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Edited version of your written advice
Authorisation Number: 1012740258404
Ruling
Subject: Supply of a going concern
Question
Is the sale by Entity A to Entity B (as purchaser) of the Commercial Property a GST-free supply of a going concern under section 38-325 of the GST Act?
Answer
Yes.
Based on the information provided, the supply of the Commercial Property will be a GST-free supply of a going concern under section 38-325 of the GST Act. This is because, on the completion date, Entity A will be supplying to the purchaser all of the things that are necessary for the continued operation of a leasing enterprise, being the property and the existing (ongoing) Lease.
In addition, the purchaser is registered for GST and Entity A and the purchaser have agreed in writing that the sale is a supply of a going concern.
As Entity A will continue to carry on the leasing enterprise until the sale date the requirements for making a GST-free going concern will be met.
Relevant facts and circumstances
Entity A is registered for GST and will enter into a contract to sell a Commercial Property.
A copy of the proposed sale contract for the Commercial Property has been provided as part of this ruling request.
Entity A and Entity B (as purchaser) will enter into a contract for the sale of the Commercial Property.
Entity B is registered for GST.
Under the contract of sale the purchaser will provide Entity A with monetary consideration.
The contract of sale provides that the Commercial Property is sold subject to a Lease. A copy of the Lease is attached to the contract of sale which has been provided as part of this ruling request.
The Lease is between Entity A (as Lessor) and Entity C (as Lessee) and has a commencing date of 30 June 2014.This is an ongoing lease which Entity A will continue till the day of the sale of the Commercial Property.
The special condition of the contract for sale refers to GST and specifies that the parties agree that the sale of the property is a GST-free supply of a going concern.
Relevant legislative provisions
A New Tax System (Goods and Services Tax Act) 1999 38-325