Private ruling: GST and tax invoice relating to an arrangement made under subdivision 153-B of the GST Act
Published: November 2012

Ruling: Q1: Are you, as the representative member of the GST group, entitled to the input tax credits for creditable acquisitions made by the principal from third parties, where you or members of the same GST group have entered into an arrangement with the principal entity under subdivision 153-B of the A New Tax System (Goods and Services Tax) Act 1999 ( GST Act) and the relevant group member holds a tax invoice showing the identity or Australian Business Number (ABN) of the principal? | A1: Yes. You (as the representative member of the GST group) are entitled to the input tax credits for creditable acquisitions made by the principal from third parties, where you or members of the same GST group have entered into an arrangement with the principal entity under subdivision 153-B of the GST Act. You may attribute the input tax credit to a relevant tax period where you hold a tax invoice showing the identity or ABN of the relevant principal and all the other requirements of a tax invoice are satisfied.

Relevant facts and circumstances: You are the representative member of a GST group: You and the group members are collectively referred to as XYZ. XYZ provides administration services, including processing purchase invoices (through its accounts payable function) as a paying agent, to a number of entities referred to collectively as 'the Principal'. XYZ acts as an intermediary in facilitating purchases on behalf of the Principal. XYZ currently does not claim any input tax credits on acquisitions that it facilitates as paying agent for the Principal. To address the current administrative complexity and time taken to distinguish between acquisitions that XYZ makes in its own capacity and those that it makes on behalf of the principal, XYZ will enter into separate written arrangements with the Principal in accordance with subdivision 153-B of the GST Act, under which XYZ will: · make acquisitions from third parties, and/or · facilitate acquisitions from third parties on behalf of the Principal. The kinds of acquisitions to which the arrangement applies will be specified in the written agreements. Once XYZ has entered into the subdivision 153-B arrangements with the Principal, XYZ will claim an input tax credit in respect of creditable acquisitions made by the Principal to which the subdivision 153-B arrangement applies. Equally, the Principal will not claim an input tax credit on the acquisition from the supplier but instead will claim an input tax credit on the deemed acquisition from XYZ under subdivision 153-B of the GST Act. XYZ receives tax invoices both for the acquisitions it makes in its own right and as paying agent for the Principal. The tax invoices relating to acquisitions of the Principal meet all the information requirements for a tax invoice, except where the tax invoice is for a supply (or supplies) where the price is $1,000 or more. These invoices show the identity or the ABN of the Principal and not the identity or the ABN of XYZ. XYZ cannot request a supplier to make out a tax invoice to XYZ for acquisitions XYZ facilitates for the principal as, specifically: · if a supplier were to issue an invoice to XYZ rather than the Principal, that invoice would fail to satisfy the information requirements under section 29-70(2) of the GST Act, as the tax invoice would not have been issued to the recipient of the supply (ie the Principal). · The transaction between the supplier and the Principal is treated as two separate transactions for GST purposes only under the subdivision 153-B of the GST Act arrangement ie there is a deemed transaction between the supplier and XYZ and a transaction between XYZ and the principal.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 (GST Act) subsection 29-10(3) | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) section 29-70 | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) subsection 29-70(1) | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) subparagraph 29-70(1)(c)(ii) | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) subsection 48-45(1) | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) subdivision 153-B | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) section 153-50 | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) paragraph 153-50(1)(a) | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) paragraph 153-50(1)(b) | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) paragraph 153-50(1)(c) | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) section 153-60 | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) subsection 153-60(1)(a) | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) subsection 153-60(1)(b) | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) subsection 153-60(1)(c)

