Private ruling: The sale of a property including lease arrangements as a going concern
Date of advice: 24 May 2019
Published: July 2019
Ruling period: May 2019

Ruling: Q1: Is the purchaser of Property A, which was acquired together with certain leasing arrangements in place, entitled to an input tax credit on the purchase price of the property? | A1: No. The purchaser is not entitled to an input tax credit on the purchase price of the property because the acquisition was not a taxable supply as the sale of Property A is the supply of a going concern that is GST-free under section 38-325 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Relevant facts and circumstances: Both purchaser and vendor are registered for GST. A certain lot of land incorporating buildings and various leases were sold together as a package linked to the same contract and at the same time. The leasing enterprise was already operating and continued to the date of settlement and beyond. The contract of sale stated that both parties agreed that the sale is the supply of a going concern, and that the price of the property was GST exclusive. The facts indicated that all things necessary for the continued operation of the leasing enterprise were provided at the date of settlement.

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

Reasons for decision: Summary: The facts outlined above indicate that all requirements of section 38-325 of the GST Act have been satisfied and that consequently the sale of Property A is the GST-free supply of a going concern and the purchaser is not entitled to an input tax credit on the purchase price of the property.