Edited version of private ruling

Authorisation Number: 1011598298168

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Ruling

Subject: GST and lodgment of activity statement and accounting for GST

Are you responsible to account for the goods and services tax (GST) on supplies ordered by the Court and held by the legal representative of the Receiver?

No.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are registered for GST.

You want to lodge your quarterly activity statement that is due and payable.

You account for GST on a cash basis and report for GST quarterly.

You were formerly established prior to 1 July 2000 and over a number of years amassed a collection (Collection).

Your last income tax return was lodged prior to 1 July 2000 and subsequently you informed the ATO that you had ceased trading. You have not been trading to date.

A Court ordered that a Receiver could seize and sell some of the items of the Collection.

The Receiver through another entity sold a considerable number of items of the Collection inclusive of GST.

The proceeds from the sale are held in an account of a legal representative for the Receiver.

The Receiver is the Receiver for entity X.

You are an entirely separate, autonomous entity from entity X.

You are disputing the ownership of the assets.

The Receiver is not your agent.

You have requested details of the sale from the Receiver.

You had never charged your assets to any entity or person.

The Court has refused to date, to rule on the ownership of the assets. They relied solely on a claim from the Receiver that you are the 'alter ego' of the Protector of entity X.

You have sought the evidence of ownership claim that the Receiver's made from the Receiver. They have not responded to your request to date.

You have lodged an appeal to the Court.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 7-1

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 Division 31

A New Tax System (Goods and Services Tax) Act 1999 section 31-5

A New Tax System (Goods and Services Tax) Act 1999 Division 17

A New Tax System (Goods and Services Tax) Act 1999 section 17-5

A New Tax System (Goods and Services Tax) Act 1999 subsection 29-5(2).

Reasons for decision

Summary

You are not required to account for GST on supplies ordered by the Court and held by the legal representative of the Receiver.

Detailed reasoning

Section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on taxable supplies.

Section 9-5 of the GST Act provides that you make a taxable supply if:

· you make the supply for consideration

· he supply is made in the course or furtherance of an enterprise that you carry on

· the supply is connected with Australia, and

· you are registered or required to be registered.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

'You' in section 9-5 of the GST Act refers to the entity that makes the supply.

Goods and Services Tax Ruling GSTR 2006/9 provides the Tax Office view on the meaning of the term 'supply'.

Paragraph 21 of GSTR 2006/9 provides a number of the propositions for characterising supplies and analysing more complex transactions.

In your case, propositions 5 and 6 may be relevant. Proposition 5 is in relation to making a 'supply' an entity must do something. Please refer to paragraphs 71 to 76 of the enclosed copy of GSTR 2006/9.

Proposition 6 is in relation to 'supply' usually, but not necessarily, requires something to be passed from one entity to another, please refer to paragraphs 92 to 94 of GSTR 2006/9.

In your circumstances (as per your advice), the question arises as to whether you are required to pay any GST to the ATO on the sale of the items of the Collection made by the Receiver.

If the Receiver has not made the sale on your behalf, you are not the supplier and therefore, you are not required to attribute the GST on the sale.

Lodgement of activity statement

Division 31 of the GST Act is about your obligation if you are registered or required to be registered to give the Commissioner of Taxation (Commissioner) GST returns for each tax period.

Section 31-5 of the GST Act provides that:

· if you are registered or required to be registered, you must give the Commissioner, a GST return for each tax period

· you must give the return whether or not:

o your net amount for the tax period is zero, or

o you are liable for the GST on any taxable supplies that are attributable for the tax period.

As mentioned in Division 31 of the GST Act, even if you did not make any sales during the tax periods that you are registered for GST, you must lodge your activity statements by completing label G1 and label 1A as Zero by their due dates.

Net amount

Division 17 of the GST Act provides that a net amount is worked out for each tax period that applies to you. This is the amount payable by you to the Commonwealth or payable to you by the Commonwealth for the tax period.

Section 17-5 of the GST Act provides that:

The net amount for a tax period applying to you is worked out using the following formula:

1. GST - input tax credits

Where:

GST is the sum of all of the GST for which you are liable on the taxable supplies that are attributable for the tax period

input tax credits is the sum of all of the input tax credits to which you are entitled for the creditable acquisitions and creditable importations that are attributable to the tax period.

2. However, the net amount for the tax period may be increased or decreased if you have any adjustments for the tax period.

Attribution rules - accounting on a cash basis

Subsection 29-5 of the GST Act provides that if you account on a cash basis, then:

· if in a tax period, all of the consideration is received for a taxable supply - GST on the supply is attributable to that tax period

· if in a tax period, part of the consideration is received - GST on the supply is attributable to that tax period, but only to the extent that the consideration is received in that tax period, or

· if in a tax period, none of the consideration is received - none of the GST on the supply is attributable to that tax period.

GST credits

GST credits in respect of an acquisition are available under section 11-20 of the GST Act only if the acquisition, as defined in section 11-10 of the GST Act is a creditable acquisition, as defined in section 11-5 of the GST Act. The definition contains four conditions for an acquisition to be creditable. It provides:

· the acquisition must be solely or partly for a creditable purpose as defined in section 11-15 of the GST Act

· the supply that was acquired must have been a taxable supply as defined in section 9-5 of the GST Act by the supplier

· consideration as defined in section 9-15 of the GST Act must have been provided for the acquisition, and

· the person acquiring the supply must be registered under section 25-5 of the GST Act or required to be registered under section 25-5 of the GST Act.