Edited version of private advice

Authorisation Number: 1052188952463

Date of advice: 27 November 2023

Ruling

Subject: GST and tax invoices

Question 1

Does Entity A meet the requirements of LI 2023/6 A New Tax System (Goods and Services Tax): Waiver of Tax Invoice Requirement (Acquisitions by Recipients Using Electronic Purchasing Systems) Determination 2023 to waive the requirement to hold a tax invoice under subsection 29-10(3) of the A New Tax System (Goods and Service Tax) Act 1999 (GST Act)?

Answer

No, Entity A cannot rely on LI 2023/6 as they do not hold a summary document produced by an electronic purchasing system.

Question 2

Can Entity A rely on subsection 29-70(1A) of the GST Act to treat Document A or Document B as a tax invoice?

Answer

No, Entity A cannot treat the Document A or Document B as a tax invoice pursuant to subsection 29-70(1A) of the GST Act as these documents are not issued by the supplier.

This ruling applies for the following period:

XX XXX 20XX to XX XXX 20XX

Relevant facts and circumstances

Entity A is registered for GST, with a GST turnover greater than $20 million.

Entity A intends to introduce a new system to request, make and finalise bookings with commercial accommodation providers situated in Australia.

Entity A use a digital and unique credit card, issued by a credit card provider, to pay for the commercial accommodation.

Document A is not produced by the EPS. Document A denotes transactions made via credit card and is provided to Entity by the credit card provider. Document A does not refer to Document B.

Document B is not produced or made available through the EPS. This document is created by Entity A to collect details about their suppliers.

Relevant legislative provisions

A New Tax System (Goods and Service Tax) Act 1999 section 9-5

A New Tax System (Goods and Service Tax) Act 1999 section 11-5

A New Tax System (Goods and Service Tax) Act 1999 section 11-10

A New Tax System (Goods and Service Tax) Act 1999 section 11-15

A New Tax System (Goods and Service Tax) Act 1999 section 29-10

A New Tax System (Goods and Service Tax) Act 1999 section 29-70

Reasons for decision

Question 1

Generally, you must hold a tax invoice for a creditable acquisition before you can attribute an input tax credit to a tax period. Subsection 29-10(3) of the GST Act provides:

(3)          If you do not hold a tax invoice for a creditable acquisition when you give to the Commissioner a GST return 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, this subsection 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.

LI 2023/6 is made under subsection 29-10(3) of the GST Act and waives the requirement for a recipient that makes a creditable acquisition through an electronic purchasing system to hold a tax invoice when they hold a document that meets the requirements prescribed in the determination.

Sections 6 and 7 of LI 2023/6 provides:

6 Waiver of the requirement to hold a tax invoice

For the purposes of attributing an input tax credit for a creditable acquisition to a tax period, a prescribed recipient is not required to hold a tax invoice under subsection 29-10(3) of the Act if:

(a)          the creditable acquisition is made through an electronic purchasing system; and

(b)          at the time the prescribed recipient gives a GST return to the Commissioner for the tax period to which the input tax credit (or any part of the input tax credit) for the acquisition would otherwise be attributable, they hold documents that meet the requirements in section 7.

7 Document information requirements

The requirements referred to in paragraph 6(b) are that:

(a)          one of the documents is a summary document of taxable supplies that has been produced by the electronic purchasing system;

(b)          the summary document refers to another document; and

(c)          reading both of these documents together, the information in paragraph 29-70(1)(c) of the Act can be clearly ascertained.

To be eligible to rely on LI 2023/6 to waive the requirement to hold a tax invoice, Entity A must:

•                     be a prescribed recipient

•                     have made a creditable acquisition through an electronic purchasing system, and

•                     hold both a summary document produced by the electronic purchasing system and another document referred to in the summary document and, if reading both of those documents together, they can clearly ascertain the information under paragraph 29-70(1)(c).

Are you a 'prescribed recipient'?

A 'prescribed recipient' is defined under section 4 of LI 2023/6 to mean 'a recipient of a taxable supply that can issue a recipient created tax invoice in accordance with a determination made under subsection 29-70(3) of the Act'.

LI 2023/20 A New Tax System (Goods and Services Tax): Recipient Created Tax Invoice Determination 2023 is made under subsection 29-70(3) of the GST Act and specifies the three classes of tax invoices (RCTIs) that may be issued by the recipient of a supply.

