Since our FocusPaper of 18 December 2008 regarding the case of
Deputy Commissioner of Taxation v PM Developments Pty Ltd
 FCA 1886 ("Case") which held that
liquidators are not personally liable for GST on post-appointment
transactions, the Assistant Treasurer has announced that GST
legislation will be amended to make it clear that representatives
of incapacitated entities are liable for GST on post-appointment
transactions. The amendments will have retrospective effect from 1
July 2000, the date of the commencement of the GST.
The Tax Office has also issued a Decision Impact Statement on
the Case. The Tax Office accepts that as a result of this Case, the
representative of an incapacitated entity is not personally liable
for GST, and that that will remain the law until the proposed
amendments are passed.
Accordingly, until the amendments are passed, the Tax Office
accepts that the liability for GST on transactions entered into by
a representative of an incapacitated entity as agent for the entity
is satisfied if the liability is "paid by or on behalf of the
If amending legislation is passed, the Tax Office will accept
that the GST liability is satisfied where:
the correct amount of GST has been paid by the representative
on behalf of the entity in the period pending the amending
legislation being in force;
the representative (on behalf of the entity) authorises the Tax
Office to treat the amount as paid on behalf of the representative;
no claim for the amount paid is made against the Tax
without further action by the representative.
The Tax Office is seeking feedback on this approach and any
other issues arising from the Case and the Decision Impact
Representatives will not be liable for penalties or general
interest charge if the GST is paid within 28 days after the
amending legislation receives Royal Assent.
In relation to representatives who personally paid GST to the
Tax Office as a result of the Case, the Tax Office will process
applications for refunds, pending the amendments being passed. The
representative will have to demonstrate that the payment was made
personally rather than on behalf of the incapacitated entity. For
full details on a representative's entitlement to refunds,
please see the Decision Impact Statement.
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.
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The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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