the RCTI will not be treated as being within the class of invoices determined as RCTIs and the recipient cannot attribute an input tax credit for the supply to a tax period until the recipient holds a tax invoice issued by the supplier. (See paragraph 48 and 49 of GSTR 2000/10).

The only exception is specifically provided for in paragraph 45, which is when a document is mistakenly issued by the supplier in respect of the supplies specified in the written agreement with the with the recipient. The exception is to reinforce the effectiveness of the agreement and to ensure that both the supplier and the recipient pay GST and attribute input tax credits on the basis of the RCTI.

It is clear from the facts provided that the supplier is only creating a tax invoice for the purposes of their accounting system. The ordinary meaning to the word ''issue" as it appears in subparagraph 13 (e)(ii) of GSTR 2000/10 is "to give". If the supplier were to give a tax invoice to the recipient, this would be contrary to the agreement to give effect to the RCTI.