Private ruling: Recipient Created Tax Invoices
Date of advice: 21 August 2015
Published: August 2015

Ruling: Q1: Is the entity, a medical centre business, entitled to issue recipient created tax invoices (RCTIs) to the General Practitioners (GPs) for services provided in the entity's GP After Hours Clinics? | A1: Yes, the entity is entitled to issue RCTIs to the GPs for services provided in the GP After Hours Clinics if it meets the requirements in A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 22) 2000 (RCTI 2000/22).

Relevant facts and circumstances: • The entity is a GST registered entity that is currently running a few After Hours Clinics comprised of several GPs. • Under the service agreement with the GPs, the entity calculates the final fees for the GPs on a worksheet constructed from the times spent in consultation with patients and the summary of claims and benefit entitlements calculated by Medicare for the services provided. • Contracting GPs do not have access to these final figures.

Relevant legislative provisions: Paragraph 29-70(1)(a) | Subsection 29-70(3)

Reasons for decision: Summary: Paragraph 29-70(1)(a) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that a tax invoice for a taxable supply must be issued by the supplier unless it is a RCTI (in which case it must be issued by the recipient). Subsection 29-70(3) of the GST Act defines a RCTI as a tax invoice belonging to a class of tax invoices that the Commissioner has determined in writing may be issued by the recipient of a taxable supply. Goods and Services Tax Ruling GSTR 2000/10 outlines the circumstances in which a recipient is entitled to issue RCTIs. An entity can issue RCTIs if the Commissioner has determined in writing that the nature of the industry in which the entity operates warrants the use of RCTIs. The relevant determination made by the Commissioner in this case is RCTI 2000/20, which is about RCTIs in relation to labour services. RCTI 2000/22 provides in Clause 4 that: A tax invoice that belongs to a class of tax invoices for a taxable supply of labour services may be issued by an entity that is the recipient of that taxable supply where the recipient: (i) establishes the value of those services after the supply is made using a calculation process and (ii) satisfies the requirements set out in Clause 5. Clause 6 of the Determination gives a definition of the following expressions: calculation process is limited to the following: base data and appropriate rate, where: base data is the information provided by the supplier that evidences the quantity of the supply, and includes but is not limited to: • completion of time sheets; • listing of consultations conducted; • completion of job dockets (however described); • listing of sales achieved (whether by type and/or volume); • bookings obtained; or • providing the goods to the recipient where the labour services involves the collection or delivery of goods; appropriate rate means the rate as determined by the recipient (whether or not in consultation with the supplier) that takes into account information not readily available to the supplier when the supply is made. This includes but is not limited to: • sales rebates; • third party rebates (for example, from a health fund); • volume discounts; • confidential contractual information; or • where the labour services involves the delivery of goods, quantity or quality checks of those goods; In the current case, the entity is the only entity that can determine the value of the services provided by the subcontracting GPs after the supply is made. This is because, the entity is only able to calculate the fees payable to the subcontracting GPs after Medicare have advised the entity of the relevant statement of claim and benefit entitlements. Based on the information provided, it is considered that the requirements in Clause 4(i) and Clause 6 of RCTI 2000/22 are satisfied. Clause 5 (in accordance with Clause 4(ii)) of RCTI 2000/22 contains other requirements that need to be satisfied in order to issue RCTIs under that Determination. Therefore, the entity is entitled to issue RCTIs if the requirements of Clause 5 of RCTI 200/22 are also met.