Edited version of private advice

Authorisation Number: 1051869235713

Date of advice: 20 July 2021

Ruling

Subject: GST and agency

Question

Are you entitled to claim input tax credits for acquisitions made under the GST Agency Agreement as Agent, on behalf of the Principals, on the basis that you hold a valid tax invoice on record?

Answer

No, you not entitled to input tax credits. There is an agency agreement under subdivision 153-A of the A New Tax System (Goods and Services Tax) Act 1999 (GST ACT)between you as Agent and other entities acting as Principals.

Where you hold a valid tax invoice, the Principals that are a party to the agency agreement under subdivision 153-A of the GST are entitled to input tax credits where the requirements of section 11-5 of the GST Act are satisfied.

Relevant facts and circumstances

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

Each of the Principals are registered for GST.

There is a written agreement in place between you as Agent and the Principals.

You as Agent under the agreement have the authority to act as Agent for the listed Principals.

The Agreement provides that the Principal expressly indemnifies the Agent for all liabilities, losses and damages, costs and expenses as a result of acting as Agent for the Principal.

The Agreement allows you to act as a disclosed or undisclosed agent.

The Agreement allows for renumeration.

The arrangement under the Agreement is intended to align with the attribution outcomes under Subdivision 153-A of the GST Act. For the avoidance of doubt the Agreement is not an arrangement to which Subdivision 153-B of the GST Act applies.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 11-20

A New Tax System (Goods and Services Tax) Act 1999 Subdivision 153-A

Reasons for decision

Detailed reasoning

Section 11-20 of the GST Act provides that you are entitled to the input tax credit for any creditable acquisition that you make.

You make a creditable acquisition if all the requirements of section 11-5 of GST Act are met. You make a creditable acquisition if:

(a) you acquire anything solely or partly for a creditable purpose

(b) the supply of the thing to you is a taxable supply

(c) you provide, or are liable to provide, consideration for the supply and

(d) you are registered or required to be registered.

Agency relationships

The issue of principals and agents is discussed in Goods and Services Tax Ruling GSTR 2000/37; Goods and services tax: agency relationships and the application of the law.

Paragraph 11 of GSTR 2000/37 provides that for commercial law purposes, an agent is a person who is authorised, either expressly or impliedly, by a principal to act for that principal so as to create or affect legal relations between the principal and third parties. Paragraph 12 of GSTR 2000/37 continues stating that the 'principal is bound by the acts of an agent as a result of the authority given to the agent'.

Paragraph 28 of GSTR 2000/37 contains several factors that indicate an entity is acting in the capacity as an agent and there being a principal/agency relationship. Whilst no single factor (by itself) is determinative, the following factors should be considered:

•         any description of you as an agent, having authority to act for another party, in an agreement (expressed or implied) between you and the other party;

•         any exercise of the authority that you are given to enter into legal relations with a third party;

•         whether you bear any significant commercial risk;

•         whether you act in your own name;

•         whether you are remunerated for your services by way of commissions and whether you are entitled to keep any part of your remuneration secret from another party; and

•         whether you decide the price of things that you might sell to third parties.

In applying the above factors to the facts in this case:

•         There is a written agreement in place between you as agent and the Principals.

•         You as Agent under the agreement have the authority to act as agent for the listed Principals.

•         The Agreement provides that the Principal expressly indemnifies the Agent for all liabilities, losses and damages, costs and expenses as a result of acting as Agent for the Principal.

•         The Agreement allows you to act as a disclosed or undisclosed agent.

•         The Agreement allows for renumeration.

In considering these factors the Commissioner considers that an agency agreement exists between you and the listed Principals under subdivision 153-A of the GST Act.

In relation to GST payable and input tax credits under agency relationships paragraph 55 of GSTR 2000/37 provides:

If you are an agent at general law, you are an agent for GST purposes unless Subdivision 153-B applies. Accordingly, if you are an agent (where taxable supplies are made through you), the principal is liable for any GST payable on the supplies. Also, if you are an agent (where creditable acquisitions are made through you), the principal is entitled to any input tax credits.¹³

Please also refer to WTI 2013/1 - A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Acquisitions Under an Agency Relationship) Legislative Instrument 2013 for information on tax invoices and agents.