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

Ruling: Q1: Will your supply of the premises 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 ? | A1: Yes. Your supply of the premises will be a GST-free supply of a going concern. This is because, on settlement date, you will be providing the purchaser all of the things that are necessary for the continued operation of a leasing enterprise, being the premises and the continuing current periodic lease agreement. In addition, you will continue to carry on the leasing enterprise until the day of the supply. Finally, there will be a clause in the contract for sale indicating that 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.

Relevant facts and circumstances: You are registered for GST. You own commercial premises (premises). You are currently negotiating a contract for the sale of the premises. The premises are used for various trading entities of the group to conduct various activities. The premises comprise multiple levels. As part of the process of allocating assets, liabilities, revenues, and expenses to the appropriate entity in the group, there are a series of intercompany charges levied on group members. An intercompany charge is levied on group members in advance each month to recognise the lease of office space occupied by the trading entities. The lease charge has been determined in accordance with a market rent for the space occupied. As the trading entities are 100% owned by you, there are currently no formal written lease agreements in place. You are also negotiating to sell the business of one of the trading entities (entity x) under a separate Business Sale Agreement. To facilitate the continued periodic tenancy of the trading entities on certain levels you will enter into a lease agreement with the purchaser of the premises. You will then sub-lease these premises to the existing trading entities. The lease will be brought into existence on the day the premises are supplied by you to the purchaser. The areas occupied by entity x will be supplied as leased premises to the purchaser at the time of supply of the premises. Under the proposed contract for sale of the premises you and the purchaser will agree that the sale will be a supply of a going concern and will carry on the enterprise until settlement.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5, | A New Tax System (Goods and Services Tax) Act 1999 Section 9-80 and | A New Tax System (Goods and Services Tax) Act 1999 Section 38-325.