This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1051216229392

Date of advice: 14 July 2017


Subject: GST and going concern

Question 1

Is the supply by Vendor of the Property a GST-free supply of a going concern when supplied to the Purchaser?


Yes, the supply of the Property to the Purchaser is a GST-free supply of a going concern.

This is because the supply of the Property to the Purchaser is for consideration, the Purchaser is registered for GST, and both parties have agreed in writing that the sale is a GST-free supply of a going concern. Accordingly, subsection 38-325(1) is satisfied.

Additionally, on settlement date, the Vendor has supplied to the Purchaser all of the things that are necessary for the continued operation of a leasing enterprise, being the Property and the transfer of relevant leases. We are of the view that the Vendor has carried on the enterprise of leasing until the day of supply (settlement) as required by subsection 38-325(2) of the GST Act.

Relevant facts and circumstances

This is a joint private binding ruling and applies to the following two entities and the transfer of a property between them:

    1. Vendor and

    2. Purchaser

The Vendor is the owner of the Property and has been registered for GST during the relevant period.

The Purchaser is an entity established to undertake property investment and management for the purpose of receiving rental income. The Purchaser has been registered for GST during the relevant period.

Both parties entered into a contract of sale under which the Vendor agreed to sell the relevant property (defined below) to the Purchaser in return for cash consideration and the assumption of liabilities pertaining to a contract for the fit-out of the relevant property.

The Property

The relevant property being transferred, henceforth referred to as the Property, and the subject of this ruling for the purpose of applying the GST going concern provisions, is part of a larger complex.

On the land sits a retail and residential building with car parking bays in the basement floor. In one corner of this land is a small parcel on which sits an electricity sub-station. The sub-station supplies electricity to all occupants of the building and the lease regulates access and any works that are required to maintain the sub-station and electricity supply. The Vendor does not derive income from the sub-station lease. A nominal amount of rent of $1.00 per annum is payable only on demand.

The Property is the result of subdivision.

The lots occupy the same land and they have been subdivided vertically, one lot on top of the other. For the purpose of this ruling, only one lot is being transferred.

The subdivision defines the relevant lot as including:

    ● Ground floor, to be fitted out as two separate retail spaces.

    ● Specified number of car parking bays located at the basement floor.

The Property being sold is thus the relevant lot consisting of the above and does not include residential apartments, nor any other floors or car parking bays except those identified above.

The identified enterprise

The Vendor is carrying on an enterprise of leasing the Property. There are two relevant leases.

Concerning the first lease, the Vendor executed an Agreement for Lease with the tenant and the variation of this lease in favour of the Purchaser occurred prior to settlement.

Concerning the second lease, the Vendor executed a lease agreement with the tenant. We are not in possession of a document varying the lease in favour of the Purchaser, however, we are informed by the representative of the Vendor and the Purchaser that the Property is sold subject to this lease.

The parcel occupied by the sub-station forms part of the legal title to the relevant lot and is incidental to that lot and therefore is not required to be separately identified. The sub-station lease does not form part of the identified enterprise because it is leased for consideration of $1 per annum, payable only on request.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 38-325