For GST purposes, when you sell a business, you are selling a going concern if you sell to the purchaser all of the things that are necessary for the continued operation of the business and you carry on (or will carry on) the business until the day of the sale.
A sale of a going concern is GST-free if, in general, all of the following apply:
- the sale is for payment
- the purchaser is registered, or required to be registered, for GST
- the purchaser and seller have agreed in writing that the sale is of a going concern.
Selling property as part of a going concern
If you sell property that is part of a GST-free sale of a going concern:
- you are not liable for GST on the sale
- you and the purchaser may be able to claim GST credits on expenses that relate to selling and buying the property respectively – for example, the GST included in solicitors’ fees.
Property that is part of a sale of a going concern can include any of the following:
- the business' premises, when it is sold together with the assets and operating structure of the business
- a fully tenanted building, where the property and all leases, agreements and covenants are included in the sale
- the sale of a partially tenanted building, where
- the vacant part of the building is either being actively marketed for lease or undergoing repairs or refurbishment
- all leases, agreements and covenants are included in the sale.