Private ruling: Recipient crested tax invoices
Date of advice: 31 August 2022
Published: November 2022
Ruling period: From 31 August 20XX
Date scheme commenced: Prior to 6 April 20XX

Ruling: Q1: Do the Terms and Conditions and other exampled documents provided, meet the requirements of a valid recipient created tax invoice (RCTI) written agreement between you (the recipient) and your supplier/s? | A1: No, you have not met the requirements of a valid written agreement between you (the recipient) and your supplier/s.

Relevant facts and circumstances: You are registered for GST. You receive referral services within the meaning outlined in Goods and Services Tax: Recipient Created Tax Invoice Determination (No. 11) 2016 on Referrals (RCTI 2016/11). You raised recipient created tax invoices (RCTI's) for the commission you pay to your suppliers in return for the referral services provided by the suppliers under RCTI 2016/11 and once you had met the large business entity turnover threshold issued under Goods and Services Tax: Recipient Created Tax Invoice Determination 2017 for Agricultural Products, Government Related Entities and Large Business Entities (RCTI 2017/6). You have asked if the Terms and Conditions the suppliers were required to agree to in relation to the issuance of RCTI's by you, the recipient, and other exampled documents provided, meet the requirements of a written agreement under clause 8 of RCTI 2016/11 and clause 9 of RCTI 2017/6, as you have not embedded a written agreement in your RCTI's.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Subsection 29-70(3) Goods and Services Tax: Recipient Created Tax Invoice Determination (No. 11) 2016 on Referrals | Goods and Services Tax: Recipient Created Tax Invoice Determination 2017 for Agricultural Products, Government Related Entities and Large Business Entities

Reasons for decision: Summary: Subsection 29-70(3) of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states: (3) 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. * Denotes terms defined in section 195-1 of the GST Act. The Commissioner has determined under Goods and Services Tax: Recipient Created Tax Invoice Determination (No. 11) 2016 on Referrals ( RCTI 2016/11) that a recipient of a taxable supply of a referral may issue a tax invoice called a recipient created tax invoice (RCTI) for the taxable supply if the recipient satisfies the requirements of RCTI 2016/11. You are a recipient of taxable supplies of referrals from your suppliers and issued RCTI's under RCTI 2016/11 until you met the requirements of the definition of a large business entity under Goods and Services Tax: Recipient Created Tax Invoice Determination 2017 for Agricultural Products, Government Related Entities and Large Business Entities (RCTI 2017/6) in which the Commissioner has determined a large business entity that is a recipient of a taxable supply may issue an RCTI for a taxable supply if it satisfies the requirements of RCTI 2017/6. Subclause 7(f) of RCTI 2016/11 and 8(f) of RCTI 2017/6 state that the recipient of a taxable supply of a referral or a recipient who is a large business entity of a taxable supply respectively, must either have a written agreement, that satisfies the requirements in the instrument with the supplier, or a written agreement embedded in the RCTI issued. You have asked if the Terms and Conditions the suppliers were required to agree to in relation to the issuance of RCTI's plus the exampled documents provided, meet the requirements of a written agreement under clause 8 of RCTI 2016/11 and clause 9 of RCTI 2017/6, as you have not embedded a written agreement in your RCTI's. Clause 8 of RCTI 2016/11 specifies the requirements of a written agreement a recipient must have with a supplier to issue a valid RCTI: 8. The written agreement the recipient has with the supplier must: (a) specify the supplies to which it relates; (b) be current and effective when the RCTI is issued; and (c) have the following conditions: (i) the recipient can issue RCTIs in respect of the supplies; (ii) the supplier will not issue tax invoices in respect of the supplies; (iii) the supplier acknowledges that it is registered for GST when it enters into the agreement and that it will notify the recipient if it ceases to be registered for GST; and (iv) the recipient acknowledges that it is registered for GST when it enters into the agreement and that it will notify the supplier if it ceases to be registered for GST. These are also the requirements of a written agreement under clause 9 of RCTI 2017/6. The terms and conditions satisfy clause 8(a) of RCTI 2016/11 and 9(a) of RCTI 2017/6 of a written agreement as it specifies the supply of "commissions" to which it relates. Regarding whether the agreement was current and effective when the RCTIs were issued to satisfy clause 8(b) of RCTI 2016/11 and 9(b) of RCTI 2017/6 required further investigation due to the requirements of a written agreement satisfying the four conditions listed in 8(c) of RCTI 2016/11 or 9(c) of RCTI 2017/6. The written agreement must contain the four conditions which would constitute an effective agreement between you and the supplier/s. Whether these conditions are contained in the terms and conditions are reviewed following. | Detailed Reasoning - Condition (i): The recipient can issue RCTIs in respect of the supplies: The Terms and Conditions do not specify that the recipient can issue RCTIs in respect to these supplies. Consequently, condition (i) is not satisfied. | Detailed Reasoning - Condition (ii): The supplier will not issue tax invoices in respect of the supplies: The Terms and Conditions and other exampled documents do not specify that the supplier will not issue tax invoices in respect of the supplies. Consequently, this condition (ii) is not satisfied. Condition (iii): The supplier acknowledges that it is registered for GST when it enters into the agreement and that it will notify the recipient if it ceases to be registered for GST The Terms and Conditions do not specify acknowledgement by the supplier that they are registered for GST when they enter into the agreement. Consequently, condition (iii) is not satisfied. Condition (iv): The recipient acknowledges that it is registered for GST when it enters into the agreement and that it will notify the supplier if it ceases to be registered for GST. The Terms and Conditions do not specify acknowledgement by the you that you are registered for GST when you enter into the agreement or that you will notify the supplier if you cease to be registered for GST. Consequently, condition (iv) is not satisfied. As your agreement does not contain the four conditions specified in 8(c) of RCTI 2016/11 or 9(c) of RCTI 2017/6 the written agreement is not current and effective and therefore does not satisfy the requirement under clause 8(b) of RCTI 2016/11 and 9(b) of RCTI 2017/6. | Detailed Reasoning - Conclusion: The Terms and Conditions and exampled documents provided do not satisfy the conditions listed in 8(b) or (c) of RCTI 2016/11 nor 9(b) or (c) of RCTI 2017/6 of a written agreement between the you (the recipient) and your supplier/s. Accordingly, you do not meet the requirements to be able to issue RCTIs under RCTI 2016/11 nor RCTI 2017/6. Goods and Services Tax Ruling GSTR 2000/10 Goods and services tax: recipient created tax invoices (GSTR 2000/10) paragraph 48 and 49 instructs what happens if you do not meet the requirements: 48. If you fail to satisfy all of the requirements when issuing an RCTI, it will not be treated as being within the class of invoices determined as RCTIs./p> 49. If this happens, you cannot attribute an input tax credit for the supply to a tax period (even though it may be for a creditable acquisition) until you hold a tax invoice issued by your supplier. To obtain the input tax credits, you can request a tax invoice for the supply from your supplier, who must give it to you within 28 days after your request.