To be considered a prescribed recipient under section 4 of LI 2023/6, Entity A must be capable of meeting one of the classes prescribed under section 6 of LI 2023/20. However, Entity A is not required to issue an RCTI or another document to the supplier, nor must they satisfy the requirements under section 7 of LI 2023/20.

A recipient may issue an RCTI if, among other things, they are a 'large business entity' and the recipient and the supplier are registered for GST. 'Large business entity' is defined under section 4 of LI 2023/20 to mean an entity that 'meets the large business entity turnover condition'. An entity meets the large business entity turnover condition if its current or projected GST turnover, including input taxed supplies, exceeds $20 million.

Entity A is registered for GST and has a GST turnover that is above $20 million. Entity A meets the requirement under section 6(1)(a) of LI 2023/20 and may be entitled to issue an RCTI.

Therefore, Entity A are considered to be a 'prescribed recipient' for the purposes of LI 2023/6.

Have you made a creditable acquisition?

Section 11-5 of the GST Act provides you make 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.

Entity A makes a creditable acquisition as:

•                     They acquire the rights to commercial accommodation in carrying on their enterprise and these acquisitions do not relate to making supplies that would be input taxed supply and are not of a private or domestic nature

•                     the supplies of the right to the commercial accommodation will be taxable supplies to Entity A

•                     they provide or are liable to provide consideration for the commercial accommodation, and

•                     they are registered for GST.

You make the creditable acquisition made through the electronic purchasing system

To rely on LI 2023/6, the creditable acquisitions must be made through an electronic purchasing system.

Based on the information, your acquisition of the rights to the commercial accommodation are made through an electronic purchasing system.

Therefore, paragraph 6(a) of LI 2023/6 would be satisfied.

Do you hold a summary document produced by the electronic purchasing system and another document referred to in the summary document?

To be eligible to rely on LI 2023/6 to waive the requirement to hold a tax invoice, Entity A must hold the documents that meet the requirements in section 7 of LI 2023/6.

Paragraphs 7(a) and (b) of LI 2023/6 provides:

The requirements referred to in paragraph 6(b) are that:

(a)          one of the documents is a summary document of taxable supplies that has been produced by the electronic purchasing system

(b)          the summary document refers to another document, and...

Document A is not produced by the electronic purchasing system as a summary document of the creditable acquisitions made through this system. Rather, this document is produced by Entity A's credit card provider as a statement, denoting the transactions made using the digital and unique credit cards and payment system provided to them.

Therefore, given the reports are not produced by the electronic purchasing system, paragraph 7(a) of LI 2023/6 cannot be satisfied.

Notwithstanding that Document A is not produced by the electronic purchasing system, this document does not refer to Document B.

Conclusion

Entity A cannot rely on LI 2023/6 to waive the requirement to hold a tax invoice as they do not hold a summary document produced by the electronic purchasing system.

Entity A must hold a tax invoice that complies with subsection 29-70(1) of the GST Act before they can attribute your input tax credits for their creditable acquisitions of the commercial accommodation.

Question 2

As discussed above, generally you must hold a tax invoice before you can attribute input tax credits to a tax period. However, where a recipient receives a document that is intended to be a tax invoice, but it does not contain all of the required information, the document may be treated as a tax invoice by the recipient if the missing information is able to be ascertained from one or more other documents issued by the supplier.

Particularly, subsection 29-70(1A) of the GST Act provides:

(1A) A document issued by an entity to another entity may be treated by the other entity as a tax invoice for the purposes of this Act if:

(a)          it would comply with the requirements for a tax invoice but for the fact that it does not contain certain information, and

(b)          all of that information can be clearly ascertained from other documents given by the entity to the other entity.

For subsection 29-70(1A) of the GST Act to apply, the documents must be issued by the supplier to the recipient.[1] It is not sufficient that the information can be ascertained from a document given to the recipient by an entity other than the supplier.

Document A is issued by Entity A's credit card provider. Document B is created by Entity A to capture certain information about their suppliers.

Given neither of these documents are issued by the supplier to Entity A, they cannot rely on subsection 29-70(1A) of the GST Act to treat these documents as a tax invoice.

Entity A must hold a tax invoice that complies with subsection 29-70(1) of the GST Act before they can attribute your input tax credits for their creditable acquisitions of the commercial accommodation.

[1] Paragraph 29-70(1)(a) provides that the document '... is issued by the supplier of the supply or supplies to which the document relates...'. See also Goods and Services Tax Ruling GSTR 2013/1 Goods and services tax: tax invoices paragraph 42.