The Government has just issued a consulation paper headed “GST treatment of property in possession of a mortgagee”.
It is asking for views on whether “there an alternative way to better achieve the Government’s policy objective of a representative of an incapacitated entity being liable for GST for supplies of property in their possession or control belonging to a corporation”.
The Government claims that amendments made to GST legislation in December 2009 had “unintended consequences” for the business mortgage lending sector. It announced in May 2011 that it would amend the GST law “to ensure that the provisions dealing with the GST treatment of property in possession or control of a mortgagee operate as intended and reduce compliance costs, particularly for entities in the mortgage lending sector”.
Closing date for submissions: 6 July 2011.
For a copy of the paper CLICK HERE.
| Email: | gstpolicyconsultations@treasury.gov.au |
| Mail: | The General Manager, Indirect Tax Division, The Treasury, Langton Crescent, PARKES ACT 2600 |
| Enquiries: | Enquiries can be initially directed to Ms Joanne Kennedy |
| Phone: | 02 6263 2079 |
NOTE:
If the proposed amendment goes ahead, it will take effect from 1 July 2012. However, the amendment has, in reality, been made already, as a result of the ATO Interpretive Decision (ATO ID 2010/224) issued in December 2010.
4 Responses to “Treasury reviewing GST on asset sales by mortgagees”
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The sale of property by a mortgagee in possession is only a taxable supply by the mortgagee in possession if the sale of that property by the mortgagor would have been a taxable supply. PJK
Understand. But practically how does it work? 105 deals with MIP of individuals & corporates. 58 deals with receivers of corporate property. What about agents for mortgagee in possession of property owned by individual? Do they remit the GST from the sale as a representative? They do not make a supply under 105 as they are not reducing their own debt? The ATO does not know how to deal with the appointment of an IP over personal property for a secured creditor.
Regarding your questions: “What about agents for mortgagee in possession of property owned by individual? Do they remit the GST from the sale as a representative? They do not make a supply under 105 as they are not reducing their own debt? “ In my view an agent for a mortgagee in possession (MIP) of property owned by an individual is not a “representative” as defined in the GST dictionary (Division 195 of A New Tax System Goods and Services Tax Act 1999 (“the GST ACT”)). Therefore the agent is not required to register. The sale of the repossessed property is a supply/sale by the MIP. The proceeds from the sale would be applied towards the satisfaction of the MIP’s outstanding debt. So under Division 105 of the GST Act had the individual made the sale, and the sale would have been a taxable supply by the individual, then the MIP has made a taxable supply. The MIP would report the taxable supply and account for the GST (even if not registered for GST).
Great – that makes sense, thanks.