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Edited version of your written advice
Authorisation Number: 1051287491091
Date of advice: 27 September 2017
Ruling
Subject: Tax liability of Receivers and Managers
Question:
ls there an obligation on the Receivers and Managers, under Sub-division 260-C of Schedule 1 to the Taxation Administration Act 1953 (TAA) to account to the Commissioner for the pre-appointment taxation liabilities of a company?
Answer:
No.
This ruling applies for the following period:
Year ended 30 June 2017
The scheme commenced on:
1 July 2016
Relevant facts
A partnership operated a number of businesses.
The partnership held a number of assets.
The assets held by the partnership were subject to securities granted by a financial institution.
A court order issued in respect of partners of the partnership.
Under the court order one partner was required transfer to the other partner plant and equipment of the partnership.
The partnership assets were subsequently transferred to a company.
The financial institution did not release the transferred assets which were subject to the security to the company.
The financial institution exercised its rights under the terms of the securities agreement with the partnership to appoint Receivers and Managers to recover the assets subject to the security.
The Receivers and Managers recovered all the transferred assets which were subject to the security agreement.
The Receivers and Managers subsequently sold all the assets.
The Receiver and Manager were not appointed as receivers or managers over the company.
Relevant legislative provisions
Taxation Administration Act 1953 Section 260-75
Taxation Administration Act 1953 Subsection 260-75(1)
Reasons for decision
Receiver’s Obligation
All legislative references that follow are to the Taxation Administration Act 1953 unless stated otherwise.
Subsection 260-75(1) applies to a person (the receiver) who, in the capacity of receiver, or of receiver and manager, takes possession of a company's assets for the company's debenture holders.
In this case, a review of the information provided indicates that the company did not hold a security with financial institution as the security over the assets was held with the partnership under a security agreement. Accordingly, as the Receivers were appointed by the partnership’s debenture holder to recover assets subject to the security, subsection 260-75(1) has no application to the Receivers.
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