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Edited version of your written advice
Authorisation Number: 1012701768461
Ruling
Subject: GST and creditable acquisitions
Question
Will your acquisition of a commercial property be a creditable acquisition under section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No
One of the requirements to be satisfied for you to make a creditable acquisition is that the supply to you is a taxable supply. In this case the supply to you is a GST-free going concern. As such you have not made a creditable acquisition.
Relevant facts and circumstances
You have entered into a contract to purchase a commercial property for consideration of a specified amount plus applicable GST.
The contract provides that both parties agree to treat the transaction as a sale of a going concern pursuant to section 38-325 of the GST Act subject to the purchaser obtaining a private binding ruling confirming section 38-325 applies to the transaction.
Both parties are registered for GST.
At the date the contract was signed, the property was occupied by a related entity of the vendor for the purposes of operating its business.
Prior to settlement, the related entity vacated the premises and the vendor entered into a six month commercial lease with another party.
In the case the sale is a supply of a going concern, the vendor will carry on the enterprise until the contract completion date.
You will acquire a reversionary interest in the property upon settlement and assume the obligations and entitlements under the existing lease agreement.
You will acquire the property solely for a creditable purpose.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999
Section 9-5
Section 11-5
Section 11-15
Section 11-20
Division 38
Section 38-325