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