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This edited version has been archived due to the length of time since original publication.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

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1012744743255

Ruling

Subject: GST and a going concern

Question 1

Was the sale of the commercial property (Property) by you 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, the sale of the Property was a GST-free supply of a going concern as all the conditions in section 38-325 of the GST Act were met.

Relevant facts and circumstances

    • You are registered for goods and services tax (GST).

    • You entered into a contract of sale, for the sale of the Property for consideration.

    • You carried on a leasing enterprise in respect of the Property.

    • The Property has a car park in the basement and the ground floor and first floor are both commercial offices and is fully leased to various tenants.

    • The ground floor is leased to various tenants.

    • The first floor is leased to separate individuals. These individuals are not themselves the owners of the Property.

    • Settlement was completed. You have supplied to the ATO a copy of the settlement statement.

    • The contract of sale states that 'You and the Purchaser agree that the sale of the Property will be a GST-free supply of a going concern'.

    • It was also agreed that the leases is in place at the time of settlement will be assigned to the purchaser at that time.

    • The purchaser has advised you that they are registered for GST.

Relevant legislative provisions

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

Reasons for decision

Based on the information you provided, under section 38-325 of the GST Act your 'supply of the Property as a going concern' will be GST-free because, on settlement date, you:

    • supplied all of the things that are necessary for the continued operation of the leasing enterprise, including the building and leases,

    • to a purchaser who is registered for GST, for agreed consideration,

    • under a contract that confirms your mutual written agreement the sale is a supply of a going concern and

    • you carried on the leasing enterprise until the day of the supply (settlement date).

Note: If the details of your arrangement are not correct or have changed all of the requirements of section 38-325 of the GST Act may no longer be satisfied. The sale of the Property would then not be a GST-free supply of a going concern, and would become a taxable supply subject to GST.


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