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Edited version of private advice
Authorisation Number: 1052275984342
Date of advice: 13 August 2024
Ruling
Subject: GST and sale of a going concern
Question
Is the sale of the Property with the lease intact 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.
Based on the information provided, the sale of the Property with the lease intact to the Purchaser is a GST-free supply of a going concern as it meets all the requirements of section 38-325 of the GST Act as follows:
• you sold the Property for consideration
• the Purchaser has been registered for GST since ddmmyyyy
• you and the Purchaser agreed in writing that the supply is of a going concern
• you sold the Property to the Purchaser with the lease intact, and
• you carried on the leasing enterprise until the date of settlement.
This ruling applies for the following period:
ddmmyyyy to ddmmyyyy
Relevant facts and circumstances
You purchased the Property on a specified date.
The sale of the Property to you was treated as a taxable supply on which GST was paid without applying the margin scheme.
The Property was a vacant land with no existing structures or developments other than a fence surrounding the land. The land size is X sqm.
You acquired the Property with the intention to develop residential units on the Property. A Planning Permit was granted on a specified date for development of the residential units.
On a specified date, you and the Purchaser executed a contract for the sale of the Property (Contract) under which you were to sell the Property to the Purchaser.
The Contract includes the following relevant terms and conditions:
• The Purchaser purchases the Property subject to the lease granted pursuant to the Contract.
• The sale of the Property is a supply of a going concern.
On a specified date, you and the Lessee executed the Lease. The key terms of the Lease, as noted in the Schedule to the Lease, are as follows:
• The commencement date of the Lease is a specified date, with a term of X months.
• The Lease is over the entire of the Property.
• The Lessee may use the Property for the specified purposes.
• Rent is payable at a rate of $X (inclusive of GST) per annum, being $X (inclusive of GST) per calendar month.
• Rent is payable monthly in arrears.
Settlement for the sale of the Property occurred on a specified date.
You received rental income and issued invoices for the lease of the Property until the settlement date.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 38-325