Private ruling: Goods and services tax and representative
Date of advice: 9 July 2020
Published: August 2020
Date scheme commenced: You (x) are joint and several liquidators for the x group of companies. The x Group consists of x entities/members.

Ruling: Q1: Are you liable to pay GST under subsection 58-10(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) with regard to the Pre-appointment Supplies (described below), where you have issued invoices after your Appointment Date? | A1: No. | Q2: Are you liable to pay GST under subsection 58-10(1) of the GST Act only with regard to the Post-appointment Supplies on your invoices (described below), where you issue invoices after your Appointment Date which relate to both Pre-appointment Supplies and Post-appointment Supplies? | A2: Yes. | Q3: Are you required to notify the Commissioner, under subsection 58-60(1) of the GST Act, of an amount of GST for which the relevant incapacitated entity is liable? | A3: Yes.

Relevant facts and circumstances: You (x) are joint and several liquidators for the x group of companies. The x Group consists of x entities/members. You have submitted this ruling application as representative of x entities within the x group. The x entities, collectively referred to as the Incapacitated Entities, are: ¢ x; ¢ x; ¢ x; ¢ x; ¢ x; ¢ x; and ¢ x. The x Group is a multi-disciplinary x group, which entered external administration in x. The parent company of the x Group is x. The below fact pattern relates to supplies made by certain entities within the x Group, namely the Incapacitated Entities. The x Group (including the Incapacitated Entities) went into administration on x. The Group appointed you as its administrator on x (Appointment Date). The x Group then went into liquidation on x. You became its liquidator on x. You are a 'representative' as defined in section 195-1 of the GST Act. Each of the Incapacitated Entities are an 'incapacitated entity' as defined in section 195-1 of the GST Act. The Incapacitated Entities are registered for GST. Before your appointment as representative, x was the representative member of a GST group that included the Incapacitated Entities. Prior to your appointment as representative, the Incapacitated Entities reported on an accruals basis. However, after your appointment as the representative, the GST group was cancelled. On and after the Appointment Date, you reported on a cash basis and on an entity by entity basis. Prior to the Appointment Date, the Incapacitated Entities had entered into various arrangements with third party customers whereby the Incapacitated Entities were required to supply x in stages or on an ongoing basis (the Progressive Arrangements). All supplies made under the Progressive Arrangements are 'taxable supplies' under section 9-5 of the GST Act. Under the Progressive Arrangements, invoices were issued regularly (e.g. on a monthly basis). The invoices reflected the progress or stage of the services being provided (i.e. reflecting those obligations which had already been performed or costs which had been incurred prior to the issue of the invoice). With respect to the Progressive Arrangements, the Work in Progress reports of the Incapacitated Entities indicate there was work performed wholly prior to the Appointment Date. However, the work had not yet been invoiced at that time (the Pre-appointment Supplies). The amount of GST, on the Pre-appointment Supplies, has not been taken into account in any GST return that has been given to the Commissioner. The Commissioner has not been previously notified of the amount of GST under section 58-60 of the GST Act. You issued invoices for the Pre-appointment Supplies after the Appointment Date. Consideration for the Pre-appointment Supplies was not received before the issuance of invoices. Based on the Work in Progress reports of the Incapacitated Entities, those invoices came to a total of approximately $x. In many cases, you continued to perform the obligations of the Incapacitated Entities under the Progressive Arrangements (the Post-appointment Supplies). There were circumstances where an Incapacitated Entity made Pre-appointment Supplies and you made Post-appointment Supplies under the same Progressive Arrangement. You often issued to the third-party customer a single invoice (Mixed Invoice). Therefore, you billed the customer for both Pre-appointment Supplies and Post-appointment Supplies. Mixed Invoices were all issued after the Appointment Date. You have not yet performed an analysis of the amounts billed under the Mixed Invoices. You have not performed any apportionment between the value of Pre-appointment Supplies and Post-appointment Supplies within any Mixed Invoices. You are a representative of a kind that does have the capacity to declare dividends to unsecured creditors of the Incapacitated Entities.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-40 | Section 48-40 | Section 48-45 | Section 48-50 | Division 58 | Subsection 58-10(1) | Subsection 58-60(1) | Subsection 156-17(1)

