Issue
Is the entity, a motor vehicle dealership, required to issue a tax invoice under subsection 29-70(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) or section 153-15 of the GST Act, to its customer in relation to the supply of compulsory third party (CTP) insurance where the entity: • pays the CTP insurance premium on behalf of the customer, and • then recoups that amount through the invoice provided to that customer?
Decision
No, the entity is not required to issue a tax invoice under subsection 29-70(2) of the GST Act or section 153-15 of the GST Act to the customer in relation to the supply of CTP insurance where it pays the CTP insurance premium on behalf of the customer and then recoups that amount through the invoice provided to that customer.
Facts
The entity is a motor vehicle dealership. As a service to the customer, the entity registers the new vehicle and pays for the registration and the CTP insurance premium on behalf of the customer.
The supply of the motor vehicle is a taxable supply under section 9-5 of the GST Act.
The entity does not have the authority nor is it acting as an agent of either the insurer or the motor vehicle registration authority to supply CTP insurance to the customer. The motor vehicle registration authority supplies the CTP insurance as agent for the CTP insurer.
The registration including the CTP insurance premium is in the name of the customer.
The entity recoups the amount for the registration and CTP insurance premium in the invoice to the customer.
Reasons for Decision
Under subsection 29-70(2) of the GST Act it is the supplier that is required to issue a tax invoice for a taxable supply. Under section 153-15 of the GST Act, the agent can issue the tax invoice. Therefore, the entity is only required to issue a tax invoice if it is the supplier, or is acting as agent for the supplier, of the CTP insurance to the customer.
When the entity sells a new vehicle to the customer it is making a taxable supply of that vehicle to the customer under section 9-5 of the GST Act.
When a vehicle is registered there are two supplies being made, the supply of the CTP insurance and the supply of the registration of the vehicle.
As a service to the customer, the entity registers the new vehicle on behalf of the customer. The entity does not have the authority nor is it acting as an agent of either the insurer or the motor vehicle registration authority to supply CTP insurance to the customer. The entity merely facilitates the registering of the motor vehicle and pays for the CTP insurance premium.
The supply of CTP insurance is still being made to the customer by the motor vehicle registration authority, as agent for the insurer. The supply is not being made to the entity.
As the entity is not the supplier of the CTP insurance or acting as agent for the supplier, it is not required to issue a tax invoice to the customer under subsection 29-70(2) of the GST Act or section 153-15 of the GST Act. Note: The motor vehicle registration authority, as agent, is responsible for issuing the tax invoice on behalf of the insurer for the supply of CTP insurance to the customer (section 153-15 of the GST Act).