GST and recipient created tax invoices

Does the entity, a health association, satisfy the requirements to issue recipient created tax invoices as defined in subsection 29-70(3) of the A New Tax System (Goods and Services Tax Act) 1999 (GST Act), when it receives services from health professionals?

No, the entity does not meet the requirements to issue recipient created tax invoices as defined in subsection 29-70(3) of the GST Act when it receives services from health professionals.

The entity is a health association that receives numerous types of supplies from health professionals.

The value of the supplies made by the health professionals is calculated by reference to the number of patients seen or length of time spent on an activity.

The payment rates are standard and the health professionals are aware of the rates and how the payments are calculated.

The entity's turnover is less than $20 million and it is not a government-related entity.

The entity is registered for goods and services tax (GST). The entity is in receipt of taxable supplies.

Subsection 29-70(3) of the GST Act provides that a recipient created tax invoice is 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.

Goods and Services Tax Ruling GSTR 2000/10 specifies three classes of tax invoices that may be issued by a recipient of a taxable supply. These classes include: • tax invoices for taxable supplies of agricultural products; • tax invoices for taxable supplies made to government related entities; and • tax invoices for taxable supplies made to registered recipients that have a turnover of at least $20 million; or are members of a group that has such an entity as a member.

From the facts, the entity does not fall within any of these classes.

Registered recipients of taxable supplies not covered by the specified classes in GSTR 2000/10, can request that the Commissioner make a determination to allow them to issue recipient created tax invoices. Such requests are considered on the basis of the particular circumstances of the industry, including the nature of the taxable supplies, the suppliers and the recipients.

For a recipient of a supply to be entitled to issue recipient created tax invoices, the recipient must set the value of the supply after it is made. In addition, the value must be set by some process or calculation the recipient of the supply undertakes.

In this case, the entity is not setting the value of the supply after it is made. The health professionals are aware of the applicable rates for the services they provide prior to making a supply and are able to calculate the value of their supplies. The health professionals are able to issue tax invoices to the entity for the services they have provided.

As such, the entity does not meet the requirements for issuing recipient created tax invoices contained in GSTR 2000/10. Therefore, the entity does not meet the requirements to issue recipient created tax invoices as defined in subsection 29-70(3) of the GST Act when it receives services from health professionals.