Division 38-J of the GST Act provides that the supply of a going concern is a GST free supply.

Division 38-J states that in order for a supply to represent the supply of a going concern, the supply must be for consideration, the recipient of the supply must be registered for GST, and the supplier must supply all things necessary for the continued operation of an enterprise.

In any given transaction therefore, the key question often becomes whether the supplier is supplying the recipient all things necessary for the continued operation of an enterprise. GSTR 2002/5 outlines the ATO’s views on this issue.

The supply of business premises is a key component relating to the supply of a going concern. On this point, GSTR 2002/5 makes some important statements relating to the supply of premises.

Where the business that is being supplied is required to be conducted from customised premises (eg a manufacturing business with assembly-lines), the particular business premises from which the business is conducted will need to be supplied (by sale or lease) together with the business in order for the supply to represent a going concern.

Where the business is not required to be conducted from customised premises but nevertheless is still a type of business that needs business premises to operate from (eg a retail clothes store), business premises still need to be supplied (by sale or lease) with the business in order for the supply to represent a going concern.

In GSTR 2002/5, the ATO state that where the recipient is not supplied with business premises as part of the transaction (eg due to the recipient intending to operate the business from different premises or due to the recipient intending to operate the business from their own business premises), it is the ATO position that the supply will not represent the supply of a going concern.

GSTR 2002/5 makes it clear that only very limited types of businesses will not need business premises to be supplied in order for the transaction to still constitute a going concern. These will be businesses that operate outdoors (eg a personal training business) or from home.

More information? To find out more, give us a call on 1300 023 782 or email team@cdrta.au.

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