Tax Invoice Legalites

[Truly Exotic]

Small dealings here but what are the legalities of tax invoices,

I was under the impression that a busienss must produce one upon request, with ABN, and tax invoice stated on here for all transactions.

I paid a city link once off toll for a few dollars yesterday, and they refused to give me one, had an argument with them about legalities , and they kept on insisting that the reference number would act as a reciept and my boss/accountant could call up and verify this if he wanted to.

Mind you, it was like arguing with a sack of cement so I gave up

 

[Scott No Mates]

In some cases the ticket stub eg train ticket will serve as your tax invoice. Check out the ato website.

 

[TMNT]

In some cases the ticket stub eg train ticket will serve as your tax invoice. Check out the ato website.

that just reminded me, was in brisbane airport catching the train to the city,

you buy the ticket, the stub is a tax invoice, but then you have to give it back to the machine to be able to get out of the gates,

What gives !!!

 

[Of The Vultures]

I had a small concreting job done and asked for a receipt - the guy took out a notepad, tore off a blank page and wrote his name, the amount and "concreting". No business name, no ABN... don't think the ATO will be accepting that one.

 

[Paul@PFI]

Tax Invoices do not need to be produced for small transactions and the ticket stub etc may suffice. eg Tolls. They wont issue one. Even if you ask. Don't have to. Train tickets are a fun one...The machine keeps it. Doh....However a etoll stmt will act as its surrogate. Or in nSW the Opal card etc for transport fares. Same may apply to the transaction record on Amex stmt etc.

The precise small value is $82.50 - Dumb number if you ask me...

Rules vary for large transactions too..If its $1000 + its not uncommon to find the supplier issues it with errors. eg No ABN, No address. This means the BUYER loses tax credits !!!

Read it all here : https://www.ato.gov.au/Business/GST/Issuing-tax-invoices/

 

[Paul@PFI]

I had a small concreting job done and asked for a receipt - the guy took out a notepad, tore off a blank page and wrote his name, the amount and "concreting". No business name, no ABN... don't think the ATO will be accepting that one.

So you withheld 48.5% ?? No ?
You may be liable for that tax already.

 

[JDM]

The link provided by Paul above explains everything you should need to know. It is important to remember that a supplier has 28 days to provide a tax invoice after it is requested by the buyer. The supplier does not have to provide a tax invoice at the time of the supply.

If the supplier fails to provide a valid tax invoice, the ATO has procedures to allow you to still claim the GST credit.

 

[Paul@PFI]

If the supplier fails to provide a valid tax invoice, the ATO has procedures to allow you to still claim the GST credit.

Not sure I aqree. The rules are that if a valid tax invoice is not provided then you cannot claim the GST. You may also be incapable of satisfying the substantiation requirements.

The impact can depend if the acquirer has an ABN. If so, then the withholding rules kick in. Withholding is automatically triggered if the supplier does not comply. In practice, you refer back to them and ask for a valid tax invoice. If not provided you withhold 49%. You then pay the 49% to the ATO and give a payment summary to the supplier who will be very p'd off. They cant demand it once it is withheld. If the acquirer has no ABN the withholding rule is not triggered. This is the position for most IP owners.

I would suggest if a valid invoice is not provided (it does not have to comply with tax invoice rule is it legitimately does not include GST) then ask for one and if it is not provided within 30 days then report the matter to the ATO. They take these issues seriously as it is a leading trigger for tax fraud.

TIP : All IP owners should check the ABN on all contractor, repairs etc invoices they may receive directly or through an agent. Check them here. You are looking to determine if they included GST and aren't registered. Its VERY common to find GST included when the trader is not registered. That's tax fraud. Its also consumer fraud. After 14 years the GST rules are very clear. A good negotiation point to discuss with the PM or tradies when discussing prices if they are assisting a fraud.

All fraud and similar concerns can be reported online to the ATO. They wont give feedback but they do action all reports.

 

[Paul@PFI]

The supplier does not have to provide a tax invoice at the time of the supply.

It must be provided BEFORE payment however.

 

[Truly Exotic]

It must be provided BEFORE payment however.

im pretty sure thats the case too, but I had a silly argument with a secretary of a small supplier about 6 months ago, who refused to issue an invoice saying that its illegal to issue an invoice without payment, anyhow I couldnt be bothered arguing with her,

in the case of this city link toll, I asked them 3 times for an invoice, and all they said is they could give me a payment reference so my employer could call up anytime to verify the payment, I was like "yeah right, you want my accountant to call up every one of the 1000 purchases I made this year when it comes to tax time because you wont issue me a tax invoice by law?"

 

[Paul@PFI]

im pretty sure thats the case too, but I had a silly argument with a secretary of a small supplier about 6 months ago, who refused to issue an invoice saying that its illegal to issue an invoice without payment, anyhow I couldnt be bothered arguing with her,

in the case of this city link toll, I asked them 3 times for an invoice, and all they said is they could give me a payment reference so my employer could call up anytime to verify the payment, I was like "yeah right, you want my accountant to call up every one of the 1000 purchases I made this year when it comes to tax time because you wont issue me a tax invoice by law?"

