Edited version of private advice

Authorisation Number: 1051955465289

Date of advice: 4 March 2022

Ruling

Subject: GST and input tax credits

Question 1

Under Scenario 1, are you (multiple Landowners) making a creditable acquisition pursuant to section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where goods and services are acquired and invoiced in the name of Entity A?

Answer

Yes, to the extent each Landowner acquires the thing for a creditable purpose.

Question 2

Under Scenario 1, are you (multiple Landowners) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

Answer

Yes

Question 3

Under Scenario 2, are you (multiple Developers) making a creditable acquisition pursuant to section 11-5 of the GST Act where goods and services are acquired and invoiced in the name of Entity A?

Answer

No.

Question 4

Under Scenario 2, are you (multiple Developers) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

Answer

No.

Question 5

Under Scenario 3, are you (multiple Developers) making a creditable acquisition pursuant to section 11-5 of the GST Act where goods and services are acquired and invoiced in the name of single Developer?

Answer

No, it is the individual Developer identified as the recipient on the tax invoice that has made the acquisition/creditable acquisition.

Question 6

Under Scenario 3, are you (multiple Developers) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

Answer

No, it is the individual Developer identified as the recipient on the tax invoice that has made the acquisition/creditable acquisition and attributes the input tax credits.

Question 7

Under Scenario 4, are you (multiple Landowners) making a creditable acquisition pursuant to section 11-5 of the GST Act where goods and services are acquired and invoiced in the name of a single Developer?

Answer

No.

Question 8

Under Scenario 4, are you (multiple Landowners) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

Answer

No

Question 9

Under Scenario 5, are you (a single Developer) making a creditable acquisition pursuant to section 11-5 of the GST Act where goods and services are acquired and invoiced in the name of Entity A?

Answer

No

Question 10

Under Scenario 5, are you (a single Developer) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

Answer

No

Question 11

Under Scenario 6, are you (a single Landowner) making a creditable acquisition pursuant to section 11-5 of the GST Act where goods and services are acquired and invoiced in the name of a single Developer?

Answer

No

Question 12

Under Scenario 6, are you (a single Landowner) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

Answer

No

Question 13

Are you (Entity B) liable for GST pursuant to section 9-40 of the GST Act in relation to supplies made by other Development Partnership?

Answer

No.

Question 14

Are you (Entity B) entitled to input tax credits pursuant to section 11-20 of the GST Act in relation to acquisitions made by other Development Partnership?

Answer

No.

Relevant facts and circumstances

Entity A acquired a specified property (the Property). Entity A is not registered for GST.

Entity A acquired the Property as bare trustee for the following entities (the 'Landowners):

•                Entity B (No.1)

•                Entity C (No.2)

•                Entity D (No.3)

•                Entity E (No.4)

•                Entity F (No.5)

•                Entity G (No.6)

•                Entity H (No.7)

•                Entity I (No.8)

•                Entity J (No.9)

•                Entity K (No.10)

•                Entity L (No.11)

Each Landowner was established with responsibility to develop a defined area of the Property with the exception of:

•                No.9 & No.10 that will have joint responsibility to develop their area of the Property.

Each Landowner(s) will engage the services of an entity (Developer) to provide services in relation to the building and construction of the Landowner(s) respective area of the Property.

To date, the following Developers have been engaged:

•                Developer No. 1 (engaged by No.1)

•                Developer No. 2 (engaged by No.3)

•                Developer No. 3 (engaged by No.4)

•                Developer No. 4 (engaged by No.5)

•                Developer No.5 (engaged by No.9 & No.10).

To date, Developers have not been engaged by No.2, No.6, No.7, No.8 and No.11 in respect of the development of their respective areas of the Property.

All Landowners and Developers referred to above are registered or required to be registered for GST and account for GST on a non-cash basis.

No. 1 has reported sales and acquisitions in its BAS that relate to the development of the stage it is responsible for and also sales and acquisitions related to stages which other partnerships are responsible for.

Partnership Agreement

For the purposes of this private ruling a Partnership Agreement has been provided entered into between the following parties:

•                Entity A (Nominee)

•                Partner A

•                Partner B

•                ABC Pty Ltd

•                Individual A.

Partner A and Partner B are the partners of No. 1.

The Partnership Agreement contains the following relevant clauses:

RECITALS:

A.    The Nominee has entered into the Contract and the Development Implementation Agreement as the nominee and bare trustee for the Partnership.

B.    ...

C.   Partner A and Partner B have agreed to associate themselves as Partners as and from the Commencement Date and have appointed the Nominee to:

                                      i.     hold all of the assets of the Partnership as bare trustee and to become entitled to be registered as proprietor of the Land for and on behalf of the Partnership;

                                     ii.    carry out the Project, subject to the agreed responsibilities of the Project Manager; and

                                    iii.    distribute all monies received in accordance with this Agreement.

Definitions and Interpretations

Commencement Date means ddmmyyyy

Contract means the Contract of Sale of Land between the Vendor, Alpha and the Nominee as purchaser dated ddmmyyyy for the purchase of the Land.

