Issue
Is the entity, a liquidator, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it makes a cash distribution to a shareholder as part of winding up a company?
Decision
No, the entity is not making a taxable supply under section 9-5 of the GST Act when it makes a cash distribution to a shareholder as part of winding up a company.
Facts
The entity is a liquidator. The entity makes a cash distribution to a shareholder of a company that is being wound up.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Under section 9-5 of the GST Act, an entity makes a taxable supply if: • the entity makes a supply for consideration; and • the supply is in the course or furtherance of an enterprise that the entity carries on; and • the supply is connected with Australia; and • the entity is registered or required to be registered for GST.
'Supply' is defined in section 9-10 of the GST Act to mean any form of supply whatsoever. However, subsection 9-10(4) of the GST Act provides that a supply does not include a supply of money unless the money is provided as consideration for a supply that is a supply of money. The entity is not providing the cash distribution as consideration for a supply of money. Therefore, the entity is not making a supply as defined in section 9-10 of the GST Act.
As the entity is not making a supply, the entity is not making a taxable supply under section 9-5 of the GST Act when it makes a cash distribution to a shareholder.