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Commissions the law caps, a guide by Dotto
  • Guide5 of 5
  • The lawGST Act 1999, Division 153
  • Checked10 October 2026

GST when an agent earns commission

Division 153 of the GST Act has two sets of rules for selling or buying through an agent. Subdivision 153‑A decides who may issue the tax invoice and when credits and adjustments are attributed; Subdivision 153‑B lets a principal and an intermediary agree in writing to be treated as separate suppliers or acquirers. On a sale under that arrangement, in valuing the supply the principal is taken to make to the intermediary, the amount the intermediary owes the principal is taken to be reduced by the commission the principal pays the intermediary (on a purchase, in valuing the intermediary’s supply to the principal, what the principal owes is taken to be increased), and either way the intermediary’s supply to the principal that the commission pays for is not a taxable supply.

General information only. Dotto is not a financial adviser or a trustee company, and this guide is not financial or legal advice. The official place to check how the ATO applies these rules is the Australian Taxation Office; the Act itself is linked at the foot of this page.

What the Division is about, in its own words

“This Division sets out the rules for holding and issuing tax invoices and adjustment notes when your supplies or acquisitions are made through an agent, or when insurance is supplied through an insurance broker. It also allows in some cases a supply or acquisition made through, or facilitated by, an entity on your behalf to be treated as 2 separate supplies or acquisitions.”

GST Act 1999, s 153‑1, compilation 96

The Act addresses “you”: the entity whose supplies or acquisitions are made through the agent.

Subdivision 153‑A: one tax invoice, from either of you

When a principal makes a taxable supply through an agent, s 153‑15(1) says the duty to issue a tax invoice arises whether the customer asks the principal or the agent, and “is complied with if either you or the agent gives the recipient a tax invoice within 28 days after the request”. Then s 153‑15(2): “However, you and the agent must not both issue separate tax invoices relating to the supply.”

Adjustment notes follow the same pattern under s 153‑20: either the principal or the agent may give one within 28 days after the request, and “you and the agent must not both issue separate adjustment notes or third party adjustment notes for the adjustment”.

Holding the paperwork before claiming

For a creditable acquisition made through an agent, if neither the principal nor the agent holds a tax invoice when the principal lodges the GST return for the period the credit would otherwise fall in, s 153‑5 moves the credit to the first period for which a return is lodged while either of them holds it. Section 153‑10 does the same for a decreasing adjustment and its adjustment note.

Subdivision 153‑B: the written arrangement

Section 153‑50(1) lets a principal, “in writing”, enter into an arrangement with an intermediary under which all five of these hold:

  1. the intermediary will, on the principal’s behalf, make or facilitate supplies to third parties, or make or facilitate acquisitions from them, or any of these;
  2. the kinds of supplies or acquisitions covered are specified;
  3. for the GST law, the intermediary is treated as making the supplies to, or acquisitions from, the third parties, and the principal as making corresponding supplies to, or acquisitions from, the intermediary;
  4. for supplies, the intermediary issues all the tax invoices and adjustment notes to third parties in its own name, and the principal issues none;
  5. the arrangement ceases to have effect if either or both of them cease to be registered.

“For the purposes of subsection (1), an entity can be an intermediary whether or not the entity is the agent of the principal.” The note to s 153‑15 makes the link: if Subdivision 153‑B is to apply, “there will be an arrangement under which only your agent can issue the tax invoice”.

What the arrangement does to a sale, and to the commission

Section 153‑55 works in four steps, each in the Act’s order:

  1. The sale moves to the intermediary. When the principal sells to a third party through the intermediary, the law treats that taxable supply as the intermediary’s, not the principal’s, if it is of a kind the arrangement covers, is made in line with it, and both are registered (s 153‑55(1)).
  2. A second supply is created. The principal is taken to make a taxable supply of the same thing to the intermediary, with a value “equal to 10/11 of the amount that is payable to the principal by the intermediary” for the intermediary’s supply; the intermediary makes a matching creditable acquisition (s 153‑55(2)).
  3. The commission comes off. If the principal pays, or is liable to pay, the intermediary “a commission or similar payment” for that supply, “the amount payable by the intermediary to the principal is taken to be reduced by” it, and the intermediary’s supply to the principal that the commission relates to “is not a taxable supply” (s 153‑55(3)).
  4. The arrangement can be undone. “However, this section no longer applies, and is taken never to have applied, if the principal issues to the third party, in the principal’s own name, any tax invoice or adjustment note relating to the supply” (s 153‑55(4)). It also does not apply to a supply covered by s 84‑55 or s 84‑81 (s 153‑55(4A)), which the Act’s note says treat an electronic distribution platform operator or a goods redeliverer as making the supply.

The mirror rule for buying

Section 153‑60 applies the same structure to acquisitions. The intermediary is taken to make the creditable acquisition from the third party and a taxable supply of the same thing to the principal, valued at 10/11 of the amount the principal pays it. If the principal pays it a commission or similar payment for the acquisition, that amount is taken to increase what the principal pays, and the intermediary’s supply to the principal that it relates to is not a taxable supply. The section does not apply where s 84‑55 applies to the supply.

When the Commissioner sets the arrangement up

Under s 153‑65, the Commissioner may determine in writing that supplies or acquisitions of a specified kind, made or facilitated by any intermediary for any principal, are treated as made under a s 153‑50 arrangement. The determination has effect unless the intermediary or the principal, or both, notify the other in writing that the supplies and acquisitions it makes or facilitates for the principal are not covered by such an arrangement.

Commission that the law caps on estates and trusts is set out in the charitable trust guide and the trustee company guide.