Make Affiliate Program Australian GST Compliant (because it's really isn't...)

[Ithiel]

[I have a feature request about this pending moderation. I'll update this post with a link once it is approved]

Hi all,

After a few discussions with our accountant, we've discovered that the Affiliate system in WHMCS does not comply with Australian GST/Taxation Law. This kinda throws a spanner in the works.

I sent through a couple of questions to my accountant to find out how things need to work here in Australia... and it looks like WHMCS may need some pretty major changes to be compliant. Below are my questions to our accountant, with the accounts response below, with a bit of a summary as to what this means at the end.

[Quick Side Note: An "RCTI" is a "Recipient Created Tax Invoice". That is, rather than an invoice from the seller saying "I sold you a thing" (or an affiliate saying "you owe/paid me this much money"), it's an invoice from the buyer/one-running-the-affiliate-program saying "I gave you money"]

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• Q. Should affiliate commissions be calculated on the Ex GST or Inc. GST amount?
• A. The commission should be calculated ex GST then calculate the GST on top of the commission.

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• Q. Do affiliate payouts need to incur/include GST?
• A. Yes, the affiliate payments do need to include GST if the affiliate is registered for GST.

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• Q. Do we need an invoice (listing the GST) from the affiliate when they want a payout from their commission balance if they’re registered for GST? Alternatively, do we need to issue an RCTI instead? Or are neither applicable.
• A. Yes, to claim the GST credits you need to receive a tax invoice stating the GST amount (or have issued a valid RCTI). You can only provide RCTI's if the referral partner is also GST registered. There are also a few other requirements you must meet in order to issue RCTI's. Please let me know if you need more information about this.

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• Q. Also, if an affiliate is NOT registered for GST – do we just not pay them the GST component of their affiliate commission?
• A. Correct, if they are not registered for GST you don’t need to add it to the commission.

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Back to My Notes:
From what I understand, this means that for the affiliate program to be compliant with Australian GST laws, it would need to:

• Allow WHMCS admins to specify if their business is registered for GST (as any AU business with $75k+ turnover/year MUST be registered for GST).
• Allow us to set commissions to be calculated on the Ex-GST (pre-tax) amount.
• Give affiliates the option to specify if they are or are not registered for GST.
• If affiliates are not registered for GST, they would receive the commission as normal (i.e. how it works now, but ideally still generating an RCTI saying that there was no GST)
• If affiliates are registered for GST, they would need to have the GST amount (+10% for commissions on sales that incurred GST) ADDED to their commission and the system would then need to generate an RCTI to send through to them.

An RCTI needs to list our/the-one-running-the-affiliate-program's ABN, it must say "Tax Invoice" (not just "Invoice" - big legal issues there), and needs to specify the Ex GST amount, the GST component and the Inc GST amount (i.e. $100, $10 GST, total $110 Inc. GST).

Without this, the affiliate program is technically causing any Australian affiliate to be in all sorts of mess with GST and compliance with tax. It also means that they're not able to properly claim their GST credits (which can really add up to a lot if they're processing a lot of affiliate sales).

So.... yeah. Potentially some big legal and tax issues for anyone in Australia running an affiliate program with WHMCS at the moment. Here's hoping that we can get some up-votes on the feature request and that they can add this feature ASAP 😕

[brian!]

On 27/06/2019 at 10:24, Ithiel said:

I sent through a couple of questions to my accountant to find out how things need to work here in Australia... and it looks like WHMCS may need some pretty major changes to be compliant.

at that last part, I would suggest taking another path....

On 27/06/2019 at 10:24, Ithiel said:

Give affiliates the option to specify if they are or are not registered for GST.

affiliates must be clients, so you could use a Client Custom Field for this - with perhaps some conditionality to only show it to affiliates.

