Private ruling: GST and the supply of goods and services in relation to voucher
Published: October 2011

Ruling: Paragraph 7 of GSTR 2003/5 states that: | a voucher evidences a right or entitlement to receive supplies in the future, and the obligation to make supplies, on the exercise or redemption of that right or entitlement. A voucher plays a part in two transactions: | The supply of the voucher itself, and | The redemption of the voucher for supplies. | For an article to be a voucher for the purposes of subsection 100-25(1) of the GST Act it must upon redemption entitle the holder to receive supplies in accordance with its terms. | The deal vouchers that you sell to the customers in Australia through company A satisfy the requirements of subsection 100-25(1) of the GST Act because: | The deal vouchers can be exchanged for supplies of goods (or services, if applicable) and are considered a voucher, token or coupon for the purposes of paragraph 100-25(1)(a) of the GST Act. The right or entitlement to receive the supplies cease on the exercise of the right or entitlement on redemption or expiry of the voucher(s); | The presentation of the deal vouchers is integral to supplies on redemption at a participating retailer; and | Upon redemption, the deal vouchers entitle the holder to receive supplies. | The next step is to determine if the additional requirements under section 100-5 of the GST Act are satisfied. | Section 100-5 of the GST Act - additional requirements | Paragraph 56 of GSTR 2003/5 provides the following additional requirements of section 100-5 of the GST Act: | · the supply of a voucher must otherwise be a taxable supply; | · 'the holder of the voucher is entitled'; | · upon redemption the voucher must entitle the holder to receive a reasonable choice and flexibility of supplies; | · the voucher must have a stated monetary value; and | · on redemption of the voucher the holder is entitled to supplies up to its stated monetary value. | From the facts provided, the deal voucher has a stated monetary value. The deal voucher can only be redeemed for the goods (or services, if applicable) specified on that voucher. The terms of the voucher does not entitle the holder to a reasonable choice and flexibility as to the types of supplies for which each voucher may be redeemed. On redemption of the voucher, the holder is not entitled to supplies up to a stated monetary value, but only of the particular goods (or services, if applicable) specified on the deal voucher. Accordingly, the additional requirements of section 100-5 of the GST Act are not satisfied, and Division 100 of the GST Act does not apply. | Treatment of a non-face value voucher | As provided in paragraph 167 of GSTR 2003/5, if a thing is a voucher as defined in section 100-25 of the GST Act but it does not meet the additional requirements of section 100-5 of the GST Act, it is not a face value voucher (FVV). Such a voucher is referred to as a 'non-FVV'. | The GST treatment of the supply of the non-FVV is determined by applying the basic rules. As stated above, the sale of the deal vouchers by you to the customers in Australia satisfies all the requirements of a taxable supply under section 9-5 of the GST Act, and therefore you are liable for GST on the supply of the deal vouchers. | However, if a non-FVV entitles the holder to input taxed or GST-free supplies, the supply of the voucher, as a supply of a right to input taxed or GST-free supplies is also input taxed or GST-free respectively. | A non-FVV may be part of a mixed supply, and if another part of the supply is either GST-free or input taxed, it is necessary to apportion the consideration between the parts (paragraphs 169 and 170 of GSTR 2003/5). This may apply in circumstances where a voucher is redeemable for GST-free supplies of certain foods (refer to GST Food Guide (NAT 3338) which is available at www.ato.gov.au). | Where a mix of GST-free and taxable individually packaged goods is packed and sold together, you tax these items individually as a mixed sale. | Based on the facts provided, the deal vouchers entitle the holder to GST-free items and taxable items. As your deal vouchers entitle holders to mixed supplies, it is necessary to apportion the consideration between the parts that are GST-free and taxable. | Apportionment | Where a supply (in this case, the supply of the goods and services) is partly GST-free and partly taxable, you are required to apportion the consideration between the GST-free and taxable parts of the supply. | To work out the value of the taxable part of the supply, the consideration has to be apportioned to each of the parts to find the consideration for the taxable part. You can use any reasonable method that is supportable in the particular circumstances to apportion the consideration. You should keep records that explain the method used. | Goods and Services Tax Ruling GSTR 2001/8 offer some insight into how to determine a 'fair and reasonable' basis for apportionment (in particular, paragraphs 25 to 30 and 92 to 117). This ruling is available from the Tax Offices website at www.ato.gov.au | Issue 2 | Issuing tax invoices for taxable supplies made through an agent | Paragraph 29-70(1)(a) of the GST Act 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 of the GST Act allows either a principal or an