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When you can use buyer-created tax invoices

Where both parties agree, any GST registered buyer purchasing from a GST registered seller can issue a buyer-created tax invoice. You do not need our approval.

The following examples show when you could use buyer-created tax invoices.

When the buyer determines the price

Buyer-created tax invoices are useful where the buyer is in a better position than the seller to determine the price of the goods or services.

For example, an abattoir buys sheep from a farmer. The abattoir weighs, slaughters and prices the sheep. It also determines other costs, such as levies.

The abattoir is in a better position than the farmer to issue a tax invoice.

When the buyer wants to standardise invoices

Buyer-created tax invoices help the producer standardise their invoicing system.

Buyer-created tax invoices are useful for buyers who buy the same goods or services from many sellers. As an example, a potato chip producer buys potatoes from many growers

Rules for buyer-created tax invoices

A buyer-created tax invoice must show:

  • the standard information for a tax invoice
  • the buyer and seller’s GST numbers
  • 15% GST added to the gross supply of goods or services
  • 15% GST added to any deductions or charges.

A buyer-created tax invoice can only be used if the buyer and the seller:

  • are GST-registered
  • agree that only the buyer will issue the tax invoice
  • record the reasons for agreeing to buyer-created tax invoices (if the agreement is not part of the normal terms of business between the buyer and seller).
  • keep a copy of the tax invoice.

Agreement between buyer and seller may be invalidated

We may invalidate the agreement before a supply because we consider 1 of the following applies:

  • the buyer and seller have not complied with the agreement
  • they have not recorded the reasons for the agreement where it is not part of their normal terms of business.
Last updated: 28 Apr 2021
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