Private ruling: GST and going concern
Date of advice: 19 May 2016
Published: June 2016

Ruling: Q1: Is the business acquired by the Buyer from the Vendors, GST-free under section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: The supply of the business to the Buyer is for consideration, the Buyer is registered for GST and the Buyer and the Vendors have agreed in writing in a purchase agreement that the supply of the business is of a going concern. The purchase agreement also provides that the Vendors will supply to the Buyer all of the things that are necessary for the continued operation of the enterprise and that the Vendors will carry on the enterprise until the day of the supply. Given the above, the acquisition of the business by the Buyer from the Vendors is GST-free under section 38-325 GST Act.

Relevant facts and circumstances: The Buyer entered into a purchase agreement to buy the business from the Vendors and their respective legal entities. The Vendors operate their business in two Australian states. The Vendors have agreed in the purchase agreement that the business will be sold as a going concern and that the Vendors will continue to operate the business in the ordinary course up to and including the date of completion. The purchase agreement also provides that the Vendors agree to supply everything necessary to continue the operation of the business.

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