GST and Going Concerns – By Anthony Miller Principal Lawyer

On any commercial transaction the question of whether the transaction is a going concern for GST purposes is always raised and considered. Having to come up with that extra 10% on the settlement date can sometimes be a deal-breaker and parties to the transaction often do what they can to invoke the going concern exemption. The ATO’s GSTR 2002/5 as updated provides the required guidance and confirms that the supply of a going concern will be GST free where:-

1. the supply is for a consideration;
2. the recipient is registered or required to be registered for GST purposes; and
3. the supplier and the recipient agree in writing that the supply is of a going concern.

GST and Going Concerns – To be classed as a going concern the enterprise must be continued until the settlement date. The implications of incorrectly labelling a transaction a GST free going concern can be severe, particularly for the Seller who may be required to pay 1/11^th of the settlement amount to the ATO as well as further penalties.

If you’re interested, the full ruling can be found here:-

https://www.ato.gov.au/law/view/document?docid=GST/GSTR20025/NAT/ATO/00001

For further information, please contact Anthony Miller on 07 5444 4750.

Located on the Sunshine Coast, Miller Sockhill Lawyers regularly advise clients on commercial law matters. Contact us today.