Private ruling: Agency agreements and tax invoices
Date of advice: 20 August 2019
Published: October 2019

Ruling: Q1: Is the collection and banking of the fees payable by the patients to the Contractors by the Company considered to be done by the Company as the agent of individual Contractors? | A1: Yes, the collection and banking of the fees payable by the patients to the Contractors by the Company is considered to be done by the Company as the agent of individual Contractors for GST purposes. | Q2: Can the Company issue a recipient created tax invoices (RCTI) to each Contractor? | A2: No, the Company is not entitled to issue a recipient created tax invoices (RCTI) to each Contractor. Please read our Reasons for Decision below for instructions on invoicing.

Relevant facts and circumstances: You are an operator of a facility. You are registered for goods and services tax (GST). You enter into separate agreements (Facilities Agreement) with health care providers who operate their businesses at your facility. You are referred to as 'the Company' under the Facilities Agreement and the health care providers are referred to as 'the Contractor'. Here in this Ruling, you will be referred to as the Company and the health care provider as the Contractor. The Contractors are registered for GST. Under the Facilities Agreement the Company provides 'the Facilities' mentioned in the Facilitates Agreement. The Facilities include: · Air-conditioned offices · Photocopying, faxing, internet, telephone · All equipment to conduct a particular type of medical facility · Support staff for the office including reception. · Technical assistance for the medical practitioners · Training for support staff · Marketing · Management and technical support · In-house training · Typing and secretarial services · All business cards. · Fee collection and billing · Client file records and maintenance · All such other facilities as may be agreed between the parties from time to time Under the Facilities Agreement nothing is to create or construe an employment relationship between the Company and the Contractor (or its officers, employees, servants and agents). The relationship of the Company and the Contractor under the Facilities Agreement is that of principal and independent contractor. The Contractor is solely responsible for controlling the manner in which the Contractor provides the Services to the patients. The Company collects the professional fees payable by the patients to the Contractor. The Contractor treats 100% of the professional fees paid by the patients as the Contractors' income. The fee payable by the Contractor to the Company is a certain percentage of the professional fees collected by the Company on behalf of the Contractor. The Contractor does not supply any goods and/or services to the Company under the Facilities Agreement and therefore does not issue any invoices to the Company.

Relevant legislative provisions: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999

