GST Hike Will Bring Structural Issue With Law Into Sharper Focus

A Court of Appeal finding late last year that a director breached his director's duty by selling an asset in a failing business when he knew that the company would be unable to meet the ensuing GST obligation has since filtered through into IRD practice.

It is important, therefore, that directors are fully alert to the decision's implications. This is particularly so as the monies involved in GST cases will become relatively larger after 1 October this year when GST rises to 15%.

Brief refresher on the case

Peace and Glory Society Ltd v Samsa concerned a property development company of which a Mr Stefano Samsa was sole director. Mr Samsa had bought a Northcote property with the intention of subdividing the land, renovating and selling the existing dwelling and using the proceeds from that sale to build a new house which he would also sell. But things did not go according to plan and, with the company insolvent, he bought the partly-renovated house himself in