On 27/06/2019 at 10:24, Ithiel said:

So.... yeah. Potentially some big legal and tax issues for anyone in Australia running an affiliate program with WHMCS at the moment. Here's hoping that we can get some up-votes on the feature request and that they can add this feature ASAP 😕

feature requests in WHMCS are not quick and will take years to be completed - i'm not joking. 😞

let me give you an example of a 5-year old feature request, "Affiliate earned amount before taxing" with 3 votes, that is currently still "under consideration"... 

v7.8 is imminent (I thought it would be May, but virtually in July still waiting for it) - so unless WHMCS having been planning this change for the last month or two, it won't be included in that release... then I think you're in to waiting for v8 which I assume now won't get a full release until towards the end of the year... and even if you could get significant numbers (certainly tens) voting for the request, there would be no guarantee of it being implemented.

so by all means, update the thread with the link of the request (I doubt users will find it if you don't), but keep a low expectation on it being completed any time soon.

for a practical suggestion while you're waiting for the request to be voted on, it might be worth posting about this issue in Kian's affiliate project thread - if he's working on a new affiliate solution, and he knows taxes within WHMCS better than most, he might be worth bouncing this idea off - it certainly can't do any harm. 🙂

[Ithiel]

The Feature Request Link:
https://requests.whmcs.com/topic/make-affiliate-program-australian-gst-compliant-because-its-really-isnt

 

Thanks Brian! Yes, feature requests with WHMCS seem to be a.. um... "long term investment", haha.

For what it's worth, they've given it an "Under Consideration" badge. My discussions with the support team were also pretty frank, and they seemed willing to look at adapting the system if we can get enough votes to show there is demand.

Here's hoping that other WHMCS users in Australia realise that the program isn't compliant and give it an up-vote, so that we might get this issue sorted before my kids retire. In the meantime, I'll reach out to Kian as well.

Cheers,
Ithiel.

[brian!]

9 hours ago, Ithiel said:

Thanks Brian! Yes, feature requests with WHMCS seem to be a.. um... "long term investment", haha.

yeah, fire & forget... I always tell others users that if it's a "wouldn't it be nice if WHMCS could do x one day" type of idea, then that's a feature request... once you are at the stage of "I need WHMCS to do x NOW", then that's the time to start looking in Marketplace or contacting a developer.... it's really not the way things should be, but I dislike seeing the constant delusion repeated that submitting a FR gets anything done quickly - it definitely doesn't.

I doubt you can hardly put off the Australian tax authorities with a "but i've submitted a feature request..." line... they tend to be a little more strict with compliance than that. 🙂

9 hours ago, Ithiel said:

For what it's worth, they've given it an "Under Consideration" badge. My discussions with the support team were also pretty frank, and they seemed willing to look at adapting the system if we can get enough votes to show there is demand.

I suspect what they actually said was that they might look at the idea if it gets enough votes, not actively begin working on it... it's a weird system in that i've seen requests with tens of votes get rejected, and other features (e.g domain suggestions in admin whois lookups) added that haven't even been requested by a FR.

the affiliates system hasn't really changed much in years - though you can say that about a lot of areas in WHMCS... there have been visual tweaks along the way, but under the hood, a lot of things still work the same way they did years ago.

10 hours ago, Ithiel said:

Here's hoping that other WHMCS users in Australia realise that the program isn't compliant and give it an up-vote, so that we might get this issue sorted before my kids retire.

if you're on other Australian forums (especially where affiliates are concerned), you should mention that feature request link and get as many votes as possible - once you used the phrase "major changes" and "WHMCS" in the same sentence, then that's going to need hefty encouragement to get the gears turning - that means votes, and that takes time... and I doubt you have the time to wait.

10 hours ago, Ithiel said:

In the meantime, I'll reach out to Kian as well.

I think that's going to be your best bet. 🙂

[Ithiel]

True and valid on all points - hopefully we can get a few votes to get WHMCS to sort a long term 1st-Party solution before we all die of old age though, haha.

Let's face it, their corporate overloads will have the spare cash for some R&D after the cPanel price changes that just got pushed though, haha

[Ithiel]

A year on, and we're still no closer to a solution.

I think I need to start looking at alternatives for WHMCS.

[Ithiel]

The months roll on... no solution in sight 😞