Item 1: Goods and services tax
1.1 Disposing of capital assets
There may be goods and services tax (GST) implications when you dispose of your capital assets.
You need to know how to account for the GST when disposing of capital assets.
1.2 Margin scheme
The margin scheme is an alternative method of calculating the GST payable when you sell real property as part of a business.
You may need more information if you are selling or buying property and the seller asks you to sign an agreement in writing for the margin scheme to apply.
For more information about GST, refer to GST essentials.
1.3 Sale of a going concern
The sale of a going concern, such as a continuing business, is GST free if certain conditions are met. 'GST free' means no GST is payable. However, as the seller, you may be able to claim input tax credits for GST you paid on expenses relating to the sale.
To work out whether the sale of a business meets the requirements of a 'supply of a going concern', refer to Goods and Services Tax Ruling GSTR 2002/5.
The sale is a financial supply if your business is a:
- company and you sell its shares
- trust or partnership and you sell the underlying interests in the trust or partnership.
These types of sales are 'input taxed' if you exceed the financial acquisitions threshold.
An input-taxed supply means no GST is payable and you cannot claim input tax credits for GST expenses relating to the sale.
To work out whether you exceed the financial acquisitions threshold, refer to Goods and Services Tax Ruling GSTR 2003/9.
If the sale of your business is input taxed, you may need to apportion the amount of input tax credits you can claim. Goods and Services Tax Ruling GSTR 2006/3 provides guidance on apportionment methods you may use.
If you do not exceed the financial acquisitions threshold, the sale is treated as if it was GST free and you will be entitled to full input tax credits.