Project means:

(a)  the Development;

(b)  the design and construction of all improvements on the Land, which improvements may constitute houses, townhouses and/or apartments and some community housing on the Land (for sale, retention for investment purposes or for lease);

(c)   all civil and infrastructure works required to carry out and complete the Development;

(d)  obtaining the Third Party Debt Funding and any additional funding required to carry out and to complete the Development;

(e)  demolishing any existing improvements on the Land as determined by the Partners;

(f)    conducting or procuring to be conducted by competent and properly qualified persons all necessary or desirable site investigations of the Land;

(g)  remediating to the satisfaction of any relevant Government Agency any contamination which may be present on the Land;

(h)  obtaining all necessary Approvals for the Development and the construction of all improvements and all modifications to improvements on the Land;

(i)    procuring compliance with all requirements of Government Agencies in connection with the Development and all improvements on the Land;

(j)    complying with all applicable laws, regulations and Approvals relating to the Land and the Development;

(k)   procuring the construction of the Development and any other improvements on the Land in accordance with all Approvals and any other necessary authorisation;

(l)    subdividing the Land into Superlots and Lots;

(m) marketing, leasing or selling the Superlots and the Lots, including appointing agents to market, sell or lease the Superlots and the Lots;

(n)  if the Partners determine to do so, retaining ownership for investment purposes of some or all of the Land, the Superlots or Lots after the Development is completed;

(o)  complying with the Nominee's obligations in relation to the development of the Land under the Development Implementation Agreement;

(p)  paying all Project Costs and distributing the proceeds of sale, rental income and all other receipts, revenue and funds obtained from the sale or leasing or other use of the Development and any other assets, revenue and funds of the Partnership in accordance with this Agreement; and

(q)  such other development or activity in respect of the Land or part of it as is agreed by the Partners in accordance with this Agreement.

Project Management Services means the services set out in Schedule B and the services described in clause xx.x.

Clause x.x Establishment of Partnership

x.x.x The Partners have associated themselves as and from the commencement Date as Partners for the purposes of establishing and undertaking the Project in accordance with this Agreement.

Clause x.x Appointment of Nominee

x.x.x The Partners acknowledge and agree that they have, as at the Commencement Date, appointed the Nominee to be the nominee and the bare trustee of the Partnership and in that capacity to:

(a)  hold the assets of the Partnership as bare trustee; and

(b)  carry out the Project,

for, and on behalf of, the Partners in accordance with this Agreement.

x.x.x The Partners covenant with the Nominee that the Nominee shall be indemnified out of the Partnership Assets for any Loss incurred or sustained by the Nominee in accordance with this Agreement, including, but not limited to, the obligations to the Financier under the Third Party Debt Funding or in relation to any Third Party Debt Security.

x.x.x The Nominee confirms that, as at the Commencement Date, it has accepted the appointment referred to in clause x.x and agrees to at all times, act in accordance with this Agreement and the instructions and directions of the Board and/or the Partners (as the case may be under this Agreement),and the Nominee acknowledges that under no circumstances will it acquire any beneficial interest in the Partnership Assets and that its interest in the Partnership Assets is as the nominee and the bare trustee of the Partnership only.

x.x.x The Nominee will not be entitled to any fee for acting as the nominee of the Partners or for carrying out the Project on their behalf.

x.x.x The Nominee must not undertake any activities of any nature whatsoever outside of the activities contemplated by this Agreement without the prior written consent of the Partners.

Clause x.x Appointment of Project Manager

x.x.x Subject to clause x.x.x, the Partners and the Nominee hereby appoint ABC Pty Ltd, and ABC Pty Ltd hereby accepts the appointment. to be Project Manager to carry out the Project on behalf of the Partners and under the supervision of the Board and the Partners in accordance with the terms set out in this Agreement and, in particular (without limiting the above), to provide the Project Management Services.

x.x.x In consideration of the Project Management Services, during the term of this Agreement, the Project Manager shall be paid the Project Management Fee by the Nominee paying the Estimated Project Management Fee in equal monthly instalments in advance from the Commencement Date.

Clause x.x Appointment of Contractors and Consultants for the Project

Contractors and consultants for the Project shall be appointed by the Project Manager on behalf of the Nominee.

Clause xx APPOINTMENT OF BUILDER FOR THE TOWNHOUSES

Clause xx.x Appointment of ABC Pty Ltd

xx.x.x The Partners agree that subject to clause xx.x and to their ability to do so within a reasonable time frame ABC Pty Ltd, or any entity appointed or nominated by ABC Pty Ltd (Appointee), shall be the nominated builder of the Townhouses forming part of the Project and where a Split Contract applies the Nominee must use its best endeavours to introduce Townhouse Lot Purchasers to ABC Pty Ltd or to the Appointee as the builder of the Townhouses.

Similar Partnership Agreements have been/will be entered into between Entity A and the partners of the other Landowner partnerships (i.e. No.2 - No.11) containing identical clauses.

Development Services Agreement

The Landowner(s) have entered into a Development Services Agreement (DSA) with their respective Developer.

In regard to a Landowner yet to engage a Developer, each Landowner will enter into a similar DSA with the Developer.

The DSAs entered into to date have been provided for the purposes of this private ruling. The terms and conditions contained in each DSA are, in essence, identical and contain the following relevant clauses as extracted from the DSA between No.1 and Developer No.1:

RECITALS:

A.   The Landowner is registered as proprietor of the Land.

B.   The Landowner has requested the Developer, and the Developer has agreed, to provide certain services in relation to the Land upon the terms and conditions outlined in this Agreement.