agent, but not both, to issue the tax invoice. | Subsection 29-70(2) of the GST Act 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. | Where an agent issues the tax invoice, that document is a tax invoice and it meets the requirements of subsection 29-70(1) of the GST Act if it sets out: | · the principal's name and ABN without the agent's name and ABN as the supplier and issuer of the tax invoice; or | · the agent's name and ABN as the supplier and issuer, instead of the principal's name and ABN as the supplier. | Goods and Services Tax Ruling GSTR 2000/37 provides guidance on agency relationships and the application of the law. This ruling is available from the Tax Offices website at www.ato.gov.au | Based on the facts provided, you have an agreement with company A to act as your agent for the supply of the deal vouchers to customers in Australia. As stated in issue 1, the supply of deal vouchers by you through company A is a taxable supply. Therefore either you or company A must issue a tax invoice for the supply of deal vouchers to customers in Australia. | It should be noted that company A, as the issuer of the tax invoices to the Australian customers, will need to determine the GST status of the supply made by you that is, whether it is a taxable or GST-free supply, to ensure a valid and correct tax invoice is provided to the customers in Australia. | Issue 3 | From the facts provided, the holder of the deal vouchers is entitled to redeem them for the specified goods (or services, if applicable). | Paragraphs 177 and 178 of the GSTR 2003/5 cover the redemption of a non-FVV, and state: | 177. The supply on redemption of a non-FVV is a taxable supply if the requirements in section 9-5 are met. | 178. In relation to the supply or supplies on redemption of a non-FVV paragraph | 9-15(3)(a) applies to limit the consideration for the supply on redemption of the voucher to any additional consideration provided either for that supply or in connection with the exercise of the right evidenced by the voucher. If there is no such additional consideration, there is no consideration for the supplies on redemption of the voucher. | Further, paragraph 9-15(3)(a) of the GST Act states that: | (a) if a right or option to acquire a thing is granted, then: | the consideration for the supply of the thing on the exercise of the right or option is limited to any additional consideration provided either for the supply or in connection with the exercise of the right or option; or | if there is no such additional consideration - there is no consideration for the supply; | On redemption of the deal vouchers to acquire the goods (or services, if applicable), there is no additional consideration provided by the end-customers (holders of the vouchers) for the goods, either for that supply or in connection with the exercise of the right evidenced by the vouchers. In accordance with paragraph 9-15(3)(a) of the GST Act, as there is no consideration for the supplies on redemption of the vouchers, paragraph 9-5(a) of the GST Act is not satisfied and the supplies of the goods (or services, if applicable) on redemption of the deal vouchers are not taxable. | Issue 4 | Under paragraph 29-70(1)(a) of the GST Act a tax invoice for a taxable supply must be issued by the supplier unless it is a recipient created tax invoice (RCTI), (in which case it must be issued by the recipient of the supply). | 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 the supply. | Based on the information provided, company A is supplying a service of promoting the deals on their websites to the customers in Australia on your behalf and in return you pay company A consideration in the form of a commission payment. You are, therefore the recipient of this supply which will be a taxable supply where all the requirements under section 9-5 of the GST Act are satisfied. | Goods and Services Tax Ruling GSTR 2000/10 outlines the circumstances in which a recipient can issue an RCTI. The three broad classes of tax invoices that may be issued by a recipient of a taxable supply are: | · tax invoices for taxable supplies of agricultural products made to registered recipients | · tax invoices for taxable supplies made to registered government related entities, and | · tax invoices for taxable supplies made to registered recipients that have a turnover of at least $20 million annually; or are members of a group of companies, partnerships or trusts, or a joint venture operator, in which one or more other members of that group or participants in that joint venture have such a turnover. | In your case, you do not fall within any of these three classes. However, the Commissioner has also made a number of specific determinations under subsection 29-70(3) of the GST Act for certain classes of tax invoices that may be issued by a recipient of a taxable supply. | Of relevance to you is RCTI 2000/23. This determination allows the recipient of a taxable supply of referral services to issue a tax invoice for that taxable supply. | Goods and Services Tax Ruling GSTR 2000/10 outlines the circumstances in which a recipient can issue RCTI's. An entity can issue RCTI's if the Commissioner has determined in writing that the nature of the industry in which the entity operates warrants the use of RCTI's. | Further, the Commissioner has