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The Federal Court (Logan J) has held that a liquidator of corporation was not personally liable for GST in respect of the sale of a residential unit pursuant to a contract entered into and completed after the making of the winding up order. This was despite the registration requirements of Div 147 of the GST Act imposed on "representatives" of "incapacitated entities" and statements made in the Explanatory Memorandum to the Bill introducing Div 147.

The Court said, at para 38:

"In the GST Act the headings of divisions and sections and the explanatory sections also form part of the Act: s 182-1. The first thing one notices about these on a perusal of Div 147 is that there is nothing about them which alerts the reader to the prospect that Div 147 is effecting a fundamental change either to the prevailing general company law position in relation to the absence of personal liability of liquidators for the post liquidation debts of a corporation or, more particularly, to the usual position under the GST Act which is that the person who makes a supply is the one liable to GST. Section 147-1 merely informs the reader that Div 147 is "about" a requirement on the part of "representatives" of "incapacitated entities" to register."

After further consideration, the Court said, at para 58:

"As the GST Act presently stands, the effect of requiring a liquidator of a corporation to register will be that any supplies which the liquidator makes in that "representative" capacity in the event that any property of the corporation is ordered to be vested in him will become a "taxable supply" by him in that capacity; otherwise the disposal of the property of a corporation, insofar as that constitutes a supply for the purposes of the GST Act, will remain a taxable supply by the corporation and have to be accounted for and paid by it accordingly."

The result of these findings was that the GST became "but one of a number of equal ranking post liquidation debts" which was subject to a number of prior ranking debts of the company: Deputy Commissioner of Taxation v PM Developments Pty Ltd [2008] FCA 1886 (Federal Court, Logan J, 12 December 2008).

For a copy of the decision, go here.

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