Private ruling: Supply of a going concern
Date of advice: 15 June 2018
Published: August 2018
Ruling period: 1 July 20xx to 30 June 20xx | 1 July 20xx to 30 June 20xx
Date scheme commenced: 9 May 20xx

Ruling: Q1: Are you carrying on an enterprise as defined under section 9-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes. An entity cannot be registered unless it is carrying on an “enterprise”. The most common example of an enterprise is a business. Section 9-20 of the GST Act confirms that an enterprise is an activity, or series of activities, done in the form of a business. In your instance the trust is carrying on a leasing business, has a corporate trustee and is considered an enterprise. | Q2: Do your leasing activities meet the conditions required for the transaction to be the sale of a going concern under section 38-325 of the GST Act? | A2: Yes. This is because you meet all the requirements of section 38-325 of the GST Act 1999, including that, 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 Property and the lease agreement. In addition, you will continue to carry on the leasing enterprise until the day of the supply. Finally, there is a clause in the sale contract 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 both the Vendor and Purchaser are registered for GST.

Relevant facts and circumstances: The Vendor xx as trustee for the xx Trust owns a service station and general store that has been fully tenanted for many years. The Tenant is xx Pty Ltd. The current Tenant has a lease in place for several more years. The Vendor is selling the service station and general store to the Purchaser xx & xx The purchase price is $xxx,xxx. A deposit of $xx,xxx will be made. The contract states that if the supply is a going concern that the purchase price does not include any amount for GST and the parties agree the supply of the property is a supply (or part of a supply) of a going concern. The Vendor warrants that between the date of the contract and the settlement date the Vendor will carry on the enterprise, the property (together with any other things that must be provided by the Vendor to the Purchaser at the settlement date under a related agreement for the same supply) is all of the things necessary for the continued operation of the enterprise and the Purchaser warrants that at the settlement date it is registered or required to be registered under the GST Act.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-20 | A New Tax System (Goods and Services Tax) Act 1999 section 38-325