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Edited version of your written advice
Authorisation Number: 1051373234602
Date of advice: 19 July 2018
Ruling
Subject: Supply of going concern
Question
Do your leasing activities meet the conditions required for the transaction to be a sale of going concern under section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes.
Based on the information supplied to us, you meet all the requirements of section 38-325 of the GST Act, including that, on settlement date, you will be providing the Purchaser all of the things that are necessary for the continued operation of a leasing enterprise, being the Property and the lease agreement. In addition, you will continue to carry on the leasing enterprise until the day of the supply.
Additionally, there is a clause in the sale contract indicating that you and the Purchaser have agreed in writing that if the sale is the supply of a going concern that on the day of the supply (settlement date), you will be:
● supplying all of the things that are necessary for the continued operation of the current enterprise, inclusive of the Property and assignment of the lease as lessor
● supplying to a Purchaser that is, or prior to settlement will be registered GST
● making the supply for agreed consideration
● supplying under a contract that confirms the sale is a supply of a going concern, and
● having carried on the enterprise until the day of the supply.
This ruling applies for the following periods:
1 July 20XX to 30 June 20XX
1 July 20XX to 30 June 20XX
The scheme commences on:
XX XXXXX 20XX
Relevant facts and circumstances
The Vendor owns a commercial property for sale.
The Vendor is registered for Goods and Services tax (GST).
The Purchaser is X and or Y.
There is an existing XX year lease in place and it is currently leased to Z and will continue to do so under the current lease agreement.
Z will continue to pay rent accordingly while the premises are vacated.
You intend to keep the enterprise of operating the lease until the date of settlement when it will be assigned to the Purchaser to continue as lessor.
The sale contract will record that the sale is of a going concern and both the seller and the purchaser will agree it is a sale of a going concern.
The purchaser will be, or will be required to be, registered for GST.
The sale will be deemed as a sale of a going concern as a result of a requested private ruling:
● if the particulars of sale specify that the supply made under this contract is a 'going concern':
● the parties agree that this contract is for the supply of a going concern; and
● the purchaser warrants that the purchaser is, or prior to settlement will be, registered for GST;
● the vendor warrants that the vendor will carry on the going concern until the date of supply and,
● Purchaser must provide to the Vendor written proof of registration for GST not less than 24 hours prior to the settlement date.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 38-325
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