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In a media release issued on 13 July 2009, the Assistant Treasurer, Senator Nick Sherry, announced the release for consultation of an Exposure Draft Bill which, in the words of the Assistant Treasurer, is "aimed at protecting $655 million in revenue, put at risk as a result of a decision last year of the Federal Court concerning insolvency and the application of the GST"

The decision was FCT v PM Developments Pty Ltd [2008] FCA 1886 (Federal Court, Logan J, 12 December 2008). It was 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. 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 Assistant Treasurer said that the $655 million is made up of refunds of GST already paid and ongoing revenue costs over the forward estimates.

The amendments will apply from the commencement of the GST law on 1 July 2000. The consultation period is for 4 weeks, closing on Friday, 7 August, 2009.

For a copy of the Assistant Treasurer's media release, No 2009/014, 13 July 2009, go here

For a copy of the Exposure Draft Bill and Explanatory Memorandum, go here


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