Reasons for decision: Summary: Are you liable to pay GST under subsection 58-10(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) with regard to the Pre-appointment Supplies (described below), where you have issued invoices after your Appointment Date? Subsection 156-17(1) states: A supply that is made: (a) for a period or on a progressive basis; and (b) for *consideration that is to be provided on a progressive or periodic basis; is treated, for the purposes of Division 58 (which is about representatives of incapacitated entities), as if each progressive or periodic component of the supply were a separate supply. The Pre-appointment Supplies were made for a period or on a progressive basis. In addition, the Pre-appointment Supplies were for consideration that was provided on a progressive or periodic basis. Pursuant to subsection 156-17(1) the Pre-appointment supplies are treated, for the purposes of Division 58, as if each progressive or periodic component of the supply were a separate supply. Subsection 58-10(1) states: A *representative of an *incapacitated entity: (a) is liable to pay any GST that the incapacitated entity would, but for this section or section 48-40, be liable to pay on a *taxable supply or a *taxable importation; and (b) is entitled to any input tax credit that the incapacitated entity would, but for this section or section 48-45, be entitled to for a *creditable acquisition or a *creditable importation; and (c) has any *adjustment that the incapacitated entity would, but for this section or section 48-50, have; to the extent that the making of the supply, importation or acquisition to which the GST, input tax credit or adjustment relates is within the scope of the representative's responsibility or authority for managing the incapacitated entity's affairs. ATO Interpretative Decision ATO ID 2012/7 Goods and services tax: GST and liability for a supply made by an incapacitated entity prior to the appointment of a representative (ATO ID 2012/7) provides information on an incapacitated entity's liability for certain supplies. ATO ID 2012/7, among other things, states: The facts state that the incapacitated entity made the taxable supply prior to the appointment of the representative. As the supply was made by the incapacitated entity prior to the appointment of the representative, the making of the supply clearly did not fall within the representative's responsibility or authority for managing the incapacitated entity's affairs, at the time the supply was made. The mere subsequent receipt by the representative of the consideration for the supply that was made by the incapacitated entity before the appointment of the representative does not have the effect of bringing the 'making' of the supply within the scope of the representative's responsibility or authority for managing the incapacitated entity's affairs. Accordingly, because the supply is not within the scope of authority of the representative, the representative is not liable for the GST on the taxable supply under subsection 58-10(1) of the GST Act, despite the fact that the representative receives all of the consideration for the supply. Instead, the incapacitated entity is liable for GST, under section 9-40 of the GST Act. It follows that, the making of the Pre-appointment Supplies clearly did not fall within your responsibility or authority for managing the Incapacitated Entities' affairs, at the time the supplies were made. Therefore, you are not liable to pay GST under subsection 58-10(1) with regard to the Pre-appointment Supplies, where you have issued invoices after your Appointment Date. It is the relevant Incapacitated Entity that is liable to pay the GST under the basic GST rules in relation to Pre-appointment Supplies. Are you liable to pay GST under subsection 58-10(1) of the GST Act only with regard to the Post-appointment Supplies on your invoices (described below), where you issue invoices after your Appointment Date which relate to both Pre-appointment Supplies and Post-appointment Supplies? We consider that, the making of the Post-appointment Supplies fall within your responsibility or authority for managing the Incapacitated Entities' affairs, at the time the supplies were made. Therefore, you are liable to pay GST under subsection 58-10(1) only with regard to the Post-appointment Supplies on your invoices, where you issue invoices after your Appointment Date which relate to both Pre-appointment Supplies and Post-appointment Supplies. As discussed above, it is the relevant Incapacitated Entity that is liable to pay the GST in regard to Pre-appointment Supplies included on a Mixed Invoice. Are you required to notify the Commissioner, under subsection 58-60(1) of the GST Act, of an amount of GST for which the relevant incapacitated entity is liable? Subsection 58-60(1) states: A *representative of an *incapacitated entity must notify the Commissioner, in the *approved form, of an amount of GST for which the entity is liable, or an *increasing adjustment that the entity has, if: (a) the representative becomes aware, or could reasonably be expected to have become aware, of the amount of GST, or the adjustment; and (b) the amount of GST, or the adjustment, has not been taken into account in any *GST return that has been given to the Commissioner; and (c) the Commissioner has not been previously notified of the amount of GST, or the adjustment, under this section. As discussed above, it is the relevant incapacitated entity that is liable for an amount of GST in respect to Pre-appointment Supplies. In addition, the requirements of paragraphs (a), (b) and (c) of subsection 58-60(1) are satisfied. Therefore, you are required to notify the Commissioner, under subsection 58-60(1), of an amount of GST for which the relevant incapacitated entity is liable. Additional information A written notice with the following information will satisfy the requirements for a notification under section 58-60: The notification should be forwarded to: Australian Taxation Office PO Box 9003 PENRITH NSW 2740 Please note that notification of these types of liabilities and adjustments should not be reported on the business activity statement of either the representative or the incapacitated entity. Subsection 58-60(2) stipulates that the representative must notify the Commissioner of a GST liability or increasing adjustment that an incapacitated entity has no later than the day before a dividend to unsecured creditors is declared. In cases where there is more than one dividend to be paid to creditors, for example an interim dividend followed by a final dividend, notification will be required the day prior to the declaration of each dividend. Each successive notification will only need to notify relevant liabilities or adjustments that have not been included in prior notifications.

The scheme commences on: 21 November 2018 | ¢ unless otherwise stated, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) | ¢ all terms marked by an *asterisk are defined terms in the GST Act | ¢ all reference materials, published by the Australian Taxation Office (ATO), that are referred to are available on ato.gov.au | the name and ABN of the incapacitated entity | the name and ABN (if different from the incapacitated entity) of the representative | the date of the representative's appointment | the amount of the GST liability or increasing adjustment and a brief explanation of what the GST liability/adjustment (or adjustments) relates to | where available, the tax period (or periods) to which the GST liability or increasing adjustment relates; and | a declaration that the information provided is true and correct.