Private ruling: GST and the supply of a going concern
Published: February 2015

Ruling: Q1: Will your supply of the properties (Property) be a GST-free supply of a going concern for the purpose of section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes. Your supply of the Property will be a GST-free supply of a going concern under section 38-325 of the GST Act. On settlement date, you will be providing the purchaser all of things that are necessary for the continued operation of a property development enterprise, being the land and intellectual property including development approvals and architectural drawings. In addition, you will continue to carry on the property development enterprise until the day of the supply, including obtaining a further development approval for a re-subdivision and boundary adjustment to facilitate the development and also to obtain registration of a plan creating rights of batter, drainage and service easements and rights of carriageway over adjoining land. You and the purchaser have agreed in writing that the sale is a supply of a going concern, the sale will be for consideration and the purchaser is registered for GST. As all the requirements for section 38-325 will be satisfied, the supply of the property will be a GST-free supply of a going concern.

Relevant facts and circumstances: Entity A as Trustee for Entity B (A) is registered for GST. Entity C as Trustee for Entity D (B) is registered for GST. Individual is the sole Director of Entity A and Entity C. A and B (Vendors) have entered into a Contract for the sale of land dated XXXX (Contract) to sell properties (Property) to Entity E (Purchaser) for $XXXX. The Purchaser is registered for GST. The Vendors purchased the following properties in XXXX: • X • XY The Vendors and another company controlled by Individual, Entity F, own other land adjacent to the properties being sold. In XXXX the Vendors obtained a development approval in relation to the lands mentioned above together with adjoining land for a mixed use development comprising residential units and retail space. This development approval lapsed. In XXXX the Vendors obtained a further development approval for a commercial development comprising office and commercial space. The Vendors have undertaken extensive geotechnical investigations of the Property. In XXXX the Vendors sought development approval for two buildings. The buildings comprise a total of X residential apartments, parking and retail space. The Council issued development approval for the two buildings. The Vendors have sold to the Purchaser the Property together with all of the intellectual property including: • development approvals • stamped plans and architectural drawings • diagrams • statements of environmental effects The Vendors are continuing to operate the enterprise including: • obtaining a further development approval for a re-subdivision and boundary adjustment to facilitate the development • obtaining registration of a plan creating rights of batter, drainage and service easements and rights of carriageway over adjoining land, and • surrendering an earlier approval for part of the site to the Council. The Vendors and Purchaser have agreed that the supply is of a going concern (clause X of the Contract).

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