ATO ID 2001/290: GST and Tax Invoices
Date of decision: 30 July 2001
Business line: Indirect Tax

Issue
Is the entity, a solicitor, required to issue a tax invoice under subsection 29-70(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to an insurer, where the insurer requests a tax invoice in respect of legal services provided by the entity to an injured worker?

Decision
No, the entity is not required to issue a tax invoice under subsection 29-70(2) of the GST Act, to an insurer where the insurer requests a tax invoice in respect of legal services provided by the entity to an injured worker.

Facts
The entity is a solicitor. The entity represented an injured worker in a worker's compensation claim against the injured worker's employer. This legal service was a taxable supply under section 9-5 of the GST Act. The injured worker was successful in their claim for compensation. As such, the employer's insurer was liable to pay out the compensation claim. This pay out included an amount to cover the legal costs of the injured worker (ie the entity's fees). The insurer has requested that the entity supply it with a tax invoice in relation to the services supplied by the entity to the injured worker. The insurer has requested that the tax invoice be made out in their name. The entity is registered for goods and services tax (GST).

Reasons for decision
Summary: One of the requirements for a recipient of a supply to claim an input tax credit is that they must hold a tax invoice (subsection 29-10(3) of the GST Act). Under subsection 29-70(2) of the GST Act, the supplier of a taxable supply must give a tax invoice, for the supply, to the recipient of the supply, if requested by the recipient to do so. Therefore, in order to determine whether the entity is required to issue a tax invoice to the insurer, it is necessary to establish who is the recipient of the entity's services. Section 195-1 of the GST Act defines recipient, in relation to a supply, as the entity to which the supply was made. In this case, the entity is making a taxable supply of legal services to the injured worker. Therefore, although the employer's insurer is, in effect, paying the legal fees of the injured worker, the recipient of the supply is the injured worker. Therefore, as the insurer is not the recipient of the supply, the entity is not required to issue a tax invoice under subsection 29-70(2) of the GST Act, to the insurer.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 subsection 29-10(3) subsection 29-70(2) section 195-1
Subject references: Goods and services tax GST invoices Tax invoices