Private ruling: GST and the supply of a going concern
Date of advice: 28 October 2016
Published: February 2017

Ruling: Q1: Is the sale of the property by you a GST-free supply of a going concern under section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, the sale of the property by you is a GST-free supply of a going concern, provided that the recipient of the supply is registered or required to be registered for GST on the date of settlement of the sale of the property.

Relevant facts and circumstances: ● You are the owner of the property. ● Since the time that you purchased the property, it was rented by you to a tenant who vacated the premises recently despite the fact that you offered incentives to extend their lease. ● Since the time the tenant vacated the property, you have been actively marketing the property for tenancy through engaging estate agents. ● You have not been able to secure a tenant due to the rates being offered by other potential tenants have been lower than what the previous tenant was paying you. ● Whilst the property was vacant and was being actively marketed for tenancy, you lodged an application for a development approval in regards to the property at the relevant council. ● The council did not approve the application to develop. ● You have received an offer to purchase the property from a prospective purchaser, who wants to pursue a development application for the construction of residential units on the property, provided that you rent out the property to a tenant on a short term basis. ● A real estate agent located a tenant who will be renting the property for a few months. ● You entered into a lease arrangement of the entire property with a new tenant. ● Recently you entered into a contract for the sale of the property for a sum with the purchaser. ● You are registered for GST and the purchaser will be registered for GST prior the settlement of the sale contract. ● You will continue to lease the property to the new tenant until the sale contract settles. ● You will be assigning the right to your lease to the purchaser. ● You and the purchaser have agreed in writing that the sale of the property will be a supply a going concern.

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