Private ruling: Supply of property as a GST-free going concern
Date of advice: 1 November 2017
Published: March 2018
Ruling period: 1 July 2017 to 30 June 2018

Ruling: Q1: Will the sale of your commercial property (the property) which is subject to a commercial lease (lease) be a GST-free supply of a going concern under section 38 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, your 'supply of a going concern' under section 38 of the GST Act will be GST-free provided that on the day of the supply (settlement date), you will be: ● supplying all of the things that are necessary for the continued operation of the current enterprise. This comprises the property and assignment of the lease as landlord. ● supplying to a purchaser who is registered for GST, for agreed consideration, ● supplying under a contract that confirms your mutual written agreement the sale is a supply of a going concern, and ● having carried on the enterprise until the day of the supply.

Relevant facts and circumstances: You, A, B and C are a partnership registered for Goods and Services tax (GST). Each partner jointly owns the property freehold at X as tenants in common in equal shares. The partners are beneficiaries from the estate of the previous deceased owner D who had conducted an enterprise of leasing the property for commercial purposes. The partnership intends to keep its enterprise of operating the lease until the date of settlement when it will be assigned to the purchaser to continue as lessor. The sale contract will record that the sale is of a going concern and both the seller and the purchaser will agree it is a sale of a going concern. The purchaser will be, or will be required to be, registered for GST.

Relevant legislative provisions: Section 38 of the A New Tax System (Goods and Services Tax) Act 1999