Private ruling: GST - trustees in bankruptcy
Date of advice: 3 March 2026
Published: 28 April 2026
Ruling period: XX XXX 20XX to 30 June 20XX
Date scheme commenced: XX XXX 20XX

Ruling: Q1: Are Person X and Person Y in their capacity as the joint and several Trustees of the Bankrupt Estate (Trustees you), entitled to input tax credits under section 58-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) in respect of the acquisitions in relation to the Litigation for which the legal costs and disbursements set out in this private ruling are consideration (the Acquisitions)? | A1: You are not entitled to input tax credits on the Acquisitions made relating to the Litigation. | Q2: If the answer to Question 1 is no, is Entity C entitled to input tax credits under section 11-20 of the GST Act in respect of the Acquisitions? | A2: Entity C is not entitled to input tax credits on the Acquisitions made relating to the Litigation.

Relevant facts and circumstances: Person A has carried on a business since XX XXX XX00 (the Business). Person A was made bankrupt on XX XXXX after a judgement was obtained against them from the Supreme Court of XX. Person X and Person Y were appointed as joint and several trustees of the Bankrupt Estate of Person A (Trustees, you). At all relevant times the Trustees have operated their general insolvency practice under the Australian Business Number of Entity C. Litigation commenced on XX XXXX and was settled on XX XXXX for $X. In your capacity as Trustees, you incurred significant legal costs and disbursements relating to the Litigation (Acquisitions). Entity C is registered for GST.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 | A New Tax System (Goods and Services Tax) Act 1999 subsection 9-15(2) | A New Tax System (Goods and Services Tax) Act 1999 section 9-20 | A New Tax System (Goods and Services Tax) Act 1999 section 11-5 | A New Tax System (Goods and Services Tax) Act 1999 section 11-15 | A New Tax System (Goods and Services Tax) Act 1999 paragraph 11-15(2)(a) | A New Tax System (Goods and Services Tax) Act 1999 paragraph 11-15(2)(b) | A New Tax System (Goods and Services Tax) Act 1999 section 11-20 | A New Tax System (Goods and Services Tax) Act 1999 section 11-30 | 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 | A New Tax System (Goods and Services Tax) Act 1999 paragraph 58-10(1)(b) | A New Tax System (Goods and Services Tax) Act 1999 paragraph 58-10(5)(b) | A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision: Summary: Section 11-20 provides that you are entitled to an input tax credit (ITC) for any creditable acquisition that you make. The term 'creditable acquisition' is defined in section 11-5 and provides that you will make a 'creditable acquisition' if: (a) you acquire anything solely or partly for a creditable purpose; and (b) the supply of the thing to you is a taxable supply; and (c) you provide, or are liable to provide, consideration for the supply; and (d) you are registered or required to be registered for GST. Section 11-15 provides that you acquire a thing for a 'creditable purpose' to the extent you acquire it in carrying on your enterprise. However, the thing will not be acquired for a 'creditable purpose' to the extent that the acquisition relates to making input taxed supplies or is of a private or domestic nature. Section 9-20 contains the meaning of the term 'enterprise' and includes amongst other things an activity, or series of activities, done on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property. Prior to being declared bankrupt, Person A conducted an enterprise of proving accountant and auditor services (the Business). The phrase 'carrying on' an enterprise includes doing anything in the course of the commencement or termination of the enterprise. In this case, we do not consider the Acquisitions related to the Business or winding up of the Business that was conducted by Person A. Relevantly the matter in dispute was a private matter unrelated to Person A's Business. It follows that the Acquisitions will not be made for a creditable purpose under section 11-15 as the services are not acquired in carrying on Person A's enterprise consisting of their Business and the Acquisitions are also considered to be of a private or domestic nature. Further, at this time, the Trustees are not registered for GST. Should the Trustees proceed with their intention to register for GST in respect of their capacity as representative at any time, there is no entitlement to any ITC in respect of the Acquisitions under section 58-10(1)(b). As explained in our reasoning to question 1, section 11-20 of the GST Act provides that an entity is entitled to an input tax credit for any creditable acquisition that it makes. According to our reasoning in question 1, the entity that made the Acquisitions is the Trustee in their capacity as a representative of an incapacitated entity (effectively the Trust). It follows that the Acquisitions are not made by Entity C in their capacity as the provider of the Trustee Service. Therefore, Entity C is not entitled to any input tax credit under section 11-20 of the GST Act in respect of the Acquisitions.