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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your private ruling

Authorisation Number: 1012484092111

Ruling

Subject: Is the company liable for GST on receipts from pre-appointment debtors

Question 1

Are you as Administrator for the specified company liable to remit GST on receipts from pre-appointment debtors under section 58-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No.

Relevant facts and circumstances

The specified Company operated an equipment rental business.

The specified Company was registered for GST on an accruals basis from 1 July 2000 until Administrator appointed.

Prior to going into administration, the specified Company sold a piece of equipment (through an agent) for an amount including GST.

The sale was treated as a taxable supply and GST was charged on the sale.

The equipment was subject to a Non-Circulating Security Interest in favour of a secured creditor.

You were appointed Voluntary Administrator of the specified company.

You registered for GST on a cash basis under a separate CAC account of the company's ABN.

You received the net proceeds of the sale of the equipment after your appointment.

You remitted the net proceeds of the sale of the equipment to the secured creditor after your appointment.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Paragraph 58-10(1)

A New Tax System (Goods and Services Tax) Act 1999 Section 195-1

Reasons for decision

Under subsection 58-10(1) of the GST Act, a representative of an incapacitated entity is liable to pay any GST that the incapacitated entity would be liable to pay on a taxable supply to the extent that the making of the supply is within the scope of the representative's responsibility or authority for managing the incapacitated entity's affairs.

A representative, for the purposes of Division 58 of the GST Act is defined in section 195-1 of the GST Act to include:

In this case, you were appointed as Voluntary Administrator for the specified Company and fall under the definition of a representative for the purposes of Division 58 of the GST Act.

You have stated that the specified Company made a taxable supply of equipment prior to your appointment as Administrator. After your appointment as Administrator you received the proceeds for this supply and remitted those proceeds to the secured creditor.

As per ATO Interpretative Decision ATO ID 2012/7 GST and liability of a supply made by an incapacitated entity prior to the appointment of a representative, we consider as the supply was made by the specified company prior to your appointment, the making of the supply does not fall within your responsibility or authority for managing the specified company's affairs. The subsequent receipt of the consideration for the supply which was made before your appointment does not bring the supply within the scope of your responsibility or authority for managing the specified company's affairs.

Accordingly, because the supplies are not within your scope of authority, you are not liable for the specified GST amount on the taxable supply under subsection 58-10(1) of the GST Act, despite the fact that you received the consideration for the supply.

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