Conditions for the GST-free supply of a going concern


Q: A client operates a bed-and-breakfast (B&B) business. The most significant asset is four adjacent properties that are used to provide the accommodation to guests. Stays are less than 28 days and the business has an annual turnover of $200,000. The client is looking to sell the business and the four properties. Will the sale of the properties ($1.5 million) and business ($100,000) together as $1.6 million be a taxable supply and subject to GST? Can the going concern exemption apply given that the properties are paramount to running the business? In an accountant Cici ’s view, B&B are relatable to hotels and motels, which are deemed by the ATO to be commercial premises. Therefore, the business premises will be commercial residential premises. Because the property is a necessary requirement to run the business and the other criteria of this exemption are met, the sale of the business will be the sale of a going concern and exempt from GST. Does she correct?



Cici analysis are good because the conditions outlined met the GST Act s 38-325, the sale could proceed as a GST-free supply of a going concern. However, this would not be possible if the business was conducted in a separate entity from the one that owns the properties. The conditions for the GST-free supply of a going concern are:

  • The supply must be for consideration (appears in the case)
  • The purchaser is registered or required to be registered for GST
  • The parties agree in writing that the sale is apply of a going concern
  • The seller supplies all of the things necessary for the continued enterprise operation, and
  • The seller carries on the enterprise up to and including the date of sale.

Written by Panbo Ye

I help people discover POWERFUL unknowns in Tax Ideas | Wealth Strategies | Retirement Planning | Finance Solutions!

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