Private ruling: Supply of a going concern
Published: December 2014

Ruling: Q1: Will your supplies of the property and the business (B&B) be GST-free supplies of going concerns under section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes - As both supplies individually will satisfy the requirements of subsections 38-325(1) and (2) of the GST Act, they can each be supplied individually as a supply of a going concern for the purposes of section 38-325 of the GST Act. Accordingly, the simultaneous supply of the partnership's leasing enterprise and the Trust's B&B enterprise will be GST free supplies under section 38-325.

Relevant facts and circumstances: The partnership owns the property (the Property), which is leased to the trustee for the family trust (the Trust). The Trust carries on a bed and breakfast enterprise (B&B) at the property. You intend to sell the property and the B&B at the same time. The draft sale of land contract (land contract) contains the following relevant items: • The supply will be for consideration, although no amount has been agreed as yet. • Under standard clause 34.7, (b) the parties agree the supply of the property is the supply of a going concern; (c )(i) between the date of the contract and the date for completion the vendor will carry on the enterprise; (d) the purchaser warrants that, as at the date for completion, they will be registered or required to be registered under the GST Act. • GST: The GST Table specifies that the sale is a sale of a going concern. • Under special condition 1, the contract is conditional upon the contemporaneous completion of the sale of the B&B. • The lease schedule specifies that the property is leased to the Trust. The lease expires on ddmmyy, with an option to renew for a further 3 years. The draft sale of business contract (business contract) contains the following relevant items: • The supply will be for consideration, although no amount has been agreed as yet. • Under standard clause 3.3, (a) the purchaser warrants that, as at the date for completion, they will be registered or required to be registered under the GST Act; (b) the buyer will provide written proof of such registration; (d) the seller must carry on the business as a going concern until the completion. • GST: The GST Table specifies that the sale is a sale of a going concern. • Under special condition 1, the contract is conditional upon the contemporaneous completion of the sale of the Property. • Schedule A to the business contract contains extensive lists of the plant and equipment, furniture and fittings to be supplied. In addition to these physical assets, you will supply non-physical assets such as your website, booking systems, email and social media addresses.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 38-325