Ruling Compendium

For instance, include a statement or an example that ordinarily a contract such as a standard land contract would not be a tax invoice unless it contains a special condition or something to the effect that 'once settlement of the sale is completed this document is intended to be a tax invoice and the vendor warrants that sale was a taxable supply that includes GST of $xx'.

A small newsagent acts as an agent for several publishers. In a single dealing the newsagent makes supplies on behalf of more than one publisher to a corporate customer. The newsagent issues a single document for the publishers in relation to the supplies. This document satisfies all of the tax invoice requirements, other than the requirements that the identity and ABN of the supplier and the total price for all of the taxable supplies are clearly ascertainable from the document. The document has the identity and ABN of the newsagent. This is in accordance with the existing commercial practice of the newsagent.

The exercise of the Commissioner's discretion, however, cannot be fettered in that manner as it is an administrative discretion. The Commissioner will consider the exercise of the discretion at the time of a request by a taxpayer based on the particular facts and circumstances of each individual case. This has been explained at new draft Ruling paragraphs 45 and 118.

Accordingly, the new draft Ruling does not outline those particular classes of document or specific circumstances in which the Commissioner will exercise the discretion to treat a document as a tax invoice. Further explanation about the exercise of the discretion by the Commissioner is found in Law Administration Practice Statement PS LA 2004/11.

However, the Commissioner recognises this may cause uncertainty for taxpayers. To reduce the uncertainty as to whether a document would be treated as a tax invoice in the circumstances previously set out in GSTR 2000/17 (or other public ruling products), the Commissioner has created a number of draft legislative instruments under subsection 29-10(3) to allow taxpayers to attribute an input tax credit without holding a tax invoice in those circumstances if they hold a document(s) that meets particular information requirements. Until these instruments take effect, any documents issued which would have been treated as tax invoices under the previously withdrawn GSTR 2000/17 will continue to be treated as tax invoices.

Further, it would require extensive and costly changes to systems created by suppliers on the basis of private rulings that explained that a tax invoice could denote which items were taxable supplies without indicating the extent to which each was a taxable supply.

The Commissioner does, however, acknowledge that there are other ways to represent the information on a tax invoice so as the extent to which a supply is a taxable supply could be determined. Unfortunately, it is not possible to address all of these situations in the new draft Ruling. Accordingly, the list is non-exhaustive.

Large businesses cannot check each tax invoice to validate each ABN due to high volumes of transactions. Systems have been implemented to validate the ABN of a supplier at the commencement of the trading relationship and sample checking for compliance conducted.

It is noted that the above concern may be redundant as a recipient may treat a document as a tax invoice where missing information can be clearly ascertained from other documents given to the recipient by the supplier. Examples of the types of other document include a supplier's product list, a business card or an earlier tax invoice.

However, these examples of other documents may not relate to the supply. A recipient therefore may have to withhold an amount, under PAYG, from a payment it makes to another entity in respect to a supply where it does not have a document relating to the supply that quotes the supplier's ABN at the time of making the payment.

Further, the previous ruling did not provide this interpretation for ABN quotation.

The types of other documents set out in the Ruling are only examples of documents the recipient may have received from the supplier which would enable them to treat the document that is missing information as a tax invoice. Other examples may also include invoices, receipts, quotes, order forms, renewal notices, letterheads, emails or other internet records if given by the supplier.

Many of those documents would relate to the supply and 'no ABN withholding' would be necessary. The Commissioner also notes that, for PAYG purposes, a recipient need not withhold an amount for no ABN withholding where, at the time of making the payment, if the recipient does not have reason to suspect that the ABN quoted might not be genuine or that it does not belong to the supplier who quoted it. Further, regular suppliers can give a recipient a periodic quotation of their ABN that covers all the supplies made to the recipient for a specified period. See questions 12 and 15 of the document No ABN withholding - questions and answers on www.ato.gov.au.

The Commissioner further notes that under the previous requirements for tax invoices a document with an incorrect ABN would not have satisfied the requirement for the tax invoice to include the supplier's ABN.

However, to reduce uncertainty as to whether the document in relation to a electronic purchasing system would be treated as a tax invoice, the Commissioner has created a draft legislative instrument under subsection 29-10(3) such that an input tax credit is attributable to a tax period without the recipient being required to hold a tax invoice for a taxable supply provided they hold a document produced by the electronic purchasing system that meets particular information requirements. Until this instrument takes effect, documents produced by an electronic purchasing system which would have been treated as a tax invoice under the previously withdrawn GSTR 2000/17 will continue to be treated as a tax invoice.

However, in Example 8 at draft Ruling paragraphs 173 to 176 it appears to limit the exercise of the discretion by stating that the Commissioner may exercise the discretion to treat a document containing an agent's details as a tax invoice. This suggests that there may be circumstances where the Commissioner may not exercise the discretion.

