Edited version of private ruling

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Ruling

Subject: Registration requirements of representatives of incapacitated entities

Question 1

Is the trustee of the bankrupt estate of Mr X (trustee) required or entitled to be registered for GST?

Answer

No, the trustee is not required or entitled to be registered for GST.

Question 2

If the trustee is entitled to be registered for GST, is the trustee entitled to claim input tax credits for acquisitions made in that capacity, in the course of administrating the bankrupt estate of Mr X?

Answer

No, as the trustee is not entitled to be registered for GST, the trustee is not entitled to claim input tax credits for acquisitions made in that capacity, in the course of administrating the bankrupt estate of Mr X.

Relevant facts

· Mr X carried on an enterprise consisting of providing specified services

· Mr X formerly held the relevant licence with the appropriate State authority

· You advised that Mr X had never been personally registered for GST

· Mr X entered into a number of contracts prior to the 2006 financial year agreeing to perform specified works for various parties

· Mr X completed work under the contracts (subject to rectifying any identified defects in the works carried out) in this time

· Mr X ceased to carry on an enterprise in financial year ending 30 June 2006

· Mr X's turnover for the financial year ending 30 June 2006 was in excess of $75,000

· Since 1 July 2006 Mr X turnover has been $0

· Subsequently, a number of claims for defective work were filed against Mr X

· Mr X filed a Debtor's petition with the Official Receiver on a specified date and the Official Trustee was appointed trustee of the bankrupt's estate on that date

· You were subsequently appointed as Trustee of the bankrupt's estate on a specified date.

Relevant legislative provisions

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

Section 23-5

Section 23-10

Section 9-20

Section 58-20

Section 58-25

Section 195-1

Reasons for decision

Question 1

Section 58-20 of the GST Act states:

58-20 Representatives are required to be registered

3. A *representative of an *incapacitated entity is required to be registered in that capacity if the incapacitated entity is *registered or *required to be registered.

4. This section has effect despite section 23 5 (which is about who is required to be registered).

The term 'representative' is defined in section 195-1 of the GST Act to include a trustee in bankruptcy. The term 'incapacitated entity' is also defined in section 195-1 of the GST Act and includes 'an individual who is a bankrupt'.

In this case you are considered a representative of an incapacitated entity. Therefore, you will only be required to be registered for GST in that capacity, if the incapacitated entity is registered or required to be registered.

In regard to Mr X, Division 23 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that an entity is required to be registered for GST if they are carrying on an enterprise and their GST turnover is $75,000 or greater ($150,000 if they are a non-profit body).

An entity may choose to register for GST where they are carrying on an enterprise regardless of their GST turnover.

Mr X ceased to carry on an enterprise in the financial year ending 30 June 2006. Also, Mr X's turnover from 1 July 2006 was $0. As such, Mr X was neither required nor entitled to be registered for GST from this date.

In accordance with subsection 58-20(1) you are required to be registered if the incapacitated entity is registered or required to be registered. We consider the date of the appointment of the representative to be the relevant date when considering whether the representative is required to be registered.

Consequently, as the incapacitated entity was neither registered nor required to be registered for GST as at your date of appointment as representative (i.e. on the specified date) you are not required to be registered for GST in your capacity as trustee of the bankrupt estate of Mr X.

Furthermore, subsection 58-25(1) of the GST Act states:

2. The Commissioner must cancel the *registration of a *representative of an *incapacitated entity if the Commissioner is satisfied that the representative is not *required to be registered in that capacity.

As a result, you are not entitled to choose to register for GST under section 23-10 of the GST Act in your capacity as the representative of the bankrupt estate where you are not required to be registered in accordance with section 58-20 of the GST Act.

Question 2

As you are not entitled to be registered for GST, you are not entitled to claim input tax credits for acquisitions made in your capacity of representative in the course of administering the bankrupt estate of Mr X.