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Ruling
Subject: Goods and services tax (GST): supply of a going concern
Question 1
Was your supply, in your capacity as Receivers and Managers of entity B (Receivers Appointed)(Receivers and Managers Appointed) (Administrators Appointed), of the Assets and the Freehold Land pursuant to the relevant contracts, to entity C (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 (GST Act)?
Answer
Yes your supply, in your capacity as Receivers and Managers of entity B (Receivers Appointed)(Receivers and Managers Appointed) (Administrators Appointed), of the Assets and the Freehold Land pursuant to the relevant contracts, to entity C (the purchaser), is a GST-free supply of a going concern under section 38-325 of the GST Act.
Relevant facts and circumstances
The Vendor carried on a business in Australia. The Vendor operated its business from leased sites and freehold sites in Australia. Its head office was located at one of the leased sites.
You were appointed as joint and several receivers and managers of the Vendor. You executed the contract between the Vendor and Purchaser.
On a specified date, the Vendor and the Purchaser entered into the Deed under which the Vendor agreed to sell and the Purchaser agreed to buy the Assets.
Both the Vendor and the Purchaser are registered for GST. You (the receivers) are also registered in your capacity as receivers and managers of the Vendor.
The supply was for consideration, and you and the recipient have agreed in writing that the supply is of a going concern.
Settlement occurred on a specified date.
The Vendor carried on the enterprise until the day of the supply.
At settlement all essential contracts, plant and equipment were supplied by the Vendor to the Purchaser.
Relevant legislative provisions
Section 38-325 of the GST Act
Reasons for decision
A receiver and manager is a representative for GST in accordance with section 195-1 of the GST Act. You have been appointed as receiver and manager over the assets of the mortgagor and are therefore the representative of the mortgagor. You have also, under the deed of appointment, been appointed as the agent of the mortgagor. As receiver and manager of the mortgagor you would be considered the supplier for the purposes of section 38-325. Therefore provided the requirements of section 38-325 are met, you may make a GST-free supply of a going concern.
A supply of a going concern is GST-free where it meets the requirements specified in section 38-325 of the GST Act.
Subsection 38-325(2) of the GST Act provides that a 'supply of a going concern' is a supply under an arrangement under which:
· the supplier supplies to the recipient all of the things that are necessary for the continued operation of an enterprise; and
· the supplier carries on, or will carry on, the enterprise until the day of the supply (whether or not as part of a larger enterprise carried on by the supplier).
The Vendor carried on the enterprise until the day of the supply. This satisfies paragraph 38-325(2)(b) of the GST Act.
At settlement all essential contracts, plant and equipment were supplied by you, as a representative of the Vendor, to the Purchaser.
Accordingly, paragraph 38-325(2)(a) of the GST Act is satisfied and you are making a supply of a going concern.
Subsection 38-325(1) of the GST Act provides that a 'supply of a going concern' is GST-free if:
· the supply is for consideration;
· the recipient is registered or required to be registered for GST; and
· the supplier and the recipient have agreed in writing that the supply is of a going concern.
The supply is for consideration, the recipient is registered for GST, and you and the recipient have agreed in writing that the supply is of a going concern.
Accordingly, the remaining requirements in subsection 38-325(1) of the GST Act are satisfied and the supply of the going concern is GST-free.
Therefore, you are making a GST-free supply of a going concern under section 38-325 of the GST Act when you supply the Assets pursuant to the relevant contracts to entity C.