Private ruling: GST and recipient created tax invoices
Date of advice: 7 December 2017
Published: April 2018

Ruling: Q1: Are you entitled to issue recipient created tax invoices (RCTIs) in accordance with subsection 29-70(3) of the A New Tax System (Goods and Services Tax Act) 1999 (GST Act) in regard to supplies of access to premises made to you? | A1: Yes, provided you satisfy the requirements set out in clause 6 of Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No. 18) 2015 (RCTI Determination 2015/18).

Relevant facts and circumstances: You are registered for GST and carry on an enterprise of providing Before School Care, After School Care and Holiday Programs to the school community. You enter into licence agreements with numerous schools or school councils under which you are granted access to their premises for the purpose of providing children’s care services. You have provided an agreement (the Agreement) as typical of the licence agreements you enter into. Under the Agreement you are granted a licence to occupy the ‘Licenced Area’. The Agreement provides that you will pay a licence fee as prescribed. The Agreement provides that the licence fee is $XXX (GST exclusive) per annum payable monthly in arrears. In addition you will pay $X.XX per child (GST exclusive) per session when attendances exceed a specified threshold per annum (calculated and payable at the end of the school year). The agreements entered into with each school will contain variables including base rent, frequency of payment, attendee thresholds and rate per attendee. For example, an agreement may have a base rent of $XX,XXX per annum with $X.XX payable per child when attendees exceed XX,XXX (calculated and payable monthly).

Relevant legislative provisions: A New Tax System (Goods and Services Tax Act) 1999 Section 9-5 | Paragraph 29-70(1)(a) | Subsection 29-70(3)

Reasons for decision: Summary: Note: In this reasoning, unless otherwise stated, ● all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) ● reference material(s) referred to are available on the Australian Taxation Office (ATO) website www.ato.gov.au | Detailed Reasoning - Reasons for decision: Paragraph 29-70(1)(a) provides that a tax invoice must be issued by the supplier for a taxable supply unless it is a RCTI (in which case it must be issued by the recipient). Subsection 29-70(3) 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. In this case, the schools are supplying/granting you access to their premises and in return, receive consideration. This is a taxable supply on the understanding that the requirements for a taxable supply under section 9-5 are satisfied. You are therefore, the recipient of a taxable supply. The Commissioner has made a number of specific determinations under subsection 29-70(3) for certain classes of tax invoices that may be issued by a recipient of a taxable supply that are not listed in Goods and Services Tax Ruling GSTR 2000/10, Goods and services tax: recipient created tax invoices . Of relevance to you is RCTI Determination 2015/18. The effect of this Determination is to allow an entity that is the recipient of access to premises to issue RCTIs to the provider. The value of the taxable supply of access to premises is based on the sales the recipient makes to third parties. Clause 5 of RCTI Determination 2015/18 states: 5. A tax invoice that belongs to a class of tax invoices for a taxable supply of access to premises may be issued by an entity that is the recipient of that taxable supply where: (a) the recipient establishes the value of that access by a sales based calculation process; and (b) the recipient satisfies the requirements set out in Clause 6. Clause 6 of RCTI Determination 2015/18 contains the following requirements that must be satisfied by a recipient of a taxable supply before the recipient can issue RCTIs: 6. A recipient of a taxable supply must satisfy the following requirements: (a) the recipient must be registered for GST when the invoice is issued; (b) the recipient must set out the Australian Business Number of the supplier in the tax invoice; (c) the recipient must issue the original or a copy of the tax invoice to the supplier within 28 days of making, or determining the value of, the taxable supply and must retain the original or the copy; (d) the recipient must issue the original or a copy of an adjustment note to the supplier within 28 days of becoming aware of the adjustment and must retain the original or the copy; (e) the recipient must reasonably comply with its obligations under the taxation laws; and (f) the recipient must have either a written agreement with the supplier that meets the requirements of Clause 7, or a written agreement embedded in the tax invoice that meets the requirements of Clause 8. The following expressions are defined in clause 9 of RCTI Determination 2015/18: Access to premises means the entitlement to enter into premises for the purpose of providing goods or services to third parties. This includes the provision of services through coin-operated machines other than vending machines; Premises means: (a) the place where the supply takes place; or (b) the grounds surrounding the outlet for the supply; or (c) the whole of any enclosed space such as football ground, garden, showground, school grounds, amusement park or similar area where there is a clear boundary or limit; Sales based calculation process means a process whereby the value of the access to premises is based on the supply to third parties (for example a percentage of sales achieved). In your case you are granted access to premises being the areas of a particular school by the school for the purpose of providing outside hours care to members of the school community. Whilst there is a fixed component to the consideration provided to the school, the consideration also includes a variable component based on sales achieved as reflected by the level of attendances. As you calculate the amount paid for the access provided by the schools on the above basis, you meet the requirements of clause 5(a) of RCTI Determination 2015/18. Therefore, as your situation fits within the scope of the abovementioned Determination, you can issue RCTIs for the taxable supplies of access to premises made to you by the schools provided you satisfy all the requirements of Clause 6 of RCTI Determination 2015/18, including paragraph (f). A copy of RCTI Determination 2015/18 is enclosed for your information.