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

Ruling: Q1: Will the supply of the Building 1 Property and the supply of the Building 2 Property (the Properties) be GST-free supplies 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 supplies of the Properties will be GST-free supplies 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 each leasing enterprise, being the property and the lease agreement. In addition, you will continue to carry on each leasing enterprise until the day of the supply. Finally, there is a clause in each 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 the purchaser is registered for GST.

Relevant facts and circumstances: You are registered for GST. You have entered into a contract (Building 1 Contract) to sell the property (Building 1 Property) to the Purchaser. The sale price is $X and the Building 1 Contract will be exchanged and settled on DDMMYYYY. Special Condition X of the Building Contract 1 provides that the Building 1 Property is sold subject to the Tenancies. You have entered into a new lease before completion of the Building 1 Contract with Entity B as lessee (clause X of the Building 1 Contract). The commencing date of the lease is DDMMYYYY. Special Condition X of the Building Contract 1 provides that you and the Purchaser agree that the sale of the Building 1 Property is a GST-free supply of a going concern. You have entered into a contract (Building 2 Contract) to sell the property (Building 2 Property) to the Purchaser. The sale price is $X and the Building 2 Contract will be exchanged and settled on DDMMYYYY. Special Condition X of the Building 2 Contract provides that the Building 2 Property is sold subject to the Tenancies. You have entered into a new lease before completion of the Building 2 Contract with Entity B as lessee (clause X of the Building 2 Contract). The commencing date of the Lease is DDMMYYYY. Special Condition X of the Building 2 Contract provides that you and the Purchaser agree that the sale of the Building 2 Property is a GST-free supply of a going concern. You will continue the business of leasing the Building 1 Property and the Building 2 Property (the properties) pursuant to the leases with Entity B until the day of the supplies. The Purchaser is registered for GST.

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