Reasons for decision: Summary: Please note that in this ruling: all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) all reference material referred to is available on the Australian Taxation Office website www.ato.gov.au | Detailed Reasoning - Subdivision 153-B arrangement: Section 153-50 provides for arrangements under which intermediaries are treated as suppliers or acquirers: (1) An entity (the principal) may, in writing, enter into an arrangement with another entity (the intermediary) under which: (a) the intermediary will, on the principal's behalf, do any or all of the following: (i) make supplies to third parties; (ii) facilitate supplies to third parties (including by issuing *invoices relating to, or receiving *consideration for, such supplies); (iii) make acquisitions from third parties; (iv) facilitate acquisitions from third parties (including by providing consideration for such acquisitions); and (b) the kinds of supplies or acquisitions, or the kinds of supplies and acquisitions, to which the arrangement applies are specified; and (c) for the purposes of the GST law: (i) the intermediary will be treated as making the supplies to the third parties, or acquisitions from the third parties, or both; and (ii) the principal will be treated as making corresponding supplies to the intermediary, or corresponding acquisitions from the intermediary, or both; and ... (e) the arrangement ceases to have effect if the principal or the intermediary, or both of them, cease to be *registered. (2) For the purposes of subsection (1), an entity can be an intermediary whether or not the entity is the agent of the principal. (Note: The terms marked with an asterisk are defined in section 195-1). Section 153-60 provides: (1) An acquisition that the principal makes from a third party through the intermediary is taken to be a *creditable acquisition made by the intermediary from the third party, and not by the principal, if: (a) the acquisition is of a kind to which the arrangement applies; and (b) the acquisition is made in accordance with the arrangement; and (c) both the principal and the intermediary are *registered. (2) In addition, the intermediary is taken to make a supply that is a *taxable supply to the principal. This supply is taken: (a) to be a supply of the same thing as is acquired in the *creditable acquisition (the intermediary's acquisition ) that the intermediary is taken to make; and (b) to have a *value equal to 10/11 of the amount that is payable to the intermediary by the principal in respect of the intermediary's acquisition. The principal is taken to make a corresponding acquisition from the intermediary, and the acquisition is taken to be a creditable acquisition if, apart from this section, the principal's acquisition from the third party would have been a creditable acquisition. ... (5) This section has effect despite section 11-5 (which is about what are creditable acquisitions), ... Goods and Services Tax Ruling, Goods and services tax: agency relationships and the application of the law GSTR 2000/37 includes explanations on the special rules under subdivision 153-B. Paragraph 74 of GSTR 2000/37 explains that section 153-50 provides that entities may enter into an arrangement under which an agent is treated as a separate supplier and/or acquirer. That is, the agent is treated as a principal in its own right. Paragraph 74A explains that section 153-60 which is about the effect of these arrangements on acquisitions, only applies to the creditable acquisitions covered by the arrangement. Paragraph 86 to 91 of GSTR 2000/37 explains the effects of the arrangements on creditable acquisitions and states that when an agent makes a creditable acquisition from a third party on behalf of the principal, it is taken to make a creditable acquisition in its own right. The agent is entitled to claim an input tax credit on that acquisition. The agent is also taken to make a taxable supply to the principal of the same thing that the agent is taken to acquire. As the supply by the agent to the principal is a taxable supply under the arrangement, the agent is required to account for the amount of GST payable on the supply to the Commissioner. The principal can claim an input tax credit (if they would have otherwise been making a creditable acquisition from the third party had Subdivision 153-B not applied). Primary Production Industry Partnership - issue register (PP Issue register) explains the issue of dealing through agents at issue 1.1.5: Additionally the principal and an agent may agree in writing to treat supplies and acquisitions as though they were acting on a principal to principal basis. Under these arrangements, the agent will be treated as making supplies to, or acquisitions from, the third party and the principal will be treated as making corresponding supplies to, or acquisitions from, the agent. ...In relation to acquisitions, the agent will issue a tax invoice to the principal. Your submission includes: · XYZ will enter into separate written arrangements with Principal entities in accordance with subdivision 153-B . · The Principal entities are not members of your GST group. · The kinds of acquisitions to which the arrangement applies will be specified in the written agreements. · XYZ entities are currently registered for GST. The Principal entities are shown as currently registered for GST on the Australian Business Register website. Based on the above facts, the XYZ entities will