C.   In consideration of the Developer agreeing to provide certain services in relation to the Land on the terms and conditions set out in this Agreement, the Landowner has agreed to pay the Developer the Services Fee.

Definitions and Interpretations

Agency agreements means an agreement under which the Developer appoints an agent to market and to sell a lot.

Holding Costs means the Internal and Display Costs and all costs incurred by the Landowner in owning the Land, including (but not limited to) all Outgoings, but excluding any cost which is a Developer Project Cost.

Internal and Display Costs means all selling and marketing costs for the Project, the costs of operating an internal sales team for the Project and the costs of operating the display suites, including, for the avoidance of doubt, all commission payments in respect of the sale of Lots.

Outgoings means all outgoings and taxes (including, but not limited to, Council rates and levies, land tax and government agency fees and taxes) payable in respect of the Land, but excluding all Service Charges.

Developer Project Costs means all of the costs of the Project, including, but not limited to, the following:

(a)  interest and all fees and expenses incurred in respect of the Project Facility or any other borrowings obtained by the borrower with respect to the Land;

(b)  construction costs;

(c)   consultant's costs;

(d)  fees to Authorities;

(e)  insurance premiums, other than the insurance premium for public liability insurance which is the responsibility of the Landowner in accordance with clause x.x(x);

(f)    all Service Charges; and

(g)  legal fees,

whether a liability to pay such costs has arisen prior to or after the date of this Agreement but excluding (for the avoidance of doubt) all Holding Costs.

Project means the construction of the improvements on the land substantially in accordance with the Plans...

Sale Contracts mean a contract for sale of a Lot under which the Landowner agrees {at the direction and in accordance with the position negotiated by the Developer) to sell the Lot in accordance with this Agreement.

Services means the services describein Annexure 1 and any additional or varied services agreed between the parties from time to time.

Service Charges means the cost of all services supplied to the Land, including, but not limited to, water consumption, electricity, gas, telephone, sewerage rates and levies and garbage levies.

Service fee means an amount equivalent to X% of the Approved Project Costs

x. PROVISION OF SERVICES

x.x Appointment

From the Effective Date:

(a)  the Landowner appoints the Developer, as an independent contractor, to provide the Services on the terms and conditions of this Agreement; and

(b)  the Developer accepts the appointment made under clause x.x(x).

x.x Nature of Relationship

(a)  The Developer is engaged by the Landowner as an independent contractor and nothing in this Agreement is to be treated as creating an employer/employee relationship, agency relationship, partnership or joint venture between the Landowner and the Developer.

(b)  In particular, and without limiting clause x.x(x), the Developer must not:

                                                 (i)        hold itself out as the agent of the Landowner in its dealings with third parties;

                                                (ii)        purport to incur any obligation, or make any promise, contract or undertaking, warranty or representation for or on behalf of the Landowner,

except with the prior written consent of the Landowner.

(c)   Notwithstanding anything contained in clause x.x(x) or x.x(x), the Developer is hereby authorised by the Landowner to enter into all necessary contractual arrangements with such third parties as the Developer deems appropriate to enable the Developer to comply with its obligations under this Agreement to provide the Services, provided always that the Developer enters into such contractual arrangements on its own behalf and not on behalf of the Landowner.

x. FUNDING AND PAYMENT OF APPROVED PROJECT COSTS

x.x Project Facility

(a)  Subject to clause x.x(x), the Developer will obtain the Project Facility.

(b)  The parties acknowledge and agree that the Developer may be one of a number of borrowers pursuant to the Project Facility.

(c)   The Landowner must do all things and sign all documents necessary to assist the Developer to obtain the Project Facility, including, but not limited to, a guarantee and the provision of the Land as security for the Project Facility.

(d)  If the Developer is unable to obtain the Project Facility, then the Landowner must obtain the Project Facility and provide the Land as security for the Project Facility.

x.x Payment of Approved Project Costs prior to the Date Of Financial Close

(a)  Until the Date of Financial Close, the Landowner must pay all of the Approved Project Costs.

(b)  The Landowner must indemnify, and keep indemnified, the Developer against all Loss and Claims suffered or incurred by the Developer as a result of, in connection with or due to a breach by the Landowner of clause x.x(x).

x.x Payment of Approved Project Costs on or after the Date of Financial Close

(a)  Subject to clauses x.x(x), x.x(x) and x.x(x), on or after the Date of Financial Close, the Developer must pay all of the Approved Project Costs.

(b)  If the Developer obtains the Project Facility or is one of the borrowers pursuant to the Project Facility, then the Developer must apply the proceeds Of the Project Facility (or if there is more than one borrower such proportion of the proceeds of the Project Facility as is allocated to the Developer) towards the payment of the Approved Project Costs.

x. SERVICES FEE

x.x Payment of Services Fee

In consideration of the Developer providing the Services to the Landowner pursuant to this Agreement, the Landowner must pay to the Developer the Services Fee in accordance with clause x.x(x).

x. DEVELOPER'S OBLIGATIONS

x.x Developer's Liability to Landowner

The Developer is liable to the Landowner in respect of any neglect, default or delay in the delivery of the Services by the Developer or any of its subcontractors which results in the Landowner suffering Loss, including any Loss resulting from the rescission or termination of a Sale Contract, an increase in the Developer Project Costs or a decrease in the Net Sale Proceeds, which are attributable to the neglect, default or delay, but provided always that the Developer shall not be liable where any such delay is caused by an event or circumstance that is not within the control of the Developer.