issued RCTI Determination 2000/23 which permits the recipient of a taxable supply of referral services to issue a tax invoice for that supply. RCTI Determination 2000/23 states in clause 4 that: | 4. A tax invoice that belongs to a class of tax invoices for a taxable supply of referral services may be issued by an entity that is the recipient of that 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 5 of the RCTI Determination 2000/23 sets out the requirements that must be satisfied by the recipient of a taxable supply, and states:- | 5. A recipient must satisfy the following requirements: | (a) the recipient must be registered for GST when the invoice is issued; | (b) the recipient must set out in the tax invoice the ABN of the supplier; | (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 a 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 the adjustment and must retain the original or the copy; | (e) the recipient must reasonably comply with its obligations under the taxation laws; | (f) the recipient must have either: | · a written agreement with the supplier specifying the supplies to which it relates, that is current and effective when the RCTI is issued, agreeing that: | (i) the recipient can issue tax invoices 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; and | (iv) the recipient acknowledges that it is registered when it enters into the agreement and that it will notify the supplier if it ceases to be registered for GST; or | · an agreement with the supplier embedded in an RCTI it issues that contains the following statement: | The recipient and the supplier declare that this agreement applies to supplies to which this tax invoice relates. The recipient can issue tax invoices in respect of these supplies. The supplier will not issue tax invoices in respect of these supplies. The supplier acknowledges that it is registered for GST and that it will notify the recipient if it ceases to be registered. The recipient acknowledges that it is registered for GST and that it will notify the supplier if it ceases to be registered for GST. Acceptance of this RCTI constitutes acceptance of the terms of this written agreement. | Both parties to this supply agree that they are parties to an RCTI agreement. The supplier agrees to notify the recipient if the supplier does not wish to accept the proposed agreement within 21 days of receiving this document. | (g) the recipient must not issue a document that would otherwise be a recipient created tax invoice, on or after the date when the recipient or the supplier has failed to comply with any of the requirements of this determination; | (h) if the recipient has a current GST turnover of less than $1,000,000, it must notify the Commissioner in writing of the recipient's intention to use recipient created tax invoices. This notification must be made before 14 days have elapsed after the first occasion that a recipient created tax invoice is issued by that recipient or before 14 days have elapsed since this Determination was signed, whichever is later. | Further, clause 6 of RCTI Determination 2000/23 provides definitions of the following: | · calculation process means any process used by the recipient to calculate the commission or payment to the service provider; | · referrals means the activity of publicising and promoting an entity and/or the goods and services of that entity with the aim of directing potential clients to that entity. This includes but is not restricted to services such as direct referrals, the display of promotional pamphlets and the inclusion of a hyperlink or website; | · service provider means the entity providing the referrals to the recipient. | Based on the facts given, we consider that the activities of company A in relation to the commission meet the definition of 'referrals' and that company A satisfies the meaning of 'service provider' for the purposes of RCTI Determination 2000/23. This is because they are the entity that promotes, sell and direct their clients to you. You are the recipient of that referral service and calculate commission to be paid to company A based on set criteria (that is, calculation process). | Therefore, RCTI Determination 2000/23 will entitle you to issue RCTIs to company A for the supply of the promotional services made to you in return for the commission, provided you satisfy all the requirements as set out in clause 5 of RCTI Determination 2000/23 (stated above). | All references to GST rulings and determinations can be downloaded from the ATO website at www.ato.gov.au

