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  • Representatives of incapacitated entities

    Issues register

    Individual issues in this issues register should include a reference to a related public ruling.

    In some cases, the issue is itself labelled as a public ruling for the purposes of section 105-60 of Schedule 1 of the Taxation Administration Act 1953  (TAA).

    If an issue in this issue register simply sets out the way the law applies, rather than dealing substantially with a question of legal interpretation, we have added to the item the description 'non-interpretative'.

    From 1 July 2010, issues labelled as a public ruling in this register will continue to be a public ruling even though section 105-60 of Schedule 1 of the TAA has been repealed.

    A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.

    If you rely on issues in this register that are a ruling, we must apply the law to you in the way set out in the ruling. However, if we are satisfied that the ruling is incorrect and disadvantages you, we may apply the law in a way that is more favourable for you – provided we are not prevented from doing so by a time limit imposed by the law.

    You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

    Issues in this register that have not been labelled as public rulings, constitute written guidance.

    If you follow our information on these issues and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we must still apply the law correctly. If that means you owe us money, we must ask you to pay it but we will not charge you a penalty.

    Also, if you acted reasonably and in good faith we will not charge you interest. If correcting the mistake means we owe you money, we will pay it to you. We will also pay you any interest you are entitled to.

    On 4 December 2009, the Tax Laws Amendment (2009 Measures No.5) Bill 2009 was enacted to replace Division 147 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) with Division 58.

    Amendments effective from 4 December 2009

    Division 58 also introduces new obligations on representatives including:

    • If directed by the Commissioner, a representative of an incapacitated entity must give to the Commissioner a GST return for a tax period applying to the incapacitated entity if the incapacitated entity has failed to give such a return [section 58-50].
    • If a representative becomes aware, or could reasonably be expected to have become aware of, any increasing adjustments or GST liability that an incapacitated entity has, and the amount of GST or increasing adjustment has not been reported in a GST return, the representative must notify the Commissioner of the amount of GST or increasing adjustment [section 58-60].

    This register has been updated to provide responses to key questions relating to the operation of Division 58. The following abbreviations are used throughout the log:

    • ABN refers to Australian Business Number
    • Bankruptcy Act refers to the Bankruptcy Act 1966
    • BAS refers to Business activity statement
    • CAC refers to client activity centre
    • Corporations Act refers to the Corporations Act 2001
    • GST Act refers to the A New Tax System (Goods and Services Tax Act) 1999
    • GST Regulations refer to the A New Tax System (Goods and Services Tax) Regulations 1999
    • ITAA 1936 refers to the Income Tax Assessment Act 1936
    • TAA refers to the Taxation Administration Act 1953.

    All legislative references in the issue log are to the GST Act unless otherwise specified.

    Amendments effective from 1 July 2000

    Briefly, the key provisions of Division 58 are:

    • A supply, acquisition or importation by a representative, in its capacity as a representative, is taken, for GST purposes, to be a supply, acquisition or importation of the incapacitated entity [section 58-5].
    • However, the representative (and not the incapacitated entity) is liable for or entitled to certain GST consequences that arise from a supply, acquisition or importation or related acts or omissions during the representative's appointment [section 58-10].
    Issues table

    Date updated



    1. Basic concepts


    1.1. Who is a representative under Division 58?


    1.2. Who is an incapacitated entity under Division 58?


    2. Registration requirements


    2.1. What are the registration and notification requirements for a representative upon appointment under the GST Act?


    2.2. Is a representative of an incapacitated entity who is appointed over only part of the assets required to register under section 58-20?


    2.3. Under Division 58, a representative of an incapacitated entity may be required to be registered. Upon registration, is the representative issued with a new ABN, or will the existing ABN of the incapacitated entity be used?


    3. Tax periods


    3.1. What is the applicable tax period for the representative upon their appointment?


    3.2. What happens to the current tax period of the incapacitated entity when a representative is appointed?


    4. Joint and several liability


    4.1 Where there are two or more representatives of the same incapacitated entity at the same time, are they jointly and severally liable for GST payable in their capacities as representatives of the same incapacitated entity?


    5. In-specie distribution


    5.1. Is an in-specie distribution made from a representative to a shareholder a taxable supply?


    6. Tax invoice


    6.1. What name should appear on tax invoices issued to or by the representative so that they meet the requirements of GST law?


    7. GST liability and adjustment notification requirements


    7.1. Under what circumstances is a representative of an incapacitated entity required to notify the Commissioner of the liability or adjustment under section 58-60?


    7.2. What information needs to be provided to meet the requirements of notifying the Australian Taxation Office (ATO) of a GST liability or an increasing adjustment (under section 58-60)?


    7.3. When should the notification of GST liability or increasing adjustments under section 58-60 be made?

    1 Basic concepts

    1.1. Who is a representative under Division 58?

    Non-interpretative – straight application of the law

    Division 58 applies to representatives of incapacitated entities. A representative is defined in the GST dictionary to be either of the following:

    • a trustee in bankruptcy
    • a liquidator
    • a receiver
    • a controller within the meaning of section 9 of the Corporations Act
    • an administrator appointed under Division 2 of Part 5.3A of the Corporations Act
    • a person appointed or authorised under an Australian law to manage the affairs of an entity because it is unable to pay all of its debts as and when they become due and payable
    • an administrator of a deed of company arrangement executed by the entity.

    'Liquidator' has the meaning given by subsection 6(1) of the ITAA 1936. It means the person who, whether or not appointed as liquidator, is the person required by law to carry out the winding-up of a company.

    We consider that the term 'receiver' in this definition includes a receiver and manager.

    Special rules prevent Division 58 applying to the extent that the representative is a creditor of the incapacitated entity. An example of this is a mortgagee in possession of the entity's property who is not a representative of the entity for any other reason.

    In these circumstances, the mortgagee – in its own right – will register for an ABN, TFN and GST, if required. This means the mortgagee – in its own right – will account for GST for the property and any other tax liabilities.

    1.2. Who is an incapacitated entity under Division 58?

    Non-interpretative – straight application of the law

    The GST dictionary defines an 'incapacitated entity' to mean one of the following:

    • an individual who is a bankrupt
    • an entity that is in liquidation or receivership
    • an entity that has a representative.
      Last modified: 20 Jul 2018QC 16292