x.x Indemnity to the Landowner

The Developer indemnifies the Landowner against all liability which the Landowner may suffer or incur arising directly or indirectly in connection with the performance or non­ performance of the Developer's obligations under this Agreement, including any liability to any third party contractor with whom the Developer engages to provide Services on behalf of the Developer except:

(a)  to the extent that the Landowner is expressly made responsible or liable for such amounts under this Agreement; or

(b)  in relation to the Landowner's obligations under this Agreement; or

(c)   to the extent caused by the wilful or negligent act or omission of the Landowner or any person under the Landowner's control.

x. THE LANDOWNER'S OBLIGATIONS

x.x Access to the Land

The Landowner grants the Developer and each other person engaged or employed by the Developer in relation to the Services a non-exclusive licence to access the Land at all times for the purpose of providing the Services.

x.x Positive obligations

The Landowner, at its own cost, must:

(a)  as the registered proprietor of the Land, execute all documents and do all things the Developer reasonably requires in connection with the Services; and

(b)  do all things reasonably necessary to assist the Developer to obtain all necessary Approvals and to provide the Services.

x.x Subcontracting

The Developer must not subcontract any part or all of the Services without the Landowner's prior written consent.

ANNEXURE 1

Description of Services

The Developer will use all reasonable commercial endeavours to do all things necessary to undertake and manage the Project on behalf of the Landowner, including (but not limited to):

1.    to retain and to enter into contracts with all necessary consultants, contractors, agents and advisors, including (but not limited to) a builder and a manager, to assist with and carry out the Project;

2.    to apply for, pursue and obtain all Approvals required for the Project, including any development consents, modifications and additional development consents;

3.    if necessary or desired for the Project make and pursue all applications for the re-zoning of any part of the Land;

4.    to create, extinguish or modify easements, restrictions on use and covenants affecting or appurtenant to the Land;

5.    to procure and deliver to relevant Authorities such bonds and securities as are required for the Project;

6.    to negotiate and enter into agreements for the supply of utility services to the Land and to each of the Lots;

7.    to obtain registration of the Plan of Subdivision;

8.    to effect the marketing and sale of any part of the Land, including negotiating and entering into and enforcing agency agreements and Sale Contracts, where necessary on behalf of the Landowner, and amending, varying or otherwise dealing with those documents and administering the sale process and receiving and disbursing any Net Sale Proceeds;

9.    to effect the leasing of any part of the Land, including negotiating and entering into and enforcing agency agreements and agreement for lease and leases, where necessary on behalf of the Landowner, and amending, varying or otherwise dealing with those documents and administering the leasing process and receiving and disbursing rentals and contributions to outgoings (subject to the terms of this Agreement);

10.  to pursue any court or administrative action which affects the Land or the Project. The Landowner agrees that it will not enforce, conduct, settle or compromise any claim which relates to the Land or the Project except in accordance with the written direction from the Developer;

11.  to vote at meetings of any body or committee formed under any building management statement or any strata management statement, as though it were the owner of the Land, and if the Land is subdivided into strata lots, any owner's corporation;

12.  anything to do with the continuing rights of the Landowner as the registered proprietor of the Land;

13.  receiving and disbursing the Net Sale Proceeds in accordance with clause x of this Agreement;

14.  to conduct any mediation, negotiation, dispute resolution or litigious proceedings;

15.  maintaining proper books of account in a form agreed to by the Developer and the Landowner; and

16.  anything ancillary or incidental to any of the above.

A copy of a document dated dd/mm/yyyy was supplied which sets out the relationships between the various partnerships and the profit distributions from the various partnerships.

The following scenarios are encountered in regard to costs and expenses incurred:

Scenario 1:

Tax invoices are received from third party suppliers in the name of Entity A.

The goods/services acquired relate to two or more stages of the development where multiple Landowners (a combination of the eleven Partnerships) are responsible for the costs under the various DSAs between the Partnerships and its respective Developer.

Scenario 2:

Tax invoices are received from third party suppliers in the name of Entity A relating to goods/services in connection with two or more stages of the development where under the various DSAs, multiple Developers are responsible for the cost.

Scenario 3:

Tax invoices are received from third party suppliers in the name of a Developer relating to goods/services in connection with to two or more stages of the development where under the various DSAs, multiple Developers are responsible for the cost.

Scenario 4:

Tax invoices are received from third party suppliers in the name of a Developer relating to goods/services in connection with to two or more stages of the development where under the various DSAs, multiple Landowners are responsible for the cost.

Scenario 5:

Tax invoices are received from third party suppliers in the name of Entity A relating to goods/services in connection with one stage of the development where under the DSA, a single Developer is responsible for the cost.

Scenario 6:

Tax invoices are received from third party suppliers in the name of a Developer relating to goods/services in connection one stage of the development where under the DSA, a single Landowner is responsible for the cost.

Scenario 7:

Tax invoices are received from third party suppliers in the name of Entity A relating to goods/services in connection with the development where under the DSA or otherwise if a DSA does not yet exist for a stage, multiple Landowners and/or multiple Developers are responsible for the cost.

Scenario 8:

Tax invoices are received from third party suppliers in the name of a Developer relating to goods/services in connection with the development where under the DSA or otherwise if a DSA does not yet exist for a stage, multiple Landowners and/or multiple Developers are responsible for the cost.

