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Edited version of private advice
Authorisation Number: 1051878833769
Date of advice: 3 August 2021
Ruling
Subject: GST and creditable acquisitions
Question
Are you making a creditable acquisition under section 11-5 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) for your acquisition of freehold interests in a property and business interests of the accommodation business conducted on the property?
Answer
No, the acquisition is not a creditable acquisition under section 11-5 of the GST Act. The supply to you as per the contract of sale of land is that of a going concern that has been treated as GST-free by the parties.
Relevant facts and circumstances
You are registered for GST.
On XX XXXX XX, Entity A entered into a Contract of sale of land (Contract) for the purchase of the freehold interests in a property and the business interests which comprised an accommodation business operated from the property.
The consideration for the sale per the Contract is $XX
By way of a sale of real estate nomination form dated XX, you were nominated as the substituted purchaser to take a transfer or conveyance in lieu of the purchaser in respect of the sale.
At the time of the sale the property included:
• xxxxx
• xxxxx
• xxxxx
• xxxxx
• xxxxx.
Under the Contract, the parties agree that the sale is the sale of a going concern. The relevant box in the Contract has been ticked.
The sale settled on XX XXXX XX.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 11-5
A New Tax System (Goods and Services Tax) Act 1999 section 11-15
Reasons for decision
Section 11-5 of the GST Act provides that you make a creditable acquisition if:
• you acquire anything solely or partly for a creditable purpose; and
• the supply of the thing to you is a taxable supply; and
• you provide, or are liable to provide, consideration for the supply; and
• you are registered or required to be registered.
Under the Contract, both the vendor and the purchaser have agreed in writing that the supply of Xxxx Xxxx Xxxx is a supply of a going concern and have treated it as a GST-free supply of a going concern.
As such, the acquisition of the freehold interests and the business interests in the property will not be as a result of a taxable supply to you by the vendor and hence the acquisition does not meet the requirements of section 11-5 of the GST Act. Therefore, the acquisition by you is not a creditable acquisition.