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This edited version has been archived due to the length of time since original publication.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: 1012935064318

Date of advice: 18 January 2016

Ruling

Subject: GST and going concern

Question

Will the sale of your business to the buyer, under the specified circumstances, be a supply of a GST-free going concern under section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes.

Relevant facts and circumstances

    • You have an Australian Business Number (ABN) and are registered for the goods and services tax (GST).

    • You currently operate a business at the identified premises. You have been operating this business at those premises for a number of years.

    • You are the registered proprietor of the land and you are the owner of the business premises on that land.

    • You intend to sell your trading business but retain the ownership of the business premises.

    • You have identified a purchaser for your business.

    • The purchaser is registered for GST.

    • The sale of your business will be for consideration.

    • You will be selling your business (including the business name, the goodwill and all the equipment necessary for the business) and you will be providing the business premises to the purchaser by way of a lease of the premises to them so that they can continue to operate the business at those premises.

    • You will be operating the business until the date of settlement of the sale of the business; and the lease of the business premises to the purchaser will be effective from settlement.

    • You and the purchaser have agreed in the contract for sale of business that the sale of the business is a going concern.

Relevant legislative provisions

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

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-325(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-325(2)

Reasons for decision

A supply of a going concern is GST-free where it meets the requirements specified in subdivision 38-J of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Subsection 38-325(1) of the GST Act provides that a 'supply of a going concern' is GST-free if:

    • the supply is for consideration

    • the recipient is registered or required to be registered for GST, and

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

Subsection 38-325(2) of the GST Act provides that a supply of a going concern is a supply 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, or will carry on, the enterprise until the day of the supply.

Based on the facts, the conditions in subsection 38-325(2) of the GST Act would be satisfied and the sale of your business would be a sale of a going concern.

Therefore, all the requirements of section 38-325 of the GST Act will be met at settlement and the sale of the business will be a supply of a GST-free going concern.


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