All supplies made by the Landowners at the completion of the Project will be taxable supplies with some taxable supplies utilising the margin scheme provisions.

All acquisitions made by Entity A, the Landowners or the Developers were taxable supplies acquired from third party suppliers.

All acquisitions made by Entity A, the Landowners or the Developers referred to do not relate to supplies that would be input taxed or are acquisitions of a private or domestic nature.

All tax invoices received from third party suppliers are held by Entity A, the Landowner or the Developer at the time the relevant entity gives the Commissioner a GST return (BAS).

All supplies and acquisitions to date relating to the development of the Property have been reported in the BAS of No. 1.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 11-5

A New Tax System (Goods and Services Tax) Act 1999 Section 11-15

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

A New Tax System (Goods and Services Tax) Act 1999 Section 29-10

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

Reasons for decision

In this ruling,

•                unless otherwise stated, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

•                all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act.

•                all reference materials, published by the Australian Taxation Office (ATO), that are referred to are available on the ATO website ato.gov.au

Summary

Entity A acquires goods and services in its capacity as an agent of the various partnerships (principals) pursuant to the various Partnership Agreements.

There is nothing contained in the documentation provided that indicate Entity A is acting in the capacity as an agent for the respective Developer in acquiring goods and/or services from third party suppliers.

Pursuant to the various DSAs, there is not a principal/agent relationship between the relevant Partnership and the associated Developer/s.

There is nothing contained in the documentation provided that indicate one Developer is an agent of other Developers.

Scenario 1

Tax invoices are received from third party suppliers in the name of Entity A.

The goods/services acquired relate to two or more stages of the development where multiple Landowners (a combination of the eleven Partnerships) are responsible for the costs under the various DSAs between the Partnerships and its respective Developer.

Question 1

Under Scenario 1, are you (multiple Landowners) making a creditable acquisition pursuant to section 11-5 where goods and services are acquired and invoiced in the name of Entity A?

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

Section 11-5 specifies that you make a 'creditable acquisition' if:

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

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

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

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

Subsection 11-15(1) provides that you acquire a thing for a 'creditable purpose' to the extent that you acquire it in carrying on your enterprise. However, pursuant to subsection 11-15(2), you do not acquire the thing for a creditable purpose to the extent that:

•                the acquisition relates to making supplies that would be input taxed; or

•                the acquisition is of a private or domestic nature.

The first issue to consider is to determine the relevant entity making the acquisition. The word 'you' for the purposes of the GST Act, applies to entities generally. It is the entity that makes an acquisition, or creditable acquisition.

Under Scenario 1, tax invoices are received from third parties with details of the recipient being Entity A. The question in this scenario is whether Entity A has made the relevant acquisition on its own behalf or in the capacity as an agent/nominee for the Landowner as principal.

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'.

When an agent uses his or her authority to act for a principal, then any act done on behalf of that principal is an act of the principal. Also, a principal is not bound by acts that are not within the expressed, implied or ostensible authority conferred on the agent. However, the principal may ratify or confirm an unauthorised dealing (paragraph 15 of GSTR 2000/37).

Paragraph 28 of GSTR 2000/37 contains a number of 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 this case, we consider that pursuant to clause x.x.x(x) of the Partnership Agreement, the partners (together referred to as No.1) have appointed Entity A (referred to as the 'Nominee') as an agent of No.1. It is also noted that under clause x.x.x(x) Entity A will also act in the capacity as a bare trustee for the purposes of holding assets of No.1 (including the Land).

Therefore, any acquisition made by Entity A in its capacity as agent for No.1 is, for GST purposes, considered an acquisition of the principal (No.1).

The provisions contained in section 11-20, section 11-5 and 11-15 are to be considered from the perspective of No.1.

This principle is also the case in respect of the relationship between Entity A and the partners of the other Landowner partnerships under the respective Partnership Agreements given similar clauses to clause x.x is contained in all other respective Partnership Agreements.

Paragraph 11-5(a) provides that one of the criteria of a 'creditable acquisition' is that you make the acquisition for a creditable purpose. Subsection 11-15(1) provides that you will acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise.

In this case, the partners of each of the Landowner partnerships have come together associating themselves for the purpose of establishing and undertaking the Project. Each Landowner partnership is considered to be carrying on an enterprise of property development.

Typically, the phrase 'to the extent' in subsection 11-15(1) contemplates the apportionment of acquisitions between the extent the thing was acquired in carrying on an enterprise and also for another purpose not in relation to carrying on an enterprise.

In the situation Entity A acquires goods and/or services from third party suppliers in its capacity as an agent of multiple Landowners, the Landowners will be making an acquisition to the extent the acquisition relates to the carrying on of each Landowner partnerships' respective enterprise.

Goods and Services Tax Ruling GSTR 2006/4, Goods and services tax: determining the extent of creditable purpose for claiming input tax credits and for making adjustments for changes in extent of creditable purpose provides guidance on how to determine the extent of your creditable purpose in making acquisitions to enable you to claim the correct amount of input tax credits.

Paragraph 32 of GSTR 2006/4 provides that you may choose your own apportionment method, but the method you choose needs to be fair and reasonable in the circumstances of your enterprise. It needs to appropriately reflect the intended or actual use of your acquisitions.

