Edited version of private advice

Authorisation Number: 1051774847869

Date of advice: 11 December 2020

Ruling

Subject: GST and the sale of a going concern

Question 1

Is the supply of the property located at <address> (the Property) by <name>(you) to <name> (the Purchaser) a GST-free supply of a going concern under section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act)?

Answer

Yes, the supply of the Property by you to the Purchaser is the GST-free supply of a going concern under section 38-325 of the GST Act. This is provided the Purchaser remains registered for GST at the time of the supply.

Question 2

If the answer to question 1 is 'no', is the supply of the Property a wholly taxable supply under section 9-5 of the GST Act?

Answer

Not required

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You, <name> of ABN <number> are registered for GST from ddmmyyyy.

According to the ABN Lookup website which is publicly available <name> of ABN <number> is registered for GST from ddmmyyyy.

In this ruling, the expression

• 'you' and 'abbreviated name' refer to the same entity <name> and are used interchangeably.
• 'Abbreviated name' and 'the Purchaser' refer to the same entity <name> and are used interchangeably.

Under the Contract for sale dated ddmmyyyy in relation to the property located at <address> (the Sale Contract), you agree to sell and the Purchaser agrees to buy your rights, title and interests in:

(1)  The Property more particularly described as Lot <number> on SP<number> in Certificate of Title reference <number> (the Land)

(2)  The buildings or buildings erected on the Land and being on the Land as at the contract date (the Buildings)

(3)  The chattels, fixtures, fittings, plant and equipment on the Property at completion except for the exclusions (the Inclusions).

(together the Property)

The exclusions are any chattel, fixture, fitting, furnishing, plant or equipment which is not owned by you, or noted in the Sale Contract as an exclusion.

The Building on the Land is the <name of building>, a <description of the building>. You previously leased all <number> of the available tenancies in the <description of the building> for a number of years. Currently, due to the downturn in the <described industry sector> and the effects of the COVID-19 virus, a number of tenants defaulted or did not renew their leases. At the date of your application for this ruling, <number> of the <number> tenancies are vacant and not tenanted.

The purchase price of the Property is <$> excluding GST.

Settlement is scheduled to take place on ddmmyyyy or an earlier date.

The Sale Contract includes:

(1)  The Purchaser agrees to purchase the Property subject to the leases and any lease document registered after the contract date but before completion.

(2)  The Property will be sold subject to the leases and the Purchaser will accept title to the Property subject to the leases and any matter relating to the leases.

(3)  The vendor will assign to the Purchaser as and from completion, the benefits of all covenants under or contained in the leases and the ancillary documents on the part of the lessees in favour of the vendor.

(4)  Until and including the date of completion, the vendor must comply with its obligations in connection with the leases and ancillary documents, including complying with all obligations as the owner of the Property (whether as a lessor, a licensor or otherwise) under each lease document.

(5)  That from completion the purchaser must comply with vendor's obligation as lessor in connection with the leases and ancillary documents.

(6)  On and from completion, the vendor will assign its right, title benefit and interest in each assignable security and

(7)  On and from completion, vendor will assign or novate all its right, title and interest in any service agreement which is not terminated to the Purchaser provided certain conditions are met.

The Sale Contract includes the service agreement that you entered into with <name> for the property management of the Property. The services include that <name> is to use its reasonable endeavour to ensure that at all times the Property is fully let and tenanted, including seeking new tenants.

<name> has posted 'For Lease' signs on the windows of each of the <number> currently vacant tenancies. <name> will continue to advertise the Property in this manner up to completion.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Subdivision 38J

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-325(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-325(2)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-325(1)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-325(1)(b)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-325(1)(c)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-325(2)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-325(2)(b)

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

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