• Selling property as part of a GST-free going concern

    When selling a property as part of a going concern, often not all of the criteria for a 'GST-free going concern' are met.

    When you sell a property as part of a going concern, you must do all of the following for the sale to be GST-free:

    • make sure the purchaser is registered for GST
    • agree in writing with the purchaser that the sale of the enterprise is a going concern on or before the settlement date
    • supply all the things necessary for the continued operation of the enterprise to the purchaser
    • carry on your enterprise until the day of sale.

    Property that is part of a sale of a going concern can include:

    • the premises when it is sold together with the assets and operating structure of the enterprise
    • a fully tenanted building where the property and all leases, agreements and covenants are included in the sale.

    Generally, the sale of a property by itself cannot be a going concern.

    If a property is purchased as part of a GST-free supply of a going concern, and the purchaser uses the property for a purpose other than to make taxable sales or GST-free sales, the purchaser may have to make an increasing adjustment. For example, the purchaser uses the property either:

    • to make input taxed sales of residential rent, or
    • for private purposes.

    See also:

      Last modified: 05 Jul 2016QC 21948