Paragraphs 33 and 34 of GSTR 2006/4 continues discussing that the apportionment method you choose must be:

•                be fair and reasonable;

•                reflect the planned use of that acquisition; and

•                be appropriately documented.

In your submission dated dd/mm/yyyy you have provided the following apportionment methodologies:

•                Methodology 1;

•                Methodology 2;

•                Methodology 3; and

•                Methodology 4.

In the situation of Scenario 1 where Entity A in its capacity as an agent for multiple Landowners makes acquisitions from a third party supplier, we consider Methodology 1, Methodology 2 and Methodology 3 are a fair and reasonable approach for Landowners to determine the extent the acquisition is acquired in carrying on their respective enterprises.

Furthermore paragraphs 11-5(a), 11-5(b) and 11-5(c) are satisfied in that;

•                for the purposes of this private ruling that all acquisitions are taken to be taxable supplies to the recipient;

•                the Landowners are liable to provide consideration for the supply; and

•                also for the purposes of this private ruling, all Landowners are registered for GST.

Conclusion

You, multiple Landowners, make a creditable acquisition pursuant to section 11-5 where goods and services are acquired and invoiced in the name of Entity A acting in its capacity as an agent of yours.

Question 2

Under Scenario 1, are you (multiple Landowners) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

Subsection 29-10(1) provides that if you account for GST on a non-cash basis, the input tax credit (ITC) you are entitled to for a creditable acquisition is attributable to:

(a)  the tax period in which you provide any of the consideration for the acquisition; or

(b)  if, before you provide any of the consideration, an invoice is issued relating to the acquisition - the tax period in which the invoice is issued.

Subsection 29-10(3) however states that if you do not hold a tax invoice for a creditable acquisition when you give to the Commissioner a GST return (BAS) for the tax period to which the input tax credit (or any part of the input tax credit) on the acquisition would otherwise be attributable:

(a)  the input tax credit (including any part of the input tax credit) is not attributable to that tax period; and

(b)  the input tax credit (or part) is attributable to the first tax period for which you give to the Commissioner a GST return at a time when you hold that tax invoice.

However, subsection 29-10(3) does not apply in circumstances of a kind determined in writing by the Commissioner to be circumstances in which the requirement for a tax invoice does not apply.

The meaning of the term 'tax invoice' is contained in section 29-70 and includes a requirement that in the case the total price of the supply or supplies is $1,000 or more, the document must enable the identity or ABN of the recipient to be clearly established (subparagraph 29-70(1)(c)(ii)).

Pursuant to subsection 29-70(3), the Commissioner has issued A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Acquisitions under an Agency Relationship) Legislative Instrument 2013 (WTI 2013/1).

In summary, WTI 2013/1 provides that a recipient (with reference to Scenario 1, multiple Landowners) makes an acquisition through their agent (Entity A) is not required to hold a tax invoice for an ITC to be attributed to a tax period if it holds a document that meets the requirements of paragraphs 29-70(1)(a) and 29-70(1)(c), other than subparagraph 29-70(1)(c)(ii) and contains the identity or ABN of their agent.

Conclusion

Under Scenario 1, ITCs in relation to creditable acquisitions described above (in Question 1) made by multiple Landowners will be attributable in accordance with subsection 29-10(2) where the Landowners hold a document that meets the requirements of paragraphs 29-70(1)(a) and 29-70(1)(c), other than subparagraph 29-70(1)(c)(ii) and includes the identity or ABN of Entity A.

Scenario 2:

Tax invoices are received from third party suppliers in the name of Entity A relating to goods/services in connection with two or more stages of the development where under the various DSAs, multiple Developers are responsible for the cost.

Question 3

Under Scenario 2, are you (multiple Developers) making a creditable acquisition pursuant to section 11-5 of the GST Act where goods and services are acquired and invoiced in the name of Entity A?

Similar to Question 1 discussed above, the issue in Scenario 2 is the relationship between Entity A, in its own right or as nominee or agent of the Landowners, and the Developers. That is, is Entity A acting in the capacity as an agent for the Developers in acquiring goods and/or services from third party suppliers.

There is nothing contained in the documentation provided that indicate Entity A is acting in the capacity as an agent for the Developers in acquiring goods and/or services from third party suppliers.

Conclusion

You (multiple Developers), are not making an acquisition in the scenario goods and/or services are invoiced to Entity A. Consequently, you (multiple Developers) have not made a creditable acquisition as defined in section 11-5.

Question 4

Under Scenario 2, are you (multiple Developers) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

As you (multiple Developers) have not made a creditable acquisition in circumstances described in Scenario 2 you are not entitled to an ITC and the attribution provisions contained in subsection 29-10(2) do not apply.

Scenario 3:

Tax invoices are received from third party suppliers in the name of a Developer relating to goods/services in connection with to two or more stages of the development where under the various DSAs, multiple Developers are responsible for the cost.

Question 5

Under Scenario 3, are you (multiple Developers) making a creditable acquisition pursuant to section 11-5 of the GST Act where goods and services are acquired and invoiced in the name of single Developer?

We consider the entity (Developer) listed on the tax invoice (Identified Developer) is the entity that is the recipient and has made the acquisition from the third party supplier. The criteria contained in sections 11-5 and 11-15 are to be considered from the perspective of the identified Developer.

Under Scenario 3, the Identified Developer acquires the goods and/or services solely for a 'creditable purpose'. Furthermore, the Identified Developer satisfies the other requirements of section 11-5.

