Private ruling: GST and supply of rent roll as a going concern
Date of advice: 17 August 2015
Published: August 2015

Ruling: Q1: Will the supply of the rent roll business be a supply of a going concern under section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when the rent roll business is relocated from the office of the vendor to the office of the purchaser on settlement? | A1: Yes. A supply of a going concern is GST-free under subsection 38-325(1) of the GST Act where there is a supply for consideration, the recipient is registered for GST and the supplier and the recipient agree in writing that the supply is of a going concern. Under subsection 38-325(2) of the GST Act, a supply is of a going concern where under an arrangement, the supplier supplies to the recipient all of the things that are necessary for the continued operation of an enterprise, and the supplier carries on or will carry on the enterprise until the day of the supply. From the facts given, your supply of rent roll business will be of a going concern under subsection 38-325(2) of the GST Act as the supply of the rent roll business will be made under an arrangement where: • you will be supplying to the buyer all of the things necessary for the continued operation of the rent roll business except the premise from which you currently conduct the rent roll business. Since 99% of your tenants pay the rent directly into your bank account, we consider in this case that the supply of your premises is not one of the things necessary for the continued operation of the rent roll business by the buyer; and • you will carry on the rent roll business until the day of the supply. Your supply of a going concern will be GST-free under subsection 38-325(1) of the GST Act as: • you will receive consideration for the supply of the rent roll business to the buyer; • you will sell the rent roll business to a GST registered buyer; and • you and the buyer will agree in writing that the supply will be of a going concern.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You conduct a rent roll business in a sole purpose unit trust from your commercial premises. The rent roll business relates to residential rental property that you are managing. The majority of tenants (99%) pay their rent to you by direct debit. It is rare for a tenant to visit your premises to make a rental payment. In some instances, current or prospective tenants attend your premises to obtain information and collect documents. You are registered for the goods and services tax (GST). You are considering selling your rent roll business as a going concern to a buyer that is registered for GST. A deposit will be payable by the buyer on signing the sale agreement. You will acknowledge that the buyer has acquired the goodwill of the rent roll business. You will carry on the business from the date the agreement is signed until the date of settlement. On settlement, you will provide the rent roll, systems, software, records and documents in relation to each transferred property. Record and documents include: • Tenancy Agreements; • Records held by the vendor in respect of each transferred property in the rent roll including correspondence files, repairs and maintenance details of payments made by tenants to the date of transfer; • Records held by the vendor in respect of payments made to landlords; • All documents required to carry on the rent roll business. On settlement, you will write to all landlords advising that a new management agent has been appointed. Given that assignment authorities have been previously signed by landlords, if the landlords do not respond with a written objection to the appointment within 14 days, the assignment of the management is deemed to have taken place. The buyer will have the option of employing your current staff or may choose to employ some staff at the exclusion of others. The buyer will not be entering into a lease with you for the existing premises as the purchaser will relocate the purchased rent roll business to its office at settlement. You and the buyer will agree in writing that the supply of the rent roll business will be of a going concern in the sale contract.

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