Private ruling: Sale of a going concern
Date of advice: 2 February 2022
Published: May 2022

Ruling: A1: Section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides the requirements that must be satisfied in order for a supply to be a GST-free sale of a going concern as follows: (1) The * supply of a going concern is GST-free if: (a) the supply is for * consideration ; and (b) the * recipient is * registered or * required to be registered ; and (c) the supplier and the recipient have agreed in writing that the supply is of a going concern. (2) A supply of a going concern is a supply under an arrangement under which: (a) the supplier supplies to the * recipient all of the things that are necessary for the continued operation of an * enterprise ; and (b) the supplier carries on, or will carry on, the enterprise until the day of the supply (whether or not as a part of a larger enterprise carried on by the supplier). (terms marked with asterisks (*) are defined in section 195-1 of the GST Act) Based on the explanation provided by both entity A (the supplier) and entity B (the recipient) that under the Agreement: - the supplier supplied to the recipient all of the things that are necessary for the continued operation of a single enterprise carried on by the supplier on two locations; and - the supplier carried on the enterprise until the day of the supply (which is the day of settlement of the Agreement), the sale made under the Agreement is a sale of a going concern. Given that: - the supply made under the Agreement is for consideration, and - the recipient is registered for GST; and - the supplier and recipient have agreed in writing that the supply is a going concern, the Commissioner ruled as follows: 1. Yes, the supply made by entity A under the Agreement to entity B, is a supply of a GST-free going concern pursuant to section 38-325 of the GST Act. 2. Yes, the contingent consideration payable under a particular Deed forms part of the one arrangement, so that the GST-free status extends to any contingent consideration payable under that the Deed. 3. Yes, the other Deed also forms part of the one arrangement, and the GST-free status extends to any payment made under that Deed.

Relevant facts and circumstances: Entity A carried on a single enterprise in two separate geographical locations. Entity A entered into a contract with Entity B to sell Entity A's assets and enterprise to Entity B. Entity A is the supplier and Entity B is the recipient of the Agreement. Under the Agreement: - Entity A (the supplier) supplied to entity B (the recipient) all of the things that are necessary for the continued operation of a single enterprise carried on by the supplier on the two geographical locations; and - the supplier carried on the enterprise until the day of the supply (which is the day of settlement of the Agreement), the sale made under the Agreement is a sale of a going concern. Further, - the supply made under the Agreement is for consideration, and - the recipient is registered for GST; and - the supplier and recipient have agreed in writing that the supply is a going concern.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 38-325


1. Is the supply made by entity A to entity B under the Agreement, the supply of a GST-free going concern pursuant to section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | 2. Assuming the answer to question 1 is 'yes' does the additional consideration payable under a particular Deed form part of the one arrangement, so that the GST-free status would extend to any contingent consideration payable under that Deed? | 3. Assuming the answer to question 1 is 'yes' does another Deed form part of the one arrangement, so that the GST-free status would extend to any payment made under that Deed also?