Tolls are under $82.50 so there is no tax invoice requirement. Parking stations (SOME charge under $82.50!!) too. Public transport fares. For tolls the e-toll statement is also a tax invoice and a substantiation document you will find. Just as they wont issue individual tax invoices your employer cant demand a tax invoice where its not mandatory or required by law. Transport fares on Myki and Opal etc all have an online history too. Just print the etoll notice.

erecords are one of the features of modern accounting - Apple don't send tax invoices either but you can ask and its emailed or you can access iTunes for apps and other purchases and can access the PDF invoices.

 

[Truly Exotic]

Tolls are under $82.50 so there is no tax invoice requirement. Parking stations (SOME charge under $82.50!!) too. Public transport fares. For tolls the e-toll statement is also a tax invoice and a substantiation document you will find. Just as they wont issue individual tax invoices your employer cant demand a tax invoice where its not mandatory or required by law. Transport fares on Myki and Opal etc all have an online history too. Just print the etoll notice.

erecords are one of the features of modern accounting - Apple don't send tax invoices either but you can ask and its emailed or you can access iTunes for apps and other purchases and can access the PDF invoices.

didnt know that, so is it all purchases under $82.50 dont require Tax invoices?

 

[devank]

Are we allowed to include the GST component as part of the total fees? For example, PM fees has GST. As an individual, can we lump both fees and GST together?

 

[Terry_w]

Are we allowed to include the GST component as part of the total fees? For example, PM fees has GST. As an individual, can we lump both fees and GST together?

This is what you are supposed to do. If you are registered for GST you should include the GST in pricing.

 

[devank]

RE agents always separate their PM fees and the GST component of it in their yearly financial statements.
As an individual property investor can we add them together and treat them as ' Property agent fees or commission' in our tax returns? Or should we not include the GST part?

 

[Paul@PFI]

RE agents always separate their PM fees and the GST component of it in their yearly financial statements.
As an individual property investor can we add them together and treat them as ' Property agent fees or commission' in our tax returns? Or should we not include the GST part?

You add them together. The reason they do this is just appalling software they all seem to use. I reckon there are two or three types of software - all the same. Why does it show GST ?? Because some properties are commercial and GST is relevant. Not residential. It would be nice if the software just grossed up the total cost for resi properties....Obviously too hard. Just like those tight **** PMs who don't send an annual summary or charge $40 extra for it...

Residential rentals are input taxed. You cant claim the GST. Its part (input) of the costs (taxed with GST).

This is no different for any other costs you incur. You buy fuel it includes GST. The total fuel cost is your actual cost and you ignore the GST.. Same with resi rent.

 

[JDM]

It must be provided BEFORE payment however.

On what basis do you say this? I am not aware of this requirement.

With this said, it is good practice to require a tax invoice before or at the time of payment and supply.

 

[devank]

Thanks Paul. I got a bit worried thinking I shouldn't have included them in the past.

 

[Paul@PFI]

On what basis do you say this? I am not aware of this requirement.

With this said, it is good practice to require a tax invoice before or at the time of payment and supply.

Its not GST law issue., Its a practical outcome of the interaction of ABN withholding and consumer and trade practices law.

Are you suggesting prepayment by way of a deposit is a better alternative ??
No. Its an exchange - You give me the paperwork and services / goods and I give you money. No invoice. No money.

Businesses are obliged by withholding rules to hold a valid tax invoice before making payment (except if you agree to prepay a deposit etc). If they are foolish enough to part with the money and no tax invoice is given the business will have a obligation imposed to remit 49% to the ATO.

Good consumer advice is to pay after presented with service / product etc and the relevant paperwork. Its the consideration part of a basic contract. Offer, acceptance, consideration. By a consumer / business insisting on the correct paperwork before payment they are assured their affairs are compliant. Its same with buying a property. Settlement is delayed if one thing is missing. Nobody trusts it to be corrected later as there is no obligation created. Lack of payment is a huge incentive to provide a tax invoice.

Deposits are a different issue. Common to see people account for the payment as the GST event. Reality is the GST event is the receipt of the tax invoice. The other payments are a financial supply...Like a laybuy.

 

[JDM]

Its not GST law issue., Its a practical outcome of the interaction of ABN withholding and consumer and trade practices law.

Are you suggesting prepayment by way of a deposit is a better alternative ??
No. Its an exchange - You give me the paperwork and services / goods and I give you money. No invoice. No money.

Businesses are obliged by withholding rules to hold a valid tax invoice before making payment (except if you agree to prepay a deposit etc). If they are foolish enough to part with the money and no tax invoice is given the business will have a obligation imposed to remit 49% to the ATO.

Good consumer advice is to pay after presented with service / product etc and the relevant paperwork. Its the consideration part of a basic contract. Offer, acceptance, consideration. By a consumer / business insisting on the correct paperwork before payment they are assured their affairs are compliant. Its same with buying a property. Settlement is delayed if one thing is missing. Nobody trusts it to be corrected later as there is no obligation created. Lack of payment is a huge incentive to provide a tax invoice.

Deposits are a different issue. Common to see people account for the payment as the GST event. Reality is the GST event is the receipt of the tax invoice. The other payments are a financial supply...Like a laybuy.

Interesting view and I agree that, practically speaking, you should require a tax invoice before or at the time of payment. I always draft contracts on this basis. Do you form the same view if the supplier has already quoted their ABN?

I've recently dealt with a matter where my client was the one that wasn't providing tax invoices for the supply of new residential premises (taxable supply, no margin scheme). In this case the contract was silent regarding issue of a tax invoice before payment. Interestingly, not one buyer out of more than 75 settlements requested a tax invoice.