Private ruling: GST and taxable supply
Published: March 2015

Ruling: Q1: Are you liable to pay the GST on livestock you sold as bailee in possession? | A1: No. You are not liable to pay the GST because you have not made a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). Although you had physical possession of the livestock, the Court held that the property in the livestock remains with the other party. We consider that, when you sold the livestock, you were not acting in your own right but as an agent for the other party. Hence, you have not made a supply for consideration. | Q2: Are you liable to pay the GST on the sale of livestock owned by a third party who sold the livestock in your name and using your ABN? | A2: No. You are not liable to pay the GST because you have not made a taxable supply under section 9-5 of the GST Act. As the property in the livestock remains with the third party, you have not made a supply for consideration.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are registered for GST. Between 20XX and 20XY, you sold livestock belonging to X in your capacity as involuntary bailee in possession. You placed the proceeds of the sale in the solicitor's trust account pending the outcome of the matters in dispute. In 20XY, A signed a national vendor declaration which stated that you were the owner of XY number of livestock held at a particular location. Shortly after, the said livestock were sold in your name and using your ABN. You have never been in possession of the said livestock and the sale was made without your knowledge, authority or consent. You were the defendant in a Court case. The Court held that you and X entered into a binding contract in 20VV. You repudiated that contract on 20WW. The contract came to an end when the repudiation was accepted as having that effect. The Court gave a judgment for X against you. In awarding the sum for the damages the Court took into account the value of the livestock as at 20WW. Subsequently, the funds from the sale of livestock you undertook as bailee in possession were transferred to the trust account of X's solicitor. The proceeds of the sale of the other livestock are currently in a trust account with X's solicitor and held under your name. To date you have not agreed to its release to X until the issue of who is liable to pay the GST is resolved. You acknowledged that pursuant to the Court judgment, the livestock the subject of this private ruling request were the property of X.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 | Section 9-40