The Government has announced that it will amend the GST law,
with retrospective effect from 1 July 2000, to ensure that
liquidators and receivers are liable for GST on post-appointment
The amendments are in light of the recent Federal Court decision
in Deputy Commissioner of Taxation v PM Developments Pty
Ltd  FCA 1886. In that decision, the court held that the
liquidator was the 'agent' of the insolvent company when it
made supplies and acquisitions on the company's behalf. This
meant that the GST payable in relation to the sale of that
company's assets was the liability of the company (not the
liquidator) and therefore ranked equally with the other post
The Government's proposed retrospective amendments will
override the decision in PM Developments to ensure that
the liquidator, or receiver, is treated as the 'entity'
that carries on the company's enterprise during the period of
If the proposed amendments operate retrospectively, as
announced, then insolvency practitioners who had correctly adopted
an approach consistent with the views of the court in PM
Developments will be exposed to a back-dated liability for GST
on supplies made after the GST commenced (or at least during the
past four years). This could be devastating where the liquidator or
receiver no longer controls the assets of the company.
If it proceeds (as seems likely), this amendment will enshrine
the unjust position that the ATO becomes a defacto first ranking
charge holder over the assets of a company in receivership or
liquidation. It means that secured creditors are in a substantially
different position depending on whether the company sells assets
before or after a controller is appointed. Gadens has lobbied
against this unfair result and will continue to do so. This
situation highlights the benefits of using Gadens' ADS systems
(Alternate Default Strategies) which have a long history of
producing better results for lenders.
The precise details of the new measures have not been released.
However, the Government has announced that it will release draft
legislation for consultation purposes in the near future.
t +61 2 9931 4738
t +61 2 9931 4871
t +61 7 3114 0124
t +61 7 3114 0102
t +61 8 8233 0662
t +61 8 8233 0645
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).