Relevant facts and circumstances: You are an Australian entity which is registered for goods and services tax (GST). You supply a range of products in Australia. Most of the items which you supply are GST-free. You charge GST only on a few items. Another Australian entity ('company A') is specialised in promotion of goods and services by way of vouchers sales. Company A offers group buying deals to customers on their websites. You have an agreement with company A to supply the goods and services described in the deal. Under the agreement you offer certain goods and/or services to customers at a specified discounted cost as deal. Company A will promote the service on one or more of the websites and market and facilitate the purchase of vouchers which are redeemable for the Service. Company A creates and sells a voucher worth of z amount to customers for the price of x and charges a commission to you for the supply of promotion services. You are required to complete a booking form and have to accept and sign the terms and conditions of the arrangement between you and company A. The booking form states that you ('Partner') sell the service or goods described in the deal section of the attached form ("Service"). Service" is defined in the agreement as the goods/service provided by the Partner for the deal described on the booking form. "Deal" is defined in the agreement as 'Deal means the Partner is offering of certain goods and/or services to customers at a specified discounted cost as per booking form'. Company A is acting as an agent for you. The price of the deal is determined by the prices of the products on offer. The deal price is ultimately determined by you. You are the supplier of the goods to the end customers. You are legally obligated to supply the goods through your contract with company A. The failure to supply means the breach of the agreement with company A. Company A is responsible for any refunds. The booking fee is agreed upon through negotiation between you and company AI. Company A pays you by bank transfer. You have been instructed by company A to issue company A with an invoice for the total number of vouchers. The voucher sale price less voucher price is equal to company A's commission.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 9-15 | A New Tax System (Goods and Services Tax) Act 1999 Division 100 | A New Tax System (Goods and Services Tax) Act 1999 Section 100-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 100-25 | A New Tax System (Goods and Services Tax) Act 1999 Section 29-70 | A New Tax System (Goods and Services Tax) Act 1999 Subsection 29-70(1) | A New Tax System (Goods and Services Tax) Act 1999 Subsection 29-70(2) | A New Tax System (Goods and Services Tax) Act 1999 Subsection 29-70(3)

Reasons for decision: Summary: Issue 1 - Sale of the deal vouchers by you through an agent GST is payable on a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). From the facts provided, your supply satisfies the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act as: · you make the supply of the deal vouchers to the customers through company A in return for consideration (by way of payments); and · the supply is made in the course or furtherance of an enterprise (business) that you carry on; and · the supply is made through a business that you carry on in Australia (and therefore the supply is connected with Australia); and · you are registered for GST. However, the supply of the deal vouchers is not a taxable supply to the extent that it is GST-free or input taxed. Company A is creating, promoting and selling the deal vouchers on your behalf as your agent to customers in Australia, where the deal vouchers are redeemable at your place for certain goods and services. The sale of the deal vouchers by you through company A to the customers in Australia is not GST-free or input taxed, unless the voucher(s) entitles the end-customer (holder) to input taxed or GST-free supplies (discussed later under the heading 'Treatment of a non-face value voucher'). Division 100 of the GST Act - Vouchers For the sale of vouchers we need to take into consideration Division 100 of the GST Act. Where Division 100 of the GST Act applies, this Division alters the application of section 9-5 of the GST Act, so that a supply of certain vouchers is not a taxable supply. Subsection 100-5(1) of the GST Act states: (1) A supply of a *voucher is not a *taxable supply if: on redemption of the voucher, the holder of the voucher is entitled to supplies up to the *stated monetary value of the voucher; and the *consideration for supply of the voucher does not exceed the stated monetary value of the voucher. (* denotes a defined term in section 195-1 of the GST Act). Further, subsection 100-25(1) of the GST Act states: (1) A voucher is any: (a) voucher, token, stamp, coupon or similar article; or (b) *prepaid phone card or facility; the redemption of which in accordance with its terms entitles the holder to receive supplies in accordance with its terms. However, a postage stamp is not a voucher. To be a GST voucher under the special rules in Division 100 of the GST Act, an article must satisfy the requirements in section 100-25 of the GST Act as well as the requirements in section 100-5 of the GST Act. Goods and Services Tax Ruling GSTR 2003/5: Vouchers (GSTR 2003/5) discusses the GST treatment of vouchers. Paragraph 7 of GSTR 2003/5 states that: a voucher evidences a right or entitlement to receive supplies in the future, and the obligation to make supplies, on the exercise or redemption of that right or entitlement. A voucher plays a part in two transactions: The supply of the voucher itself, and The redemption of the voucher for supplies. For an article to be a voucher for the purposes of subsection 100-25(1) of the GST Act it must upon redemption entitle the holder to receive supplies in accordance with its terms. The deal vouchers that you sell to the customers in Australia through company A satisfy the requirements of subsection 100-25(1) of the GST Act because: The deal vouchers can be exchanged for supplies of goods (or