Ruling Compendium

Although this paragraph advises that tax invoices can include a reference mark to denote each taxable supply, taxpayers should be permitted to use reference marks or any other method of identification to denote non-taxable/non GST impacting transactions (for example GST free, input taxed, out of scope). This would allow taxpayers who predominantly make taxable supplies to identify by exception non-taxable/non GST impacting transactions.

The Commissioner does, however, acknowledge that there are other ways to represent the information on a tax invoice so that 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 final Ruling and the list is non-exhaustive.

There are no legislative restrictions to identifying non-taxable supplies with a reference mark. However, the requirement that the extent to which each supply that is a taxable supply can be clearly ascertained must be satisfied.

Although GSTR 2011/D1 has been withdrawn and replaced with GSTR 2012/D3, we have reviewed the compendium of comments for GSTR 2011/D1 and believe that an issue has been raised by the ATO's response to the comment at A.6.4.

Also, under this heading and again in paragraph 118, to assist with clarifying this area, the ruling should provide examples of where the requirement for the recipient to hold a tax invoice may impose a disproportionate burden on a supplier or recipient, particularly if that document substantially complies with the requirements for a tax invoice.

The instrument is intended to effect the same general treatment as when the Commissioner had exercised the discretion to treat offer documents and insurance renewal notices as a tax invoice in GSTR 2000/17.

Appendix 2 of the final Ruling includes a table outlining all of the circumstances where the Commissioner has determined under subsection 29-10(3) that an input tax credit may be attributable without a tax invoice. Further, the Commissioner will consider the exercise of the discretion under subsection 29-70(1)(B) to treat a document as a tax invoice at the time of a request by a taxpayer based on the particular facts and circumstances of each individual case.

The draft GSTR should include a reference to the proposed Legislative Instrument on Agency Relationships and include a summary of the Instrument.

Further, despite its importance, the proposed Instrument, A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Acquisitions under an Agency Relationship) Legislative Instrument (No. 1) 2012, only has a reference to disclosed and undisclosed principals in Footnote 2. Although we believe this is fundamental to the Instrument and warrants more prominence in the Instrument, it should be dealt with more comprehensively in the GSTR.

Once an agency relationship is established, the Legislative Instrument will have application whether that relationship is disclosed or undisclosed.

GSTR 2000/37 which deals with agency relationships will be amended to reflect the legislative amendments to section 29-70 and to confirm that a tax invoice will satisfy the requirements of subparagraph 29-70(1)(c)(i) where it contains either the identity and Australian Business Number (ABN) of the supplier or the supplier's agent.

The requirements of the proposed Legislative Instrument, A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Creditable Acquisition of Taxi Travel) Legislative Instrument (No. 1) 2012 place a greater burden on taxpayers using corporate credit cards to pay for taxi travel than those using corporate credit cards for non-taxi related travel (as outlined by Clause 7 of Goods and Services Tax: Waiver of Tax Invoice Requirement (Corporate Card Statements) Legislative Instrument (No.1) 2008) (WTI 2008/1).

Employees using Corporate Cards for employee business related taxi travel should be able to rely on their Corporate Card statements from providers rather than needing to comply with the proposed Instrument. Consequently, if this cannot be dealt with in the draft GSTR, a statement should be included in the body of the Instrument that WTI 2008/1 will apply where Taxi Travel is recorded on the Corporate Card statement issued by the eligible Corporate Card providers (Clauses 4 (a) and (b) of WTI 2008/1).

This was not replicated in GSTR 2012/D3 as it is considered that the circumstances described above are covered by subsection 29-70(1A). This provision can be applied by a recipient of a supply, if the requirements of the subsection are satisfied. In this case, there is no need for the recipient to request an exercise of the discretion under subsection 29-70(1)(B).

Subsection 29-70(1) does not require that the information on the document (that is enough to enable the items listed in paragraph (c) to be able to be clearly ascertained) is to be ascertained solely 'from the document.' Interpreting paragraph (c) in this manner has the effect of adding wording that is not in the legislation.

In paragraph 86 of the draft Ruling, the ATO accepts that the business name (presumably because it can be linked to the legal name of the supplier) is sufficient to meet the requirements of paragraph (c), however the same principles are not applied to the remaining criteria in paragraph (c).

Paragraph 21 of the final Ruling provides guidance on the meaning of the term 'identity' in section 29-70. It indicates that the registered business name is one way of establishing the identity of the supplier and/or the recipient. However, the identity of the supplier and/or recipient must still be clearly ascertainable from the document.

We submit that the variation in expression of the test in the legislative instrument supports the interpretation that subsection 29-70(1) is satisfied if the information in the document is sufficient for the specified information to be identified.

GSTR 2012/D3 substantially limits the preparedness of the Commissioner to exercise his discretion. The draft Ruling changes the fundamental view and approach to the exercise of the discretion in subsection 29-70(1B). We consider that this change renders the proposed approach not capable of compliance by taxpayers generally.

We submit that a series of legislative instruments (LIs) is an inappropriate mechanism to address the mischief when normal commercial and accepted practices can be used to satisfy the tax invoice requirement.

Further, the LIs require that the document that is issued by the supplier complies with paragraph 29-70(1)(d) in that the document must show that it is intended to be a tax invoice - this is an impossible requirement in practice.

The Commissioner has made a number of determinations under subsection 29-10(3) to reduce uncertainty and facilitate compliance in situations where the discretion had previously been exercised in GSTR 2000/17 and other rulings products.

However, we agree with the concern about meeting the paragraph 29-70(1)(d) (intended as a tax invoice) requirement in the context of the LI's. The information requirements in the determinations made under subsection 29-10(3) have been modified so that subsection 29-70(1)(b) (approved form) and subsection 29-70(1)(d) (intended as a tax invoice) do not need to be met where an alternative document to a tax invoice is required.

There is a legislative requirement to issue tax invoices in the correct form, and many contracts (and government agencies) have conditions imposed that require a valid tax invoice to be issued as a condition of payment. As such, a legislative instrument stating that a recipient does not need a tax invoice is not an appropriate response.

We submit that the Commissioner is required to exercise his discretion to vary the tax invoice rules and that this discretion is fundamental to the efficient working of the tax invoice system.

We do not agree with the view expressed at paragraph 87. In our view, a builder's registration number or licence number would generally be sufficient to identify the relevant party for tax invoice purposes. Such an identifier could be used to trace the legal identity of the relevant party.

A builder's registration number or licence number would not be sufficient information to identify the supplier and/or recipient as there is a requirement to go to an external source (that is the relevant builder's registration authority) to determine the identity of the entity. In this situation, the identity of the supplier and/or recipient cannot be clearly ascertained from the document. A recipient may still be able to apply subsection 29-70(1A) where they have another document that was given to them by the supplier and identifies the supplier.

However, to reduce uncertainty, the Commissioner has created a proposed legislative instrument under subsection 29-10(3) such that an input tax credit is attributable to a tax period where the recipient holds a document that contains enough information to enable the identity and ABN of the partner of a partnership (either as the recipient or the supplier as the case may be) to be clearly ascertained from the document.

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 (see A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Acquisitions under an Agency Relationship) Legislative Instrument 2013).