satisfy the requirements of paragraphs 153-50(1)(a) and (b) in relation to acquisitions. Accordingly, an XYZ entity will be treated for GST purposes as a separate supplier and acquirer when it enters into a 153B arrangement. Accordingly, when an XYZ entity (that has entered into the section 153-B arrangement with a Principal entity) makes a creditable acquisition from a third party on behalf of the relevant Principal entity, the relevant XYZ entity is taken to make a creditable acquisition in its own right, and the creditable acquisition is not made by the Principal. This is provided the requirements under paragraphs 153-60(1)(a), (b) and (c) are also satisfied. The XYZ entity is also taken to have made a taxable supply to the Principal of the same thing that it is taken to have acquired. The XYZ entity is required to account for the amount of GST payable on the supply to the Commissioner. The XYZ entity will issue a tax invoice to the Principal entity and the Principal entity can claim an input tax credit (if they would have otherwise been making a creditable acquisition from the third party had subdivision 153-B not applied). | Detailed Reasoning - GST group and entitlement to input tax credit: Subsection 48-45(1) provides the special GST rules in relation to 'who is entitled to input tax credits' where entities are organised in a GST group. (1) If an entity makes a *creditable acquisition or *creditable importation the input tax credit for which is attributable to a tax period during which the entity is a *member of a *GST group: (a) the *representative member is entitled to the input tax credit on the acquisition or importation; and (b) the entity making the acquisition or importation is not entitled to the input tax credit on the acquisition or importation (unless the entity is the representative member). XYZ entities are all members of the same GST group of which you are the representative member. Accordingly, where a member of the GST group makes a creditable acquisition, you are entitled to the input tax credits on the acquisition, and that group member is not entitled to the input tax credits on the acquisition unless you are also that GST group member. | Detailed Reasoning - Tax invoice and attribution: Section 29-10 provides: (1) The input tax credit to which you are entitled 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. ..... (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. ... Under section 29-70: (1) A tax invoice is a document that complies with the following requirements: ... (c) it contains enough information to enable the following to be clearly ascertained: ... (ii) if the total *price of the supply or supplies is at least $1,000 or such higher amount as the regulations specify, or if the document was issued by the recipient-the recipient's identity or the recipient's ABN; You submit that the tax invoices relating to acquisitions made by the Principal meet all the information requirements for a tax invoice, except where the tax invoice is for a supply (or supplies) where the price is $1,000 or more as these invoices show the identity or ABN of the Principal and not the identity or ABN of XYZ. We consider the tax invoices you referred to already satisfy the requirements of a tax invoice under section 29-70. This is because subparagraph 29-70(1)(c)(ii) is also satisfied as the tax invoices contain the recipient's (the Principal's) identity or ABN (and you state that all other information requirements are met as well). An input tax credit is attributable to the tax period in which an entity provides consideration or an invoice is issued. However, under section 29-10 an entity is required to hold a tax invoice for the creditable acquisition when it lodges its Business Activity Statement (BAS). As determined earlier in this ruling, the effects of subdivision 153-B and section 48-45 make you the entity entitled to the input tax credit for the creditable acquisition that is taken to be made by XYZ. Accordingly, where you hold a tax invoice (with the identity or ABN of the Principal) relating to the relevant creditable acquisition you may attribute the input tax credit on the creditable acquisition to the relevant tax period. This is provided XYZ holds the written agreement/arrangement entered into under subdivision 153-B. | Detailed Reasoning - Disclaimer: You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you or to someone acting on your behalf. The Register of private binding rulings is a public record of private rulings issued by the ATO. The register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies. The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet . | You (as the representative member of the GST group) are entitled to input tax credits where the group members in the same GST group are taken, under subdivision 153-B of the GST Act, to have made creditable acquisitions from third parties that were made by the principal. Accordingly, where you hold a tax invoice specifying the identity or ABN of the relevant principal as the recipient and XYZ holds the relevant subdivision 153-B agreement, you may attribute the input tax credit to the relevant tax period.