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Does anyone know the answer to the following scenario:

Company A subcontracts Company B for Services.

Company B undertakes the services with its staff and resources.

Company B subcontracts Company C to be the funds administrator. 

Company B and Company C have an affiliation but have different ABN's and both are registered for GST.

There is an agreement between Company B and Company C for Company C to act as the funds administrator for Compan B.The Primary Employee at Company B also has an appointment with Company C.

As the Funds administrator, Company C invoices company A for services.

Can company C invoice company A on its own letterhead with its ABN and bank account details which is the intent of the agreement between Company B and Company C?

 

Any insight would be appreciated.

 

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ATO Certified

TaxTime Support

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Hi @M1chael,

 

Thanks for your question!

 

It really depends on what the nature of the relationship is between Company B and Company C. You've mentioned that Company C is the funds administrator - is this an agency relationship, or are Companies B and C part of a GST group?

 

If there is an agency relationship, then you may have to refer to GSTR 2000/37 for guidance on the invoicing and GST implications.

 

If the companies are part of a GST group, then either company can issue the tax invoice, but the invoice should include the details of the group member making the sale.

 

If there is no agency relationship or GST group, then the invoice should contain enough information to clearly determine the following seven details:

  1. That the document is intended to be a tax invoice
  2. The seller's identity
  3. The seller's Australian business number (ABN)
  4. The date the invoice was issued
  5. A brief description of the items sold, including the quantity (if applicable) and the price
  6. The GST amount (if any) payable – this can be shown separately or, if the GST amount is exactly one-eleventh of the total price, such as a statement which says 'Total price includes GST'
  7. The extent to which each sale on the invoice is a taxable sale (that is, the extent to which each sale includes GST).  

If the sale is over $1,000, then the buyer's ABN must also be included.

 

As long as the buyer has the understanding that Company C is the recipient of the funds, and not Company B, then there shouldn't be any difficulties with the tax invoice.

 

Hope this helps,

 

Rachael B.

1 REPLY 1

Best answer

ATO Certified

TaxTime Support

Replies 0

Hi @M1chael,

 

Thanks for your question!

 

It really depends on what the nature of the relationship is between Company B and Company C. You've mentioned that Company C is the funds administrator - is this an agency relationship, or are Companies B and C part of a GST group?

 

If there is an agency relationship, then you may have to refer to GSTR 2000/37 for guidance on the invoicing and GST implications.

 

If the companies are part of a GST group, then either company can issue the tax invoice, but the invoice should include the details of the group member making the sale.

 

If there is no agency relationship or GST group, then the invoice should contain enough information to clearly determine the following seven details:

  1. That the document is intended to be a tax invoice
  2. The seller's identity
  3. The seller's Australian business number (ABN)
  4. The date the invoice was issued
  5. A brief description of the items sold, including the quantity (if applicable) and the price
  6. The GST amount (if any) payable – this can be shown separately or, if the GST amount is exactly one-eleventh of the total price, such as a statement which says 'Total price includes GST'
  7. The extent to which each sale on the invoice is a taxable sale (that is, the extent to which each sale includes GST).  

If the sale is over $1,000, then the buyer's ABN must also be included.

 

As long as the buyer has the understanding that Company C is the recipient of the funds, and not Company B, then there shouldn't be any difficulties with the tax invoice.

 

Hope this helps,

 

Rachael B.

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