Edited version of private advice

Authorisation Number: 1051801569934

Date of advice: 9 February 2021

Ruling

Subject: Goods and services tax and supply of a going concern

Question

Is the supply of the property at xxx (Property) by Entity X (you) under the proposed contract (Contract) a GST-free going concern under section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, the supply of the Property by you is a GST-free going concern as it meets the requirements under section 38-325 New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Relevantly in this case it is accepted that under the terms of the Contract you will carry on a leasing enterprise and this activity is carried on until the time of the supply. As the remaining conditions in section 38-325 of the GST Act are also met, the supply of the Property under the Contract is GST-free.

This ruling applies for the following periods:

1 July 20xx till quarter ending 30 June 20xx

The scheme commences on:

1 July 20xx

Relevant facts and circumstances

Entity X (you) is registered for GST.

You currently operate a business on property located at xxx (Property).

You (as Proposed Seller) entered into a Put and Call Option Deed (Deed) with a purchaser (Proposed Buyer). The Deed and a proposed contract for the sale of the Property have been provided with the application for the ruling.

The Deed provides the definition of the following:

Call Option means an irrevocable offer by the Proposed Seller to the Proposed Buyer to sell the Property and Business to the Buyer or its Nominee on the conditions specified in the Contract;

Contract means the contract attached to this Deed;

Nominee means a party nominated by the Proposed Buyer as contemplated by this Deed.

Put Option means an irrevocable offer by the Proposed Buyer to buy the Property and Business from the Proposed Seller on the conditions specified in the Contract.

The Deed provides that unless the context otherwise requires, any term used in the Deed will have the same meaning given to that term in the Contract.

The Deed allows for the Proposed Buyer to nominate a Nominee when exercising the Call Option, upon which the Nominee will buy the Property and business under the Contract.

The Buyer under the Contract will be the entity identified as "Buyer". Pursuant to the terms of the Deed, this may be the Proposed Buyer or the Nominee.

The Contract includes special conditions (Special Conditions).

The Special Conditions provides that the Buyer (i.e. the Proposed Buyer or Nominee) acknowledges that you currently operate a business at the Property which will be wound up by the settlement date.

The Special Conditions also provide that the Contract is conditional upon and subject to the Seller entering into a lease of the Property on a month to month basis with the nominee of the Buyer on or before fourteen days prior to the Settlement Date.

For the purposes of the Special Condition the 'nominee' will not be the Buyer under the Contract.

The Special Conditions provides that you and the Buyer agree that the supply of the Property is of a going concern pursuant to section 38-325 of the GST Act and thus GST-free.

Settlement is expected to occur between xxx. The purchase price per the Contract is $xxx.

You have advised that the Buyer will be registered for GST and the time of settlement of the Contract.

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 9-20

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

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)

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