Conclusion

The Identified Developer has made a creditable acquisition as defined in section 11-5.

Question 6

Under Scenario 3, are you (multiple Developers) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

The Identified Developer is entitled to attribute the ITC pursuant to subsection 29-10. The requirement to hold a tax invoice under subsection 29-10(3) has, for the purposes of this private ruling, assumed to be satisfied.

Scenario 4:

Tax invoices are received from third party suppliers in the name of a Developer relating to goods/services in connection with to two or more stages of the development where under the various DSAs, multiple Landowners are responsible for the cost.

Question 7

Under Scenario 4, are you (multiple Landowners) making a creditable acquisition pursuant to section 11-5 of the GST Act where goods and services are acquired and invoiced in the name of a single Developer?

The issue to be considered in Scenario 4 is the relationship between the Landowners and the Developers. That is, is a specific Developer acting in the capacity as an agent for the one or more Landowner in acquiring goods and/or services from third party suppliers.

The relevant document in considering this issue is the Development Services Agreement (DSA).

In your submission accompanying your private ruling application you state:

'... although there are express clauses in the DSA [Clause x.x and x.x] which provides that an agency relationship does not exist, there are a number of clauses which provide for certain powers and the weighting which is attached to these powers, suggests and indicates that overall, an agency relationship is in existence between the Landowner and the Developer.

We submit, that the obligations, powers, and the description of the services that are to be provided under the DSA [Annexure 1 to the DSA] indicate that the DSA has all the hallmarks of an Agency Agreement (amongst other things). We submit that of critical importance, is the description of services provided in the DSA which includes the limitation that the Developer is not allowed to sub-contract any part or all of the services without the Landowner's prior written consent [Clause x.x].

In addition, we note that the Developer has to do all the things necessary to undertake and manage the project on behalf of the Landowner. The powers which are afforded to the Developer a [sic] very wide and general in nature. Of importance is that the Developer has the power to enter into contracts with all necessary consultants, contractors, agents amongst others, in order to carry out the project. The Developer also has the authority to apply for relevant approvals on behalf of the Landowner, negotiate and enter into agreements on behalf of Landowner for the supply of utility services, to pursue any court administrative action which affects the land or the project, and to do anything which preserves the continuing rights of the Landowner as the registered proprietor of the land.

...

The powers, services and obligations required of the Developer do more than suggest an agency relationship, the obligations of the Developer require it to "stand in the shoes" of the Landowner and this confirms an agency/principal relationship. The list of services for which the Developer is obligated to provide and the powers which has to provide such services negate and extinguish the express clause in the DSA which provides that there is no agency relationship in existence under it.'

We however disagree with your contention and do not consider the relationship between Landowners and Developers to be one of principal and agent.

With reference again to GSTR 2000/37 discussed at Question 1 above, paragraphs 11 and 12 state:

11. 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.

12. The principal is bound by the acts of an agent as a result of the authority given to the agent. In cases of actual authority, the relationship between a principal and an agent is a consensual one so that no party can claim to be a principal's agent unless both parties consent to the creation of the agency.

Paragraph 28 of GSTR 2000/37 contains a number of factors that may indicate a party is an agent under an agency relationship with no single factor (by itself) being determinative:

•                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.

The DSA is clear that whilst the Developer role and responsibilities are 'very wide and general in nature' as described in Annexure 1 to the DSA, including entering 'into contracts with all necessary consultants, contractors, agents amongst others, in order to carry out the Project' [Clause x of Annexure 1 to the DSA], clause x.x(x) of the DSA stipulates that the Developer 'enters into such contractual arrangements on its own behalf and not on behalf of the Landowner'. That is, clause x.x(x) of the DSA in our view was drafted with the specific purpose of clarifying that any contractual arrangements entered into between the Developer and third parties are not intended to create a legal relationship between the Landowner and the third party.

Clause x.x of the DSA provides that the Developer may be exposed to significant commercial risk in respect of any neglect, default or delay in the delivery of the Services by the Developer or any of its subcontractors which results in the Landowner suffering Loss.

The term 'commission' in a business context is typically referred to as a fee paid in exchange for services in facilitating or completing a sale transaction. The commission may be structured as a flat fee, or as a percentage of the revenue, gross margin, or profit generated by the sale.

In this case clause x.x provides that in consideration of the Developer providing the Services to the Landowner under the DSA, the Landowner must pay to the Developer the Services Fee. In essence, the Services Fee is an amount equal to x% of the budgeted Developer's costs as prepared by the respective Developer and approved by the respective Landowner. We consider the Services Fee to be a fee for service as opposed to being classified as a 'commission'.

It is acknowledged that whilst not stated specifically, the definition of the term 'Sales Contract' together with clause x.x of the DSA and clauses x and x of Annexure 1 to the DSA indicate the Developer may determine the price of subsequent supplies of any part of the Land (either by way of sale or lease).

We consider the roles and responsibilities of the Developer as described in Annexure 1 to the DSA to be typical of those afforded to an entity engaged for a similar purpose, being to provide development services to an owner of land. We do not consider Annexure 1 to the DSA was for the purpose of establishing a principal/agent relationship.