services, if applicable) and are considered a voucher, token or coupon for the purposes of paragraph 100-25(1)(a) of the GST Act. The right or entitlement to receive the supplies cease on the exercise of the right or entitlement on redemption or expiry of the voucher(s); The presentation of the deal vouchers is integral to supplies on redemption at a participating retailer; and Upon redemption, the deal vouchers entitle the holder to receive supplies. The next step is to determine if the additional requirements under section 100-5 of the GST Act are satisfied. Section 100-5 of the GST Act - additional requirements Paragraph 56 of GSTR 2003/5 provides the following additional requirements of section 100-5 of the GST Act: · the supply of a voucher must otherwise be a taxable supply; · 'the holder of the voucher is entitled'; · upon redemption the voucher must entitle the holder to receive a reasonable choice and flexibility of supplies; · the voucher must have a stated monetary value; and · on redemption of the voucher the holder is entitled to supplies up to its stated monetary value. From the facts provided, the deal voucher has a stated monetary value. The deal voucher can only be redeemed for the goods (or services, if applicable) specified on that voucher. The terms of the voucher does not entitle the holder to a reasonable choice and flexibility as to the types of supplies for which each voucher may be redeemed. On redemption of the voucher, the holder is not entitled to supplies up to a stated monetary value, but only of the particular goods (or services, if applicable) specified on the deal voucher. Accordingly, the additional requirements of section 100-5 of the GST Act are not satisfied, and Division 100 of the GST Act does not apply. | Detailed Reasoning - Treatment of a non-face value voucher: As provided in paragraph 167 of GSTR 2003/5, if a thing is a voucher as defined in section 100-25 of the GST Act but it does not meet the additional requirements of section 100-5 of the GST Act, it is not a face value voucher (FVV). Such a voucher is referred to as a 'non-FVV'. The GST treatment of the supply of the non-FVV is determined by applying the basic rules. As stated above, the sale of the deal vouchers by you to the customers in Australia satisfies all the requirements of a taxable supply under section 9-5 of the GST Act, and therefore you are liable for GST on the supply of the deal vouchers. However, if a non-FVV entitles the holder to input taxed or GST-free supplies, the supply of the voucher, as a supply of a right to input taxed or GST-free supplies is also input taxed or GST-free respectively. A non-FVV may be part of a mixed supply, and if another part of the supply is either GST-free or input taxed, it is necessary to apportion the consideration between the parts (paragraphs 169 and 170 of GSTR 2003/5). This may apply in circumstances where a voucher is redeemable for GST-free supplies of certain foods (refer to GST Food Guide (NAT 3338) which is available at www.ato.gov.au). Where a mix of GST-free and taxable individually packaged goods is packed and sold together, you tax these items individually as a mixed sale. Based on the facts provided, the deal vouchers entitle the holder to GST-free items and taxable items. As your deal vouchers entitle holders to mixed supplies, it is necessary to apportion the consideration between the parts that are GST-free and taxable. | Detailed Reasoning - Apportionment: Where a supply (in this case, the supply of the goods and services) is partly GST-free and partly taxable, you are required to apportion the consideration between the GST-free and taxable parts of the supply. To work out the value of the taxable part of the supply, the consideration has to be apportioned to each of the parts to find the consideration for the taxable part. You can use any reasonable method that is supportable in the particular circumstances to apportion the consideration. You should keep records that explain the method used. Goods and Services Tax Ruling GSTR 2001/8 offer some insight into how to determine a 'fair and reasonable' basis for apportionment (in particular, paragraphs 25 to 30 and 92 to 117). This ruling is available from the Tax Offices website at www.ato.gov.au | Detailed Reasoning - Issue 2: Issuing tax invoices for taxable supplies made through an agent Paragraph 29-70(1)(a) of the GST Act 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 of the GST Act allows either a principal or an agent, but not both, to issue the tax invoice. Subsection 29-70(2) of the GST Act 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. Where an agent issues the tax invoice, that document is a tax invoice and it meets the requirements of subsection 29-70(1) of the GST Act if it sets out: · the principal's name and ABN without the agent's name and ABN as the supplier and issuer of the tax invoice; or · the agent's name and ABN as the supplier and issuer, instead of the principal's name and ABN as the supplier. Goods and Services Tax Ruling GSTR 2000/37 provides guidance on agency relationships and the application of the law. This ruling is available from the Tax Offices website at www.ato.gov.au Based on the facts provided, you have an agreement with company A to act as your agent for the supply of the deal vouchers to