This is contrary to the Commissioner's previously definitive view on the exercise of the discretion. It would be fair and reasonable for the Commissioner to exercise the discretion in these circumstances as it would cause unnecessary compliance costs for suppliers to change their systems.

Further, it would align the tax invoice requirements with the 'no ABN withholding' principles set out at subsection 12-190(2A). This provision contains an exception to need to withhold an amount from a payment where the payer receives an invoice or some other document from the payee's agent which quotes the agent's ABN.

However, to reduce uncertainty as to whether a document that contains enough information to clearly ascertain the identity and ABN of the agent would be treated as a tax invoice, the Commissioner has created a draft legislative instrument under subsection 29-10(3) such that an input tax credit is attributable to a tax period without the recipient being required to hold a tax invoice for a taxable supply provided they hold a document issued by the agent and which contains the agent's identity and ABN. Until this instrument takes effect, a document that contains the identity and ABN of the agent which would have been treated as a tax invoice under the previously withdrawn GSTR 2000/17 will continue to be treated as a tax invoice.

Alternatively, if the property manager does not have legal authority to execute the lease, but has authority to manage the leased premises and issue tax invoices, provided the tenant is aware of the landlord's identity and ABN from another document, the tenant should be able to treat a document as a tax invoice that instead contains the identity and ABN of the property manager. That is, the validity of the tax invoice should not turn on strict legal agency principles as subsection 29-70(1A) allows other documents to provide information 'missing' from a tax invoice.

Trusts are treated as separate entities for the purposes of GST. However, trusts have no legal personality. This makes issuing tax invoices in the trust's name difficult. However, trustee's have legal personalities.

Under paragraph 29-70(1)(c), the matters listed in (i) to (viii) must be clearly ascertainable from the contents of the tax invoice. The meaning of the word 'it' in the phrase 'it contains enough information to enable the following to be clearly ascertained' does not suggest that the matters listed in (i) to (viii) might be contained in some other document or multiple documents.

When the opening passage of subsection 29-70(1) are read in conjunction with the opening passage of paragraph 29-70(1)(c), the combined effect is as follows:

A tax invoice is a document that complies with the following requirements: it contains enough information to allow the following to be clearly ascertained...

A plain English reading of the provision, the word 'it' could be interpreted in any other way than a reference back to the tax invoice.

Further, if the alternative view applied, subsection 29-70(1A) would be rendered redundant.

If the Commissioner chooses to state the alternative view, the above explanation should be made clear rather than a reference to an ability to refer to extrinsic materials where the law is ambiguous and obscure (which clearly it is not).

The statement should also be qualified with a reference to the fact that other Rulings may contain approved form requirements. A list of references to these other Rulings should be included.

In addition, reference has been made to these other Rulings which contain approved form requirements in footnote 6 at new draft Ruling paragraph 10 and footnote 55 at new draft Ruling paragraph 71.

This view is inconsistent with the terms of the legislation. Subsection 29-70(1A) would apply equally to paragraph 29-70(d) as it would to paragraph 29-70(c). For instance, a supplier sends a document as an attachment to an email and the email states, 'Please see attached tax invoice.' If the attached document contains a description of the supply, the date of the supply, the details of the supplier and recipient (if appropriate), the amount of GST payable in respect of each supply and all the information otherwise required by the GST Act, there is no reason why subsection 29-70(1A) would not apply to allow the entity receiving the email and the document to treat the document as a valid tax invoice.

Further, the Commissioner should include more practical and common examples of where it might be 'clearly ascertainable' that a document is intended to be a tax invoice than that currently at draft Ruling paragraph 83. For instance, if a document (or a combination of documents under subsection 29-70(1A)) sets out a description of each of the relevant supplies, the date of those supplies, the identity and ABN details of the supplier and the recipient (if appropriate) and all the details of the GST associated with those supplies required by subparagraphs 29-70(1)(c)(iv),(vi) and (vii), it would be clearly ascertainable that the document was intended to be a tax invoice.

The Commissioner, however, disagrees that the requirement that it can be clearly ascertained that the document is intended to be a tax invoice should reflect a less specific standard or lower threshold. A document that merely contains all of the other required information will not, without something more, be sufficient to demonstrate that the document was intended to be a tax invoice.

Further, the recipient in these circumstances may be in a position to rely on subsection 29-70(1A) by using another document issued by the supplier that reflects the correct value of the supply. However, this raises the issue of how subsection 29-70(1A) applies where a document purported to be a tax invoice conflicts with other relevant documentation that the recipient seeks to use under subsection 29-70(1A) to satisfy all of the tax invoice requirements. This is unclear in the law.

