Private ruling: Recipient Created Tax Invoices
Published: June 2012

Ruling: Q1: Will the Commissioner make a determination to allow you to issue recipient created tax invoices? | A1: No, the Commissioner will not make a determination to allow you to issue recipient created tax invoices.

Relevant facts and circumstances: You are a company carrying on an enterprise providing online services. You are registered for the goods and services tax (GST). Your annual turnover is less than $20 million. You acquire website space from website owners (publishers) as taxable acquisitions. You then market and sell such website space to advertisers. The sale price of such space sold to advertisers determines the price you pay to the website owners. Consequently, it is you who determine the price for the supplies of web space you acquire from website owners. You claim that it is administratively convenient to both website owners and you to issue recipient created tax invoices (RCTI) for the acquisitions mentioned above rather than inform the supplier of the price and then get the supplier to raise an invoice. To your knowledge there is no peak industry body representing entities engaged in this kind of online marketing services and you are not a member of any industry body. However, it is possible that there may be other entities similar to you providing comparable services and who would benefit from the issuance of a RCTI determination for this industry. To your knowledge there are no current RCTI determinations made by the Commissioner to cover this class of recipient taxpayers.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 29-70.

Reasons for decision: Summary: RCTI Determinations are made under subsection 29-70(3) of A New Tax System (Goods and Services Tax) Act 1999 ('the GST Act'). This subsection states as follows: 'A recipient created tax invoice is 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.' (Items marked with an asterisk are defined in section 195-1 of the GST Act) Paragraph 10 of Goods and Services Tax Ruling GSTR 2000/10 (GSTR 2000/10), which deals with RCTIs, lists three broad classes of tax invoices in relation to which RCTI agreements may be entered into. These classes are established by the first Determination made pursuant to subsection 29-70(3) of the GST Act. The first such class is tax invoices for taxable supplies involving the determination of the value of agricultural products (and any by-products) subsequent to and dependent upon quantitative or qualitative analysis of the supply. The second such class is tax invoices for taxable supplies made to registered government related entities. The third such class is tax invoices for taxable supplies made to a registered recipient that (a) has an annual turnover, including input taxed supplies, of at least $20 million or (b) is a member of a GST group, or a member of a GST joint venture in which another member of the group, or another participant in the joint venture has such a turnover. The design of the GST system in Australia is that the registered supplier issues the tax invoice. It is, normally, the supplier that is liable to remit the GST. It is not the practice to give on an entity-by-entity basis what in effect would be an exemption from this requirement so as to allow responsibility for issuing a tax invoice to be transferred from the particular supplier entity to the particular recipient entity. Subsection 29-70(3) of the GST Act refers to classes of tax invoices, rather than the granting of permission to specific entities. Consistent with this, RCTI Determinations that have already been issued are in respect of broad classes rather than particular entities. Paragraph 53 of GSTR 2000/10 mentions industry associations making requests to the Commissioner for RCTI determinations. This reflects the concept of there being an identified need in a particular taxpayer community for a determination. Although the paragraph was added to in the Addendum of 27 September 2000 to include the sentence "Other registered recipients may also make requests," Determinations will only be made for broad classes rather than particular entities. However, the Commissioner may initiate a process to issue a legislative instrument with a view to preparing a legislative determination to capture a broad class of taxpayers who fall within the circumstances you have outlined in your submission to us, provided there is such a broad class of taxpayers and they make an application as a class. You have informed us that, to your knowledge, there are no other taxpayers in Australia who can be classed as to be in similar circumstances that would constitute a tax community forming a broad class. As such the Commissioner will not initiate a process to issue a legislative instrument in this instance. If, at a future date, the Commissioner decides that the circumstances you have outlined merit a legislative determination because there is a broad class of taxpayers who would benefit from it, the issuance of a legislative instrument in that regard will be in compliance with Legislative Instruments Act 2003 and the relevant ATO practice statements current at that time. If a new legislative determination for this purpose is eventually issued, it would be placed in the ATO website at a time when it is prepared. Taxpayers will need to check the website to see whether any of the existing or new legislative determinations would allow them to issue RCTIs.

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.