Private ruling: GST and going concern
Date of advice: 16 February 2021
Published: April 2021

Ruling: Q1: Was Entity A's sale of a Development Site to Entity B (the Buyer) a GST-free supply of a going concern under section 38-325 of A New Tax System (Goods and Services Tax) Act 1999 ? | A1: Yes. Entity A's supply of the Development Site was a GST-free supply of a going concern under section 38-325 of the GST Act. This is because, on settlement, Entity A provided the Buyer all of things that are necessary for the continued operation of the property development enterprise, being: • The vacant Development Site. • Planning permit. • Planning approvals. • Constructions drawings. • Novated agreements with various project consultants. • Assigned Agreement for Lease with Entity C. In addition, Entity A continued to carry on the property development enterprise until the day of the supply, including the following activities: • Finalise and issue the Control Plan. • Engage architect to prepare design suite of documentation. • Finalise facility scope, receive Quantity Surveyor advice and manage Town Planning approvals process. The requirements under subsection 38-325(2) are satisfied. Finally, there is a clause in the Contract indicating that Entity A and the Buyer have agreed in writing that the sale is a supply of a going concern, the sale will be for consideration and the Buyer is registered for GST. The requirements under subsection 38-325(1) are satisfied.

Relevant facts and circumstances: Entity A strategically seeks and purchases sites for the purposes of developing those sites by constructing a standalone building or building complex. Entity A (the Seller) entered into a Contract of Sale with Entity B (the Buyer) for the sale of the Property for $X (exclusive of GST) (the Contract) on dd/mm/yyyy. A copy of the Contract has been provided. Settlement occurred on dd/mm/yyyy. The Seller and Buyer are registered for GST. The Property is comprised of two lots: a) Lot A b) Lot B A planning permit has been granted to Entity A for the development of a specific building complex. Entity A and Entity B have agreed that the supply of Lot A will be a supply of a going concern (cl.X of the Contract) and that the supply of Lot B will be a taxable supply (cl.X of the Contract) for GST purposes. Entity A have entered into an Agreement for Lease (AFL) with Entity C dated DD/MM/YYYY to lease a building within the building complex upon completion of the building complex. Entity A have engaged various consultants to provide specific technical advice for the development of Lot A. Entity A will supply the Buyer on settlement: • The vacant Lot A. • Planning permit. • Planning approvals. • Constructions drawings. • Novated agreements with various project consultants. • Assigned AFL with Entity C. The following agreements with the consultants are novated to the Buyer as part of the sale process in accordance with the Novation Agreement (copy provided): Architect (named w) Structural and Civil Engineer (named x) Combined Services Engineer (named y) Building Surveyor (named z) The AFL was assigned to the Buyer via the Purchaser Deed dated DD/MM/YYYY (copy provided). Between entering into the Contract and settlement, Entity A has continued to conduct the specified activities. • Design Team review and approve Building Plans. • Continued involvement in Town Planning Approvals strategy for facility. • Ongoing discussions / design refinement with Architects. • Reviewed planning advice regarding Council's Design Guide. • Prepare Sketch Plan to allow preparation of Control Plan. • Reviewed the Quantity Surveyor estimate for development of the facility. • Held briefing session with Partners to undertake full detailed review of scope and cost for the development. • Design consultation completed for incorporation into Control Plan. • Finalise and issue Control Plan. • Engage architect to prepare design suite of documentation. • Finalise scope, receive Quantity Surveyor advice and manage Town Planning approvals process.

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