Private ruling: GST and sale of business
Published: November 2014

Ruling: Q1: Is the sale of a business a GST-free supply of a going concern? | A1: No In this instance, another entity is carrying on the enterprise. You are unable to supply the enterprise that the other entity carries on or all of the things that are necessary for the continued operation of that enterprise. Therefore, the supply will not satisfy the requirements of subsection 38-325(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). There is no agreement in writing between the other entity and the purchaser for the supply of a going concern. Therefore, the supply will not satisfy the requirements of subsection 38-325(1) of the GST Act. As the supply of the resort business will not satisfy the requirements of subsections 38-325(1) and 38-325(2), the supply of the business will not be a supply of a going concern for the purposes of section 38-325 of the GST Act.

Relevant facts and circumstances: You own business premises. On ddmmyyyy, you entered into three contracts of sale in respect of assets located on the property and the accommodation business operated therefrom. The property assets were sold under two interdependent contracts as follows: • Contract 1 - sale of Commercial Premises - 'the commercial properties'. • Contract 2 - Sale of Residential Premises - 'the residential properties'. • Contract 3 - Sale of Business On ddmmyyyy, you requested a ruling in relation to the three supplies. On ddmmyyyy, in response to our request for further information, you advised: • There is a lease in place between you and another entity - you supplied a copy of the lease. • The other entity is supplying the accommodation services in its own right. • The other entity bears the risk of the operation at the resort. Later, following discussions with your representative, we advised that the business was being conducted by the other entity. Your agent subsequently agreed to withdraw the question in relation to the sale of the business.

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