Government Announcements
Insolvency and GST
13.07.2009
An exposure draft bill (and explanatory memorandum) to overcome the effect of the Federal Court’s decision in DFCT v PM Developments Pty Ltd [2008] FCA 1886; 2008 ATC ¶20-078 was released by the Assistant Treasurer on 13 July 2009. In that case, Logan J held that the GST liability for transactions occurring during the period of a liquidator’s appointment is the liability of the company in liquidation and not the liquidator.
The Assistant Treasurer said that the intention of the GST law is that the liquidator of an insolvent company is responsible for paying GST on transactions made in their capacity as the liquidator of that insolvent company and that, if left to stand, the Federal Court decision would mean that the GST liability would instead fall to the insolvent company, greatly reducing the likelihood of payment.
The amendments are to apply from the commencement of the GST law on 1 July 2000.
For the text of the Assistant Treasurer’s media release (which contains a link to the draft legislation), click here.