customers in Australia. As stated in issue 1, the supply of deal vouchers by you through company A is a taxable supply. Therefore either you or company A must issue a tax invoice for the supply of deal vouchers to customers in Australia. It should be noted that company A, as the issuer of the tax invoices to the Australian customers, will need to determine the GST status of the supply made by you that is, whether it is a taxable or GST-free supply, to ensure a valid and correct tax invoice is provided to the customers in Australia. | Detailed Reasoning - Issue 3: From the facts provided, the holder of the deal vouchers is entitled to redeem them for the specified goods (or services, if applicable). Paragraphs 177 and 178 of the GSTR 2003/5 cover the redemption of a non-FVV, and state: 177. The supply on redemption of a non-FVV is a taxable supply if the requirements in section 9-5 are met. 178. In relation to the supply or supplies on redemption of a non-FVV paragraph 9-15(3)(a) applies to limit the consideration for the supply on redemption of the voucher to any additional consideration provided either for that supply or in connection with the exercise of the right evidenced by the voucher. If there is no such additional consideration, there is no consideration for the supplies on redemption of the voucher. Further, paragraph 9-15(3)(a) of the GST Act states that: (a) if a right or option to acquire a thing is granted, then: the consideration for the supply of the thing on the exercise of the right or option is limited to any additional consideration provided either for the supply or in connection with the exercise of the right or option; or if there is no such additional consideration - there is no consideration for the supply; On redemption of the deal vouchers to acquire the goods (or services, if applicable), there is no additional consideration provided by the end-customers (holders of the vouchers) for the goods, either for that supply or in connection with the exercise of the right evidenced by the vouchers. In accordance with paragraph 9-15(3)(a) of the GST Act, as there is no consideration for the supplies on redemption of the vouchers, paragraph 9-5(a) of the GST Act is not satisfied and the supplies of the goods (or services, if applicable) on redemption of the deal vouchers are not taxable. | Detailed Reasoning - Issue 4: Under paragraph 29-70(1)(a) of the GST Act a tax invoice for a taxable supply must be issued by the supplier unless it is a recipient created tax invoice (RCTI), (in which case it must be issued by the recipient of the supply). 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 the supply. Based on the information provided, company A is supplying a service of promoting the deals on their websites to the customers in Australia on your behalf and in return you pay company A consideration in the form of a commission payment. You are, therefore the recipient of this supply which will be a taxable supply where all the requirements under section 9-5 of the GST Act are satisfied. Goods and Services Tax Ruling GSTR 2000/10 outlines the circumstances in which a recipient can issue an RCTI. The three broad classes of tax invoices that may be issued by a recipient of a taxable supply are: · tax invoices for taxable supplies of agricultural products made to registered recipients · tax invoices for taxable supplies made to registered government related entities, and · tax invoices for taxable supplies made to registered recipients that have a turnover of at least $20 million annually; or are members of a group of companies, partnerships or trusts, or a joint venture operator, in which one or more other members of that group or participants in that joint venture have such a turnover. In your case, you do not fall within any of these three classes. However, the Commissioner has also made a number of specific determinations under subsection 29-70(3) of the GST Act for certain classes of tax invoices that may be issued by a recipient of a taxable supply. Of relevance to you is RCTI 2000/23. This determination allows the recipient of a taxable supply of referral services to issue a tax invoice for that taxable supply. Goods and Services Tax Ruling GSTR 2000/10 outlines the circumstances in which a recipient can issue RCTI's. An entity can issue RCTI's if the Commissioner has determined in writing that the nature of the industry in which the entity operates warrants the use of RCTI's. Further, the Commissioner has issued RCTI Determination 2000/23 which permits the recipient of a taxable supply of referral services to issue a tax invoice for that supply. RCTI Determination 2000/23 states in clause 4 that: 4. A tax invoice that belongs to a class of tax invoices for a taxable supply of referral services may be issued by an entity that is the recipient of that 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 5 of the RCTI Determination 2000/23 sets out the requirements that must be satisfied by the recipient of a taxable supply, and states:- 5. A recipient must satisfy the following requirements: (a) the recipient must be registered for GST when the invoice is issued; (b) the recipient must set out in the tax invoice the ABN of the supplier; (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 a 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 