Furthermore, whilst clause x.x of the DSA provides that the 'Developer must not subcontract any part or all of the Services [as described in Annexure 1 to the DSA] without the Landowner's prior written consent', we take the view of this to be a control mechanism to ensure the roles and responsibilities of the Developer is not outsourced. That is, a safeguard that a third party is not engaged by the Developer to perform the roles and responsibilities as described in Annexure 1.

Conclusion

We do not consider the relationship between a Landowner and a Developer to be one of principal and agent. Any acquisitions made by the Developer are made by the Developer in its own right. The Landowner has not made the acquisition/creditable acquisition.

Question 8

Under Scenario 4, are you (multiple Landowners) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

As discussed above, the Landowners have not made a creditable acquisition in the circumstances described in Scenario 4. Consequently, the attribution rules contained in section 29-10 are not applicable to Landowners under Scenario 4.

Scenario 5:

Tax invoices are received from third party suppliers in the name of Entity A relating to goods/services in connection with one stage of the development where under the DSA, a single Developer is responsible for the cost.

Question 9

Under Scenario 5, are you (a single Developer) making a creditable acquisition pursuant to section 11-5 of the GST Act where good and services are acquired and invoiced in the name of Entity A?

Similar to Question 3 (Scenario 2) as discussed above, the issue in Scenario 5 is the relationship between Entity A, in its own right or as nominee or agent of the Landowner, and the Developer under the respective DSA. That is, is Entity A acting in the capacity as an agent for the respective Developer in acquiring goods and/or services from third party suppliers.

There is nothing contained in the documentation provided that indicate Entity A is acting in the capacity as an agent for the respective Developer in acquiring goods and/or services from third party suppliers.

Conclusion

You (single Developer), are not making an acquisition in the scenario where goods and/or services are invoiced to Entity A. Consequently, you (single Developer) have not made a creditable acquisition as defined in section 11-5.

Question 10

Under Scenario 5, are you (a single Developer) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

As you (single Developer) have not made a creditable acquisition in circumstances described in Scenario 5, you are not entitled to an ITC and the attribution provisions contained in subsection 29-10(2) do not apply.

Scenario 6:

Tax invoices are received from third party suppliers in the name of a Developer relating to goods/services in connection with one stage of the development where under the DSA, a single Landowner is responsible for the cost.

Question 11

Under Scenario 6, are you (a single Landowner) making a creditable acquisition pursuant to section 11-5 of the GST Act where good and services are acquired and invoiced in the name of a single Developer?

As discussed above at Question 7 (Scenario 4) we do not consider a Developer to be acting as an agent for a Landowner in acquiring goods/and or services as required to fulfil their obligations under a DSA.

Any acquisitions made by the Developer are made by the Developer in its own right. The Landowner has not made the acquisition/creditable acquisition.

Question 12

Under Scenario 6, are you (a single Landowner) entitled to attribute input tax credits pursuant to section 29-10 of the GST Act?

As discussed above, the Landowner has not made a creditable acquisition in the circumstances described in Scenario 6. Consequently, the attribution rules contained in section 29-10 are not applicable to a Landowner under Scenario 6.

Scenario 7:

Tax invoices are received from third party suppliers in the name of Entity A relating to goods/services in connection with the development where under the DSA or otherwise if a DSA does not yet exist for a stage, multiple Landowners and/or multiple Developers are responsible for the cost.

The concepts discussed above in relation to Scenario 1 and Scenario 2 are applicable to the circumstances described in Scenario 7. That is:

•                Entity A is acting as an agent of the Landowners in when acquiring goods and/or services in fulfilling its obligations under the respective Partnership Agreements. See Question 1 reasoning.

•                There is nothing contained in the documentation provided that indicate Entity A is acting in the capacity as an agent for the Developers in acquiring goods and/or services from third party suppliers. See Question 3 reasoning.

Scenario 8:

Tax invoices are received from third party suppliers in the name of a Developer relating to goods/services in connection with the development where under the DSA or otherwise if a DSA does not yet exist for a stage, multiple Landowners and/or multiple Developers are responsible for the cost.

The concepts discussed above in relation to Scenario 3 and Scenario 4 are applicable to the circumstances described in Scenario 8. That is:

•                We do not consider a Developer to be acting as an agent for a Landowner/s in acquiring goods/and or services as required to fulfil their obligations under a DSA. See Question 7 reasoning.

•                There is nothing contained in the documentation provided that indicate an Identified Developer is acting in the capacity as an agent for the other Developers in acquiring goods and/or services from third party suppliers. See Question 5 reasoning.

Question 13

Are you (No. 1) liable for GST pursuant to section 9-40 of the GST Act in relation to supplies made by other Development Partnerships?

Section 9-40 provides that you are liable for GST on any taxable supplies that you make. Provides that you are liable for GST on any taxable supply that you make.

In the situation another Development Partnership has made a supply/taxable supply, you (No. 1) will not be liable for the GST in relation to those supplies. It is the entity making the taxable supply that will be liable pursuant to section 9-40.

Question 14

Are you (No. 1) entitled to input tax credits pursuant to section 11-20 of the GST Act in relation to acquisitions made by other Development Partnerships?

Section 11-20 provides that you are entitled to an input tax credit (ITC) for any creditable acquisition that you make.

In the situation another Development Partnership has made an acquisition/creditable acquisition, you (No. 1) will not be entitled to an ITC in relation to those acquisitions. It is the entity making the creditable acquisition that will be entitled to the ITC pursuant to section 11-20.