Reasons for decision: Detailed Reasoning - Agency: The Commissioners' views in regards to agency relationships are provided in goods and services tax ruling Goods and services tax: agency relationships and the application of the law (GSTR 2000/37) as follows: 10. An entity may be authorised by another party to do something on that party's behalf. Generally, the authorised entity is called an agent. The party who authorises the agent to act on their behalf is called the principal.... 11. For commercial law purposes, an agent is a person who is authorised, either expressly or impliedly, by a principal to act for that principal so as to create or affect legal relations between the principal and third parties. When considering the Facilities Agreement, it is the Commissioners' view that the Company is collecting and banking the fees payable to the Contractor by the patients' in the Company's capacity as the Contractors' agent. | Detailed Reasoning - Recipient created tax invoices (RCTI): An RCTI is a tax invoice that belongs to a class of tax invoices that the Commissioner has determined in writing may be issued by the recipient of a taxable supply. Accordingly, in order to decide whether the Company can issue an RCTI the Company must first be the recipient of a supply. In this case, the Company is not the recipient of a supply under the Facilities Agreement. Accordingly, the Company cannot issue an RCTI. The Company being the supplier of the facilities services makes taxable supply of these services to the Contractors for which the Company must issue tax invoices. However, if the Company wishes to indicate the full amount of the fees that the Company has collected from the patients on-behalf of the Contractors in the tax invoices the Company issues to the Contractors, they may use the same tax invoice to indicate this amount separately. | Detailed Reasoning - Invoices to the patients: GSTR 2000/37 states the following regarding tax invoices issued by an agent on-behalf of a principal. | Detailed Reasoning - Documentary requirements: 23. Under the basic rules about tax invoices and adjustment notes, a tax invoice for a taxable supply or an adjustment note must be issued by a principal who makes supplies through an agent. However, Subdivision 153-A provides that the principal's obligations are complied with if the agent issues tax invoices and adjustment notes on behalf of the principal for those supplies made by the principal through the agent. | Detailed Reasoning - Issuing tax invoices for taxable supplies made through an agent: 61. Paragraph 29-70(1)(a) requires that the principal (as the supplier) must issue a tax invoice for a taxable supply. However, if a principal makes a taxable supply through an agent, section 153-15 allows either a principal or an agent, but not both, to issue the tax invoice. A principal may be liable to a penalty, under the TAA , if the principal and agent both issue separate tax invoices for the same taxable supply. 62. Subsection 29-70(2) requires that if the principal (as the supplier) has not issued a tax invoice and the recipient of the supply requests one, it must be issued within 28 days of that request. In agency relationships, this obligation arises when the recipient makes a request to either the principal or the agent, and is complied with if either the principal or the agent gives the recipient a tax invoice within 28 days after the request. 63. A tax invoice is a document that complies with the following requirements: - it is issued by the supplier of the supply or supplies to which the document relates (paragraph 29-70(1)(a)); - it is in the approved form (paragraph 29-70(1)(b)); - it contains enough information to enable the following to be clearly ascertained: - the identity and ABN of the supplier (subparagraph 29-70(1)(c)(i)); - the identity or ABN of the recipient if the total price of the supply or supplies is at least $1,000, or such higher amount as the regulations specify (subparagraph 29-70(1)(c)(ii)); - what is supplied, including the quantity (if applicable) and the price (subparagraph 29-70(1)(c)(iii)); - the extent to which each supply included on the document is a taxable supply (subparagraph 29-70(1)(c)(iv)); - the date the document is issued (subparagraph 29-70(1)(c)(v)); - the amount of GST (if any) payable in relation to each supply included on the document (subparagraph 29-70(1)(c)(vi)); and - such other matters as the regulations specify (subparagraph 29-70(1)(c)(viii)); - it can be clearly ascertained from the document that the document was intended to be a tax invoice (paragraph 29-70(1)(d)); and - it sets out the GST branch registration number of the GST branch (if applicable) (subsection 54-50(1)). 64. There is an argument that subsection 153-15(1) not only varies the requirements of subsection 29-70(2), about who can issue the tax invoice, but also varies the requirements set out in subsection 29-70(1) about the information required on a tax invoice, including the issuer's identity and ABN. 64A. However, the Commissioner considers that the better view is that subsection 153-15(1) only varies the requirements of subsection 29-70(2) about who can issue the tax invoice. 65. If an agent issues a tax invoice for a supply made on behalf of the principal that contains the agent's identity and ABN, the document would not meet the requirements of subsection 29-70(1). However, the Commissioner has made a determination under subsection 29-10(3) to waive the requirement for the recipient to hold a tax invoice before attributing an input tax credit to a tax period, if the recipient or their agent holds a document that contains the identity and ABN of the supplier's agent, and that otherwise satisfies the requirements of subsection 29-70(1). 66. You may act as an agent for more than one principal in a single dealing with a customer. In addition to supplies you make as an agent on behalf of your principals, you may also make a separate supply on your own account. In these situations, if you issue a single tax invoice that contains your identity and ABN for all of the supplies, the document would not meet the requirements of subsection 29-70(1) for the supplies you made on behalf of the principal. However, where the recipient holds a document that contains the identity and ABN of the agent for the supplier, the total price for all of the taxable supplies, and that otherwise satisfies the requirements of subsection 29-70(1), the determination made by the Commissioner will also apply such that the recipient does not need to hold a tax invoice before attributing their input tax credit entitlement to a tax period. Accordingly, the Company (being the agent of the Contractors) may issue invoices to the patients on-behalf of the Contractors for the services/goods supplied by the Contractors to the patients.