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Edited version of your written advice
Authorisation Number: 1051235525862
Date of advice: 20 June 2017
Ruling
Subject: GST and commission on administering estate as executor
Question
Will the commission that you will be receiving as an executor in administering your parent’s deceased estate, be subject to goods and services tax (GST)?
Answer
No. The commission that you will be receiving as an executor in administering your parent’s deceased estate will not be subject to GST.
This ruling applies for the following periods:
Not applicable
The scheme commences on:
Not applicable
Relevant facts and circumstances
● You are registered for goods and services tax (GST) in relation to the enterprise you carry on.
● You have voluntarily registered for GST as your GST turnover is less than $75,000.
● You do not carry on an enterprise of administering deceased estate as an executor.
● You have been appointed jointly with your sibling as an executor to administer your parent’s estate pursuant to their Will.
● The solicitor acting for the estate sought commission from a residual beneficiary.
● The residual beneficiary will receive $XXX from your parent’s will.
● The commission will be split equally between you and your sibling.
● The commission will be to paid you only once for the services.
● You were not appointed as an executor in the past in relation to any other deceased estate.
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 9-20
A New Tax System (Goods and Services Tax) Act 1999 – section 23-5
Reasons for decision
An executor of a deceased estate will make a taxable supply where the requirements of section 9-5 of the A New tax System (Goods and Services Tax) Act 1999 (GST Act) are satisfied.
You make a taxable supply if your supply is for consideration; and the supply is made in the course or furtherance of an enterprise that you carry on; and the supply is connected with the indirect tax zone; 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.
Based on the facts provided, you will be receiving consideration for the supply of administering the deceased estate as an executor. The supply will be connected to the indirect tax zone. However, the issue of whether you will be providing this service in the course or furtherance of an enterprise and whether you are required to be registered for GST should be determined.
The supply of administering the deceased estate as an executor is neither GST-free nor input taxed.
Section 23-5 of the GST Act provides that you are required to be registered for GST if you are carrying on an enterprise and your annual turnover meets the registration turnover threshold.
The current GST registration turnover threshold is $75,000.
To calculate your annual turnover you need to calculate the total value of any supplies you make or are likely to make over a 12 months period. This 12 months period covers the period of the current month and the preceding 11 months, known as your current annual turnover, and the current month and the following 11 months, known as your projected annual turnover.
You advised that you have registered for GST voluntarily in relation to your enterprise as your annual turnover is less than $75,000. You also confirmed that the commission you will be receiving for administering the deceased estate as an executor is a one off payment. Therefore, it is our view that you are not required to be registered for GST.
The term 'enterprise’ is defined in section 9-20 of the GST Act, which states:
An enterprise is an activity, or series of activities, done:
a) in the form of a business; or
b) in the form of an adventure or concern in the nature of trade; or
c) on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property; or
d)……………………………..
Miscellaneous Taxation Ruling MT 2006/1 of the New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian Business Number (MT 2006/1) provides guidance on the meaning of 'an entity’ and 'enterprise’ for the purposes of the A New Tax System (Australian Business Number) Act 1999 (ABN Act).
Goods and Services Tax Determination GSTD 2006/6 (GSTD 2006/6) provides that the principles in MT 2006/1 have equal application to the meaning of 'entity’ and 'enterprise’ for the purposes of the GST Act.
We consider that your appointment as an executor to administer your parent’s will is a one off activity and therefore it will not satisfy the definition of 'enterprise’ as per section 9-20 of the GST Act.
Therefore, the commission you will be receiving as an executor in administering your parent’s deceased estate will not be subject to GST.