the adjustment and must retain the original or the copy; (e) the recipient must reasonably comply with its obligations under the taxation laws; (f) the recipient must have either: · a written agreement with the supplier specifying the supplies to which it relates, that is current and effective when the RCTI is issued, agreeing that: (i) the recipient can issue tax invoices 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; and (iv) the recipient acknowledges that it is registered when it enters into the agreement and that it will notify the supplier if it ceases to be registered for GST; or · an agreement with the supplier embedded in an RCTI it issues that contains the following statement: The recipient and the supplier declare that this agreement applies to supplies to which this tax invoice relates. The recipient can issue tax invoices in respect of these supplies. The supplier will not issue tax invoices in respect of these supplies. The supplier acknowledges that it is registered for GST and that it will notify the recipient if it ceases to be registered. The recipient acknowledges that it is registered for GST and that it will notify the supplier if it ceases to be registered for GST. Acceptance of this RCTI constitutes acceptance of the terms of this written agreement. Both parties to this supply agree that they are parties to an RCTI agreement. The supplier agrees to notify the recipient if the supplier does not wish to accept the proposed agreement within 21 days of receiving this document. (g) the recipient must not issue a document that would otherwise be a recipient created tax invoice, on or after the date when the recipient or the supplier has failed to comply with any of the requirements of this determination; (h) if the recipient has a current GST turnover of less than $1,000,000, it must notify the Commissioner in writing of the recipient's intention to use recipient created tax invoices. This notification must be made before 14 days have elapsed after the first occasion that a recipient created tax invoice is issued by that recipient or before 14 days have elapsed since this Determination was signed, whichever is later. Further, clause 6 of RCTI Determination 2000/23 provides definitions of the following: · calculation process means any process used by the recipient to calculate the commission or payment to the service provider; · referrals means the activity of publicising and promoting an entity and/or the goods and services of that entity with the aim of directing potential clients to that entity. This includes but is not restricted to services such as direct referrals, the display of promotional pamphlets and the inclusion of a hyperlink or website; · service provider means the entity providing the referrals to the recipient. Based on the facts given, we consider that the activities of company A in relation to the commission meet the definition of 'referrals' and that company A satisfies the meaning of 'service provider' for the purposes of RCTI Determination 2000/23. This is because they are the entity that promotes, sell and direct their clients to you. You are the recipient of that referral service and calculate commission to be paid to company A based on set criteria (that is, calculation process). Therefore, RCTI Determination 2000/23 will entitle you to issue RCTIs to company A for the supply of the promotional services made to you in return for the commission, provided you satisfy all the requirements as set out in clause 5 of RCTI Determination 2000/23 (stated above). All references to GST rulings and determinations can be downloaded from the ATO website at www.ato.gov.au

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. | Question 1: Is the supply of deal vouchers by an Australian entity (you) through another Australian entity ('company A') to customers in Australia a taxable supply? | Answer: Yes, the supply of deal vouchers by you to customers in Australia is a taxable supply where company A is acting as an agent of you for the supply of the deal vouchers to customers in Australia. | However, the sale of the deal vouchers is not a taxable supply to the extent that the vouchers entitle the end-customers (holders of the vouchers) to any input taxed or GST-free supplies. | Question 2: Are you required to issue a tax invoice for the supply of the deal vouchers to customers in Australia? | Answer: You (as the supplier) must issue a tax invoice for the supply of the deal vouchers. However, as you make a taxable supply of the deal vouchers through company A, either you or company A must issue the tax invoice for the supply of the deal vouchers. | Question 3: When the voucher is redeemed for goods from you, is this transaction subject to GST? | Answer: No, there is no GST payable when an end-customer redeems a voucher for the goods at your place where no additional consideration is provided. | Question 4: Can you issue recipient created tax invoices (RCTI) for the supply of promotional services made by company A to you in return for the commission or booking fee? | Answer: Yes, you may issue RCTI to company A for the promotional services made to you, provided you satisfy all the requirements set out in A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoices Determination (No. 23) 2000 (RCTI Determination 2000/23).