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Edited version of your written advice
Authorisation Number: 1012826208777
Date of advice: 19 June 2015
Ruling
Subject: Going Concern - supply of premises
Question 1
Is your supply of the premises a GST-free supply of a going concern for the purpose of section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999?
Answer
No
Relevant facts and circumstances
You are registered for GST.
You own Property.
You granted leases in respect of the Property.
You entered into an arrangement which granted:
• Other leases
• An option to take a further lease and
• Other exclusive rights
Under the arrangement a payment being $x plus GST was required.
The Completion Date means ddmmyyyy.
The arrangement was completed on or around ddmmyyyy.
On ddmmyyyy you received payment of $x including GST.
At the time of entering into the arrangement and at completion date there was no agreement in writing between you and the recipient that the supply was of a going concern.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 and
A New Tax System (Goods and Services Tax) Act 1999 Section 38-325.
Reasons for decision
In this ruling, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) unless otherwise specified.
Subdivision 38-J provides that, if certain conditions are satisfied, a supply of a going concern is GST-free. This means that, in the case of a supply which would otherwise be a taxable supply, or an input taxed supply, the supply is GST-free if it is supplied under an arrangement for the supply of a going concern.
Subsection 38-325(1) provides that the supply of a going concern is GST-free if
a) the supply is for consideration
b) the recipient is registered or required to be registered for GST, and
c) the supplier and the recipient have agreed in writing that the supply is of a going concern.
The term 'agreed in writing' means that the supplier and the recipient have made a mutual declaration in such form that clearly evidences that they agree that the supply is a 'supply of a going concern'. This agreement between the supplier and the recipient must be made on or before the day of the supply. (See paragraphs 181 and 182 of Goods and Services Tax Ruling GSTR 2002/5 GST: when is the 'supply of a going concern' GST-free? (GSTR 2002/5))
As there was no agreement between you and the recipient at or before making the supply that the supply is of a going concern, the requirements of subsection 38-325(1) are not satisfied and the supply is not of a going concern.
As this requirement has not been satisfied it is not necessary to consider whether the other requirements of Subdivision 38-J have been met.