Tribunal: Senior Member R Olding
In this decision summary, the AAT had to decide which entity is entitled to GST input tax credits on acquisitions made before a company is placed into administration but paid for by the administrators in the course of their administration – the company or the administrators?
The AAT found the answer to this question turned upon the correct interpretation of section 58-10 (1) of the A New Tax System (Goods and Services Tax Act) 1999 (GST Act) and affirmed the Commissioner of Taxation's decision.
The applicants, who we refer to as the Administrators, were appointed as Joint Administrators of Cooper & Oxley Builders Pty Ltd as trustee for Cooper & Oxley Builders Unit Trust (the Company) in February 2018.
In that capacity, they were required to lodge an activity statement for March 2018, which they did on 22 June 2018. As they had elected to account for GST on a cash basis, the Administrators claimed input tax credits on acquisitions made by the Company in January 2018, which the Administrators paid for in March 2018.
On 25 May 2018, under the terms of a Deed of Company Arrangement, control of the Company was returned to its former directors. On 15 June 2018, the directors caused the Company to lodge an activity statement for January 2018. As it accounted for GST on an accrual basis, the Company claimed input tax credits for the Acquisitions for which it had been invoiced in January 2018.
The Commissioner of Taxation assessed the Administrators' net amount for the March 2018 tax period on the footing that the Company, not the Administrators, was entitled to the tax credits. The Administrators objected to the assessment.
The Commissioner allowed the objection in part but maintained that the Administrators were not entitled to the input tax credits. The amount of the input tax credits remaining in contention, totalling $329,256, was not in dispute, only whether the Administrators were entitled to them.
Section 58-10(1) of the GST Act specifies when representatives have GST-related liabilities and entitlements. As a general rule, section 58-10 states that representatives are liable for any GST, and entitled to any input tax credits, the entity would otherwise be liable for or entitled to.
However, the AAT decided that section 58-10 can only apply in respect of supplies and acquisitions made by a representative of an incapacitated entity (within the scope of their appointment).
It follows that, consistent with the Commissioner's objection decision, the Administrators were not entitled to the contested input tax credits because they did not make the acquisitions to which they relate. The objection decision was therefore affirmed.
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