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Ruling

Subject: GST and supplies made before and after the appointment of a representative

Question

Are you, The Receiver and Manager, (RM) appointed to Entity A liable for GST in the following situations?

(a) Situation 1
Work is completed and invoices are issued to the customer by the incapacitated entity pre-appointment, and payment is made by the customer to the Receivers and Managers post-appointment.

(b) Situation 2
Work is completed by the incapacitated entity pre-appointment and the customer is invoiced by the Receivers and Managers post-appointment, and the customer makes payment post-appointment.

(c) Situation 3
Work is completed during the receivership period and customers are invoiced and payment made post-appointment.

Answer

(a) The incapacitated entity is liable for the GST.

(b) The incapacitated entity is liable for the GST.

(c) The Receiver and Manager is liable for the GST.

Relevant facts and circumstances

You are the Receiver and Manager for Entity A.

While appointed Receiver and Manager you have received payments in relation to supplies made both pre and post your appointment.

In situations 1 and 3, as stated in the scenario, the supplies were made and invoices raised pre-appointment and post-appointment respectively.

In situation 2, prior to your appointment, the incapacitated entity raised invoices (for work that had not yet been done) and submitted them to the Bank. The Bank kept the invoices and advanced the entity a percentage of the invoice amounts, using the invoices as security. The work was subsequently completed (prior to your appointment), but no invoice had been sent to the customer. You raised 2nd invoices and sent them to the clients.

The incapacitated entity and you, in your capacity as representative of the incapacitated entity both account for GST on a cash basis.

Relevant legislative provisions

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

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

A New Tax System (Goods and Services Tax) Act 1999 section 58-5

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

Reasons for decision

GST payable on supplies made before the appointment of a Receiver and Manager is dealt with under sections 9-40 and 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). However, the GST payable on taxable supplies made by a Receiver Manager during their term of appointment is dealt with under Division 58 of the GST Act.

Supplies made before the appointment of the RM

Under section 9-40 of the GST Act, an entity must pay the GST on any taxable supply that it makes.

Section 9-5 of the GST Act states that the entity makes a taxable supply if:

• the entity makes the supply for consideration

• the supply is made in the course or furtherance of an enterprise that the entity carries on

• the supply is connected with Australia, and

• the entity is registered, or required to be registered for GST.

Supplies made during the appointment of the RM

Section 58-5 of the GST Act provides that while you are representative and making supplies those supplies are taken to be supplies made by the incapacitated entity (IE).

Section 58-10 of the GST Act provides amongst other things that you as a representative of an IE are liable to pay any GST that the IE would but for section 58-10 or section 48-40 be liable to pay on the taxable supply, to the extent that the making of the supply to which the GST relates is within your scope or authority for managing the IE's affairs.

The effect of Division 58 of the GST Act is that you, as representative of the IE, are liable for GST in respect of taxable supplies which are taken to have been made by the IE during the course of your appointment, as representative of the IE.

(a) Situation 1

Any supply made prior to your appointment as representative was made by the IE, even though you, in your capacity as representative of the IE may receive the payment for the supply. Therefore in this scenario, it is the IE and not you that is making the supply under section 9-5 of the GST Act.

Accordingly, the IE made a taxable supply under section 9-5 of the GST Act and is liable for GST pursuant to section 9-40 of the GST Act.

(b) Situation 2

Although you issued the tax invoice, as the representative of the IE after your appointment, the supply was made prior to your appointment. Therefore, even though you, in your capacity as representative of the IE issued the invoice and received the payment for the supply, it is the IE and not you that made the supply under section 9-5 of the GST Act.

Accordingly, the IE made a taxable supply under section 9-5 of the GST Act and is liable for GST pursuant to section 9-40 of the GST Act.

(c) Situation 3

The supplies made in this scenario are made in the course of the same enterprise as that which was carried on by the IE prior to your as a representative. However they were made after you were appointed as representative of the IE, when you took over the charge and continued to carry on all aspects of the enterprise of the IE.

Accordingly, as per section 58-5 and 58-10 of the GST Act, you are liable for those supplies which meet the requirements of taxable supplies as per section 9-5 of the GST Act and are made within the scope of your authority.