Where both parties agree, any GST registered buyer purchasing from a GST registered seller can provide buyer-created taxable supply information. You do not need our approval.
In the following situations, you may want to use buyer-created taxable supply information.
When the buyer determines the price
Buyer-created taxable supply information is 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 provide taxable supply information.
When the buyer wants to standardise taxable supply information
Buyer-created taxable supply information is useful for buyers who buy the same goods or services from many sellers. For example, a potato chip producer buys potatoes from many growers.
The producer is able to standardise their invoicing system using buyer-created taxable supply information.
Rules for buyer-created taxable supply information
Buyer-created taxable supply information must show:
- standard taxable supply information
- the buyer and seller’s GST numbers
- GST added to the gross supply of goods or services.
Buyer-created taxable supply information can only be used if the buyer and the seller:
- are GST-registered
- agree only the buyer will provide the taxable supply information
- record the reasons for agreeing to buyer-created taxable supply information (if the agreement is not part of the normal terms of business between the buyer and seller)
- keep a copy of the taxable supply information.
Agreement between buyer and seller may be invalidated
We may invalidate the agreement before a supply because the buyer and seller have:
- not complied with the agreement, or
- not recorded the reasons for the agreement where it is not part of their normal terms of business.
Existing arrangements can continue
Any buyer-created tax invoice arrangement approved by Inland Revenue before 1 April 2023 can continue to be used as taxable supply information after this date.