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Edited version of your written advice
Authorisation Number: 1051374342014
Date of advice: 22 May 2018
Ruling
Subject: Goods and services tax - sale of a going concern
Question
Are the supplies made by the trustee for the trust (you) under the Sale Agreement the supply of a GST-free going concern?
Answer
Yes
Relevant facts and circumstances
You are registered for GST.
The purchaser is registered.
You operated a medical practice up to the sale completion date
You entered into an arrangement to provide the assets, authorisations, property and equipment leases, together with specialist doctors services for the continued operation of the practice
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5
A New Tax System (Goods and Services Tax) Act 1999 Section 9-30
A New Tax System (Goods and Services Tax) Act 1999 Section 38-325
Reasons for decision
All legislative references in this Ruling, unless otherwise stated are to A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The relevant legislative provisions are discussed below.
Section 9-5 defines a taxable supply as:
9-5 You make a taxable supply if:
(a). you make the supply for *consideration; and
(b). the supply is made in the course or furtherance of an *enterprise you *carry on; and
(c). the supply is *connected with Australia; and
(d). you are *registered or *required to be registered.
However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.
(* denotes a defined term under section 195-1)
Paragraph 9-30(1)(a) of the GST Act provides that a supply is GST-free if it is GST-free under Division 38 of the GST Act or under a provision of another Act.
Section 38-325 of the GST Act provides that, if certain conditions are satisfied, a supply of a going concern is GST-free.
Section 38-325 of the GST Act states:
(1) The *supply of a going concern is GST-free if:
(a) the supply is for *consideration; and
(b) the *recipient is *registered or *required to be registered; and
(c) the supplier and the recipient have agreed in writing that the supply is of a going concern.
(2) A supply of a going concern is a supply under an arrangement under which:
(a) the supplier supplies to the *recipient all of the things that are necessary for the continued operation of an *enterprise; and
(b) the supplier carries on, or will carry on, the enterprise until the day of the supply (whether or not as a part of a larger enterprise carried on by the supplier)
The requirements of subsection 38-325(1) are met as the sale is for consideration and a clause of the Purchase Agreement provides confirmation for paragraphs (b) and (c)..
You supplied all the assets, authorisations, property and equipment leases together with staff and the specialist doctor’s services for the continued operation of the enterprise. You continued to operate up to the date of completion.
Therefore, the requirements of subsection 38-325(2) are also met and the supply of the medical practice is a GST-free supply of a going concern.