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  • 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?

    Non-interpretative – straight application of the law

    Subsection 58-60(1) provides that a representative must notify the Commissioner if they become aware or could reasonably be expected to become aware of:

    • a GST liability or an increasing adjustment that the incapacitated entity has
    • such liability or adjustment has not been taken into account in any BAS that has been lodged
    • there was no previous notification of the liability, or adjustment, under this section.

    The representative is required to notify the Commissioner of such amounts no later than the day prior to declaring a dividend to unsecured creditors. The representative is not required to notify under section 58-60 if the representative is a representative of a kind that does not have the capacity to declare dividends to unsecured creditors (for example a receiver).

    The notification requirement under section 58-60 does not determine whether a representative has a GST liability or increasing adjustment. Section 58-10 is the provision that stipulates the circumstances under which a representative is liable for any GST, entitled to any input tax credit or has any adjustment.

    If the representative is not liable for the GST liability or increasing adjustment under section 58-10, then the representative is still not liable for such amounts whether or not the representative notifies the Commissioner of the GST liability or increasing adjustment. However, if a representative does not comply with section 58-60 an administrative penalty may arise under section 286-75 of Schedule 1 to the TAA.

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

    Non-interpretative

    A written notice with the following information will satisfy the requirements for a notification under section 58-60:

    • the name and ABN of the incapacitated entity
    • the name and ABN (if different from the incapacitated entity) of the representative
    • the date of the representative's appointment
    • the amount of the GST liability or increasing adjustment and a brief explanation of what the GST liability/adjustment (or adjustments) relates to
    • where available, the tax period (or periods) to which the GST liability or increasing adjustment relates; and
    • a declaration that the information provided is true and correct.

    The notification should be forwarded to:

    Australian Taxation Office
    PO Box 9003
    PENRITH  NSW  2740

    Please note that notification of these types of liabilities and adjustments should not be reported on the business activity statement of either the representative or the incapacitated entity.

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

    Non-interpretative – straight application of the law

    Subsection 58-60(2) stipulates that the representative must notify the Commissioner of a GST liability or increasing adjustment that an incapacitated entity has no later than the day before a dividend to unsecured creditors is declared.

    In cases where there is more than one dividend to be paid to creditors, for example an interim dividend followed by a final dividend, notification will be required the day prior to the declaration of each dividend. Each successive notification will only need to notify relevant liabilities or adjustments that have not been included in prior notifications.

    If a representative does not comply with section 58-60 an administrative penalty may arise under section 286-75 of Schedule 1 to the TAA for failing to lodge documents on time.

    See also:

      Last modified: 20 Jul 2018QC 16292