Private ruling: GST and sale of property
Date of advice: 6 May 2016
Published: June 2016

Ruling: Q1: Will the sale of the real property by the Vendor, pursuant to the Contract for the sale of land, be a GST-free supply of a going concern under section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes.

Relevant facts and circumstances: • The entity (you) is registered for the goods and services tax (GST). • You are the registered proprietor of the specified real property (the Property). • The improvements on the Property consist of a commercial building. • You (Vendor) entered into a Contract for the sale of the Property to a Purchaser, for the specified sale price. • The Purchaser is registered for GST at Completion Date. • The Contract provides that you will supply to the Purchaser all the things necessary for the continued operation of the enterprise being supplied and you will carry on the enterprise until the Completion Date. • The sale is subject to existing tenancies. You will be assigning the Lease operated on the Property to the Purchaser upon the sale of the Property. In relation to existing tenancies, the Vendor must comply with its obligations until Completion Date and the Purchaser must comply with the Vendor's obligations from Completion Date. • You and the Purchaser agree that the supply made under the Contract is the supply of a going concern.

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

Reasons for decision: Summary: A supply of a going concern is GST-free if it meets all the requirements specified in section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). Section 38-325 of the GST Act states: (1) The *supply of a going concern is GST-free if: (a) the supply is for *consideration; and (b) the *recipient is *registered or *required to be registered; and (c) the supplier and the recipient have agreed in writing that the supply is of a going concern. (2) A supply of a going concern is a supply under an arrangement under which: (a) the supplier supplies to the *recipient all of the things that are necessary for the continued operation of an *enterprise; and (b) the supplier carries on, or will carry on, the enterprise until the day of the supply (whether or not as a part of a larger enterprise carried on by the supplier). (* denotes a term defined in section 195-1 of the GST Act) Based on the facts, the requirements in subsection 38-325(2) of the GST Act will be satisfied at Completion Date. The sale of the Property subject to the existing tenancies will be a sale of a going concern. Subsection 38-325(1) of the GST Act will also be satisfied as the sale of the Property is for consideration; the Purchaser is registered for GST at the time of settlement; and you and the Purchaser have agreed in writing that the supply is of a going concern. Therefore, all the requirements of section 38-325 of the GST Act will be met at settlement and the sale of the Property will be a supply of a GST-free going concern at the Completion Date.