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Edited version of your written advice
Authorisation Number: 1012744743255
Ruling
Subject: GST and a going concern
Question 1
Was the sale of the commercial property (Property) by you a GST-free supply of a going concern under section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes, the sale of the Property was a GST-free supply of a going concern as all the conditions in section 38-325 of the GST Act were met.
Relevant facts and circumstances
• You are registered for goods and services tax (GST).
• You entered into a contract of sale, for the sale of the Property for consideration.
• You carried on a leasing enterprise in respect of the Property.
• The Property has a car park in the basement and the ground floor and first floor are both commercial offices and is fully leased to various tenants.
• The ground floor is leased to various tenants.
• The first floor is leased to separate individuals. These individuals are not themselves the owners of the Property.
• Settlement was completed. You have supplied to the ATO a copy of the settlement statement.
• The contract of sale states that 'You and the Purchaser agree that the sale of the Property will be a GST-free supply of a going concern'.
• It was also agreed that the leases is in place at the time of settlement will be assigned to the purchaser at that time.
• The purchaser has advised you that they are registered for GST.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 (GST Act) Section 38-325.
Reasons for decision
Based on the information you provided, under section 38-325 of the GST Act your 'supply of the Property as a going concern' will be GST-free because, on settlement date, you:
• supplied all of the things that are necessary for the continued operation of the leasing enterprise, including the building and leases,
• to a purchaser who is registered for GST, for agreed consideration,
• under a contract that confirms your mutual written agreement the sale is a supply of a going concern and
• you carried on the leasing enterprise until the day of the supply (settlement date).
Note: If the details of your arrangement are not correct or have changed all of the requirements of section 38-325 of the GST Act may no longer be satisfied. The sale of the Property would then not be a GST-free supply of a going concern, and would become a taxable supply subject to GST.
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