We are often asked how to obtain a tax invoice when using a booking website. In this article we will use the simple example of an Australian GST-registered entity using one of the online booking sites to book accommodation at a hotel in Australia for one of its employees who will be travelling for work-related purposes interstate.
Note: We have referred to Expedia/Wotif below, but similar issues may arise for any of the other sites. The GST implications of such transactions will depend on the facts and circumstances of each case and the specific terms and conditions. It is beyond the scope of this article to determine such GST implications.
More specifically, let’s assume the following example facts:
- John works for City Council in Melbourne;
- John chooses to use the Expedia website by typing in ‘www.expedia.com.au’
- John may not be aware, but he will be redirected to a website called ‘www.expedia.com’
- John searches and finds suitable accomodation (City Hotel) for his business trip to Sydney;
- The website provides him with two options:
- One option is to ‘Pay Online Now’; and
- The other option is to ‘Pay Later at Hotel’
The Pay Later at Hotel option seems relatively uncontroversial, as a tax invoice is usually provided at checkout when payment is made.
The most common complaint is where the Pay Online Now option is chosen – no tax invoice is issued by the online booking site, and the hotel may not provide a tax invoice even if one is requested at the time of the stay.
From a commercial viewpoint, however, the purchasing procedures of the organisation making the booking could place a preference on which option is chosen. For example, there could be different approval processes to have the organisation Pay Online Now vs Pay Later at Hotel. Also, the Pay Later at Hotel option assumes the guest will be paying, and generally they would do this by using a debit or credit card. If a personal credit card is used, the guest will need to be reimbursed via an employee reimbursement process, which may give rise to timing issues (time of payment to hotel vs time of reimbursement). Finally, if no tax invoice is received at all for the Pay Online Now option, then business travelers would never choose this option as this may result in no GST credit being available for the cost of the hotel accommodation.
Why No Tax Invoice?
It seems the online booking websites (or at least some of them, for example Wotif, Expedia, etc) have recently altered the terms and processes they apply with regard to issuing tax invoices. After a couple of quick internet searches this was confirmed.
Expedia and Wotif have virtually identical terms and conditions published on their respective websites (unsurprising given that Expedia owns Wotif). By way of summary, and in the context of tax invoices, these contain the following terms:
- They offer a ‘Pay Online Now’ and a ‘Pay Later at Hotel’ option;
- The Pay Online Now option is a prepaid hotel reservation, and when this option is chosen one of the Expedia Companies (e.g. Wotif) will charge your credit card immediately;
- The Pay Later at Hotel is a postpaid hotel reservation, and when this option is chosen the hotel will charge your credit card in the local currency at the time of the stay – note that under this option, other matters such as hotel booking, tax rates, foreign exchange rates, etc could change between the time of booking and the time of stay.
With regard to tax invoices the following paragraph is included:
“If you are a business traveler and book using the Pay Online Now option (where available), you will not receive a tax invoice for your booking. Some of the Expedia Companies are not required to issue tax invoices for the Pay Online Now option. If you book using the Pay Later at Hotel option, you should receive a tax invoice from the hotel at the time of your stay. If you require a tax invoice, we recommend that you book using the Pay Later at Hotel option (where available).”
Again, it seems, using the Pay Later at Hotel option is relatively uncontroversial. However, the problem appears to stem from the comments: ‘you will not receive a tax invoice for your booking. Some of the Expedia Companies are not required to issue tax invoices for the Pay Online Now option’.
Where the hotel is in Australia and is GST-registered, if a guest makes a booking directly with the hotel the supply by the hotel would be a taxable supply and a tax invoice should be provided by the hotel to the guest. If a tax invoice is not issued, and the guest requests a tax invoice, the obligation to issue a tax invoice would rest with the hotel.
So why the confusion when the hotel booking is made via an online booking site?
Whether the booking is made directly with the hotel or via a booking site, in both circumstances the hotel is providing accommodation to the guest. It would be reasonable for the guest to assume that irrespective of the method of payment chosen, the guest has paid for the provision of a hotel accommodation supply and where that supply is a taxable supply it would be entitled to receive a tax invoice. The issue therefore becomes one of understanding the nature of the relationship that the booking sites (e.g. Expedia/Wotif) has in these transactions.
By way of background we note the GST law contains special rules for dealing with GST and the issue of tax invoices where agents are involved. So, using the above example, if it is assumed that the hotel is making its supply to the guest though an agent (i.e. Expedia/Wotif) then either the hotel or Expedia/Wotif can issue the tax invoice to the guest. If a tax invoice is not provided, and a tax invoice is requested, then either the hotel or Expedia/Wotif would be required to issue a tax invoice (but both must not issue separate tax invoices). The issue this raises is whether the hotel is making its supply through Expedia/Wotif as its agent. That the terms and condition make no mention of Expedia/Wotif acting as agent for anyone is not necessarily conclusive (as many agency arrangements operate on an undisclosed basis). However, if Expedia/Wotif is not acting as agent for the hotel and/or the hotel is not making its supply through Expedia/Wotif as agent, then the conclusion would be that the hotel becomes the only entity that can issue the tax invoice.
Other matters that may contribute to the GST implications include whether the relevant Expedia/Wotif entity is GST-registered or required to be GST-registered. Again this will depend on the characterisation of the supplies being made by Expedia/Wotif and to whom those supplies are made (e.g. booking fee charged to guest, booking fee charged to hotel, etc).
It is not immediately clear why Expedia/Wotif takes the stance that it will not issue a tax invoice where the Pay Online Now option is chosen.
It also seems unreasonable that a guest booking accommodation at a hotel in Australia would not be able to receive a valid tax invoice either from the booking site or the hotel irrespective of which payment option is chosen.
Meanwhile, and in the absence of any reasonable explanation of why Expedia/Wotif (or similar online booking organisations) are not required to provide a valid tax invoice, guests booking accommodation via online booking sites should choose the Pay Later at Hotel option. Alternatively, they could book directly with the hotel.