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Edited version of your private ruling
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Ruling
Subject: GST and representatives of incapacitated entities
Question 1
Do you, in your capacity as Receivers and Managers, have a GST liability in regard to an increasing adjustment in respect of acquisitions made prior to your appointment as Receivers and Managers?
Answer
No, you do not have a GST liability in regard to an increasing adjustment in respect of acquisitions made prior to your appointment as Receivers and Managers.
Question 2
Are you, in your capacity as Receivers and Managers, required to notify the Commissioner of such adjustments in accordance with section 58-60 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No, you are not required to notify the Commissioner of such adjustments in accordance with section 58-60 of the GST Act.
Relevant facts and circumstances
You registered for GST in your capacity as Receivers and Managers of an identified entity.
Prior to your appointment as Receivers and Managers of the entity, the entity made acquisitions relating to the development of land resulting in the construction of a number individual strata titled units.
The acquisitions were not made within the scope of your responsibility or authority for managing the affairs of the identified entity.
The identified entity claimed an input tax credit in respect of the GST included in all acquisitions relating to the development.
As a result of compliance activity conducted, it was determined that the identified entity was/is required to make adjustments in regard to the input tax credits claimed in accordance with Division 129 of the GST Act.
Relevant legislative provisions
Section 58-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
Section 58-10 of the GST Act
Section 58-60 of the GST Act
Reasons for decision
Question 1
Section 58-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that under certain circumstances, a representative of an incapacitated entity will have GST related liabilities and entitlements.
Subsection 58-10(1) of the GST Act provides, in part, that a representative of an incapacitated entity will have an adjustment that the incapacitated entity would have, to the extent that the making of the acquisition to which the adjustment relates is within the scope of the representative's responsibility or authority for managing the incapacitated entity's affairs.
In this case, the adjustment relates to acquisitions associated with the development of the strata titled villa units. The acquisitions were made prior to your appointment as Receivers and Managers and were not made within the scope of your responsibilities or authority in managing the affairs of the identified entity.
Therefore you, in your capacity as Receivers and Managers of the identified entity, do not have a GST liability in regard to an increasing adjustment in respect of acquisitions made prior to your appointment as Receivers and Managers of the identified entity.
Question 2
Section 58-60 of the GST Act places an obligation on the representative of an incapacitated entity to notify the Commissioner of a GST liability or increasing adjustment the incapacitated entity has where:
· the representative is aware (or could reasonably be expected to have become aware) of the GST or the adjustment; and
· the GST or the adjustment has not been taken into account in a previously lodged BAS; and
· the Commissioner has not been previously notified of the amount of GST or the adjustment.
However, the obligation to notify the Commissioner will only apply to a representative that is a representative that has the capacity to declare dividends to unsecured creditors of the incapacitated entity.
Generally, it is the role of a Liquidator to realise the assets of a company and declare dividends to unsecured creditors and distribute any proceeds of realisation to creditors in order of priority.
As such, in your current capacity as Receivers and Managers, you do not have the capacity to declare dividends to unsecured creditors. As such, at this stage you do not have an obligation to notify the Commissioner of an increasing adjustment of the identified entity under section 58-60 of the GST Act.
If, at a future point in time, you are appointed as a representative of the identified entity who has the capacity to declare a dividend to unsecured creditors, an obligation to notify the Commissioner of such liabilities may arise after taking into account the criteria listed above. Please also note that should such an obligation arise, notification must be made to the Commissioner prior to the declaration of the dividend to unsecured creditors.