1051374342014 | Legal database

Disclaimer
This edited version has been archived due to the length of time since original publication.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: 1051374342014

Date of advice: 22 May 2018

Ruling

Subject: Goods and services tax - sale of a going concern

Question

Are the supplies made by the trustee for the trust (you) under the Sale Agreement the supply of a GST-free going concern?

Answer

Yes

Relevant facts and circumstances

You are registered for GST.

The purchaser is registered.

You operated a medical practice up to the sale completion date

You entered into an arrangement to provide the assets, authorisations, property and equipment leases, together with specialist doctors services for the continued operation of the practice

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5

A New Tax System (Goods and Services Tax) Act 1999 Section 9-30

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

Reasons for decision

All legislative references in this Ruling, unless otherwise stated are to A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The relevant legislative provisions are discussed below.

Section 9-5 defines a taxable supply as:

9-5 You make a taxable supply if:

(a). you make the supply for *consideration; and

(b). the supply is made in the course or furtherance of an *enterprise you *carry on; and

(c). the supply is *connected with Australia; and

(d). you are *registered or *required to be registered.

However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.

(* denotes a defined term under section 195-1)

Paragraph 9-30(1)(a) of the GST Act provides that a supply is GST-free if it is GST-free under Division 38 of the GST Act or under a provision of another Act.

Section 38-325 of the GST Act provides that, if certain conditions are satisfied, a supply of a going concern is GST-free.

Section 38-325 of the GST Act states:

(1) The *supply of a going concern is GST-free if:

(a) the supply is for *consideration; and

(b) the *recipient is *registered or *required to be registered; and

(2) A supply of a going concern is a supply under an arrangement under which:

(a) the supplier supplies to the *recipient all of the things that are necessary for the continued operation of an *enterprise; and

(b) the supplier carries on, or will carry on, the enterprise until the day of the supply (whether or not as a part of a larger enterprise carried on by the supplier)

The requirements of subsection 38-325(1) are met as the sale is for consideration and a clause of the Purchase Agreement provides confirmation for paragraphs (b) and (c)..

You supplied all the assets, authorisations, property and equipment leases together with staff and the specialist doctor’s services for the continued operation of the enterprise. You continued to operate up to the date of completion.

Therefore, the requirements of subsection 38-325(2) are also met and the supply of the medical practice is a GST-free supply of a going concern.

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).