However, it is recognised that the recipient would not be holding a document that meets the requirements of a tax invoice at the time of lodging their GST return. If the supplier has issued a subsequent document that contains the price of the supply after the adjustment event, the recipient may apply subsection 29-70(1A) to treat the document it holds as a tax invoice. See the explanation at new draft Ruling paragraph 98.

Perhaps the interpretation leads to what the Commissioner considers to be an appropriate outcome. In fact, it is agreed that where a recipient wishes to claim an input tax credit for many low value items purchased in a single transaction, it may be appropriate that they hold a tax invoice. However, if the law doesn't currently require that the tax invoice be held, the matter should be taken to Treasury to make amendments to subsection 29-80(1) to ensure that when multiple taxable supplies in a single transaction exceed a value of $75, the recipient of those taxable supplies must hold a tax invoice in order to claim an input tax credit. It is not appropriate to rewrite the law in a public ruling in order to avoid unfavourable outcomes.

Further, the ambiguous term 'taxable item' should be removed. Instead consistent and coherent guidelines around what constitutes a single taxable supply and what constitutes multiple taxable supplies for the purposes of subsection 29-70(1) and subsection 29-80(1) should be provided. These guidelines should be supported by the law and should be consistent with the views of the Commissioner as expressed in other public rulings.

The Commissioner considers that it is improbable that it was intended that it would not be necessary to issue a tax invoice where a large number of low value items are supplied in a single transaction.

The Commissioner has removed the term 'taxable item' and replaced it with an explanation that multiple supplies of items in a single transaction are not a single taxable supply.

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the point in time a supplier or recipient may request the Commissioner to exercise the discretion to treat a document as a tax invoice;

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the point in time the exercise of the Commissioner's discretion takes effect (including if a recipient that has already claimed an input tax credit will be taken to have complied with subsection 29-10(3) or taken to have made a false and misleading statement); and

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the form the request for the Commissioner to exercise the discretion should take, including the documents that should be attached.

The Commissioner notes that guidance in relation to the first and second dot points can be found in Law Administration Practice Statement PS LA 2004/11.

The Commissioner further advises that, in relation to the final dot point, any written form is acceptable to make a request for the Commissioner to treat a document as a tax invoice. This request should include enough information for the Commissioner to make a determination, including copies of any documents that relate to the supply. Such documents may include the document that does not meet the requirements for a tax invoice, an invoice, a receipt, a contract, a lease agreement, a quote, an order form, etcetera.

It is recommended that if a statement of principle in the ruling section should be cross-referenced to the explanation of the principle if it is not clear from the legislation and there could be an alternative view from that expressed in the ruling.

Consideration could also be had to cross-referencing all statements of principle in the binding section to its equivalent discussion in the non-binding section.

Further, in the explanation at draft Ruling paragraphs 62 to 67, this requirement is said to be found in the Explanatory Memorandum. It is questionable whether there can be a reference to that document to interpret paragraph 29-70(1)(c) because the words of that paragraph are clear and do not require any interpretative assistance from that document.

In addition, it is contrary to the manner of interpretation in sections 23 and 25 of the Acts Interpretation Act 1901 which indicates that scope of the term tax invoice extends beyond the limits of a single piece of paper.

It is particularly relevant to the examples in Appendix 3. These examples purport to be circumstances where the Commissioner would exercise the discretion under subsection 29-70(1B) to treat documents as tax invoices. However, examples 4, 5, 8, 9 and 10 are all situations where the tax invoices that have been issued satisfied the tax invoice requirements before the law amendments and, on the basis of the statement in the explanatory statement, would continue to satisfy the tax invoice requirements regardless of any exercise of the Commissioner's discretion.

However, to reduce uncertainty as to whether documents would be treated as a tax invoice, the Commissioner has created draft legislative instruments under subsection 29-10(3) such that an input tax credit is attributable to a tax period without the recipient being required to hold a tax invoice for a taxable supply in circumstances similar to those where the Commissioner had previously treated a document as a tax invoice. Until these instruments take effect, any documents which would have been treated as tax invoices under the previously withdrawn GSTR 2000/17 will continue to be treated as tax invoices.

When read in context, it provides that there is no specific requirement for a supplier to keep a copy of a tax invoice to demonstrate it issued a tax invoice to a recipient (if requested by the recipient). Accordingly, when read in isolation, the paragraph is correct.

However, it may cause confusion for entities as it does not make reference to the requirement for entities to keep records that explain all transactions. While an entity could keep tax invoices as a means to explain its sales and taxable supplies, it is open on the wording of the requirement for an entity to keep records of sales and taxable supplies in documents other than a tax invoice.

Accordingly, it is recommended that paragraph advise that keeping a copy of a tax invoice will assist an entity to meet its record keeping requirements.