Private ruling: GST and creditable acquisitions
Published: September 2014

Ruling: Q1: Will your acquisition of a commercial property be a creditable acquisition under section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No One of the requirements to be satisfied for you to make a creditable acquisition is that the supply to you is a taxable supply. In this case the supply to you is a GST-free going concern. As such you have not made a creditable acquisition.

Relevant facts and circumstances: You have entered into a contract to purchase a commercial property for consideration of a specified amount plus applicable GST. The contract provides that both parties agree to treat the transaction as a sale of a going concern pursuant to section 38-325 of the GST Act subject to the purchaser obtaining a private binding ruling confirming section 38-325 applies to the transaction. Both parties are registered for GST. At the date the contract was signed, the property was occupied by a related entity of the vendor for the purposes of operating its business. Prior to settlement, the related entity vacated the premises and the vendor entered into a six month commercial lease with another party. In the case the sale is a supply of a going concern, the vendor will carry on the enterprise until the contract completion date. You will acquire a reversionary interest in the property upon settlement and assume the obligations and entitlements under the existing lease agreement. You will acquire the property solely for a creditable purpose.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 | Section 11-5 | Section 11-15 | Section 11-20 | Division 38 | Section 38-325