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This edited version has been archived due to the length of time since original publication.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

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Edited version of your private ruling

Authorisation Number: 1012415437180

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Ruling

Subject: GST and the purchase of a property as a going concern

Question 1

Is the purchase of the Property a purchase of a GST-free going concern?

Answer

No

Relevant facts and circumstances

Entity A signed a contract to purchase a property in Australia as a nominee of entity B (You).

You did not provide an ABN for either entity A or entity B.

You advised that:

      · entity B had no ABN and was not registered for GST

      · both you and the vendor disagreed on whether there was a supply of a going concern

      · because of this disagreement the sale did not proceed and you forfeited your deposit.

The contract does not contain a clause that the supply would be a GST-free going concern.

You obtained an opinion from a barrister where he provides at clause 12 that:

    ….The absence of a sale of business agreement … is ineffective for the purposes of section 38-325 because the contract alone did not amount to, or give rise to, a supply of a going concern.

Relevant legislative provisions

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

Reasons for decision

Section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that for there to be a GST-free supply of a going concern the supply must meet all of the following criteria:

      · There must be a supply for consideration

      · The recipient must be registered or required to be registered for GST

      · the supplier and the recipient have agreed in writing that the supply is of a going concern and

      · the supply occurs 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 a part of a larger enterprise carried on by the supplier).

In your case:

      · there was no supply of the property or the enterprise,

      · nor was the recipient registered for GST

      · nor was there an agreement in writing or an agreement during the sale process that the supply would be a GST free going concern

Therefore as the sale did not proceed, there could not have been a supply by the Vendor of a GST-free supply of a going concern as per section 38-325 of the GST Act.


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