Q: A client owns a bed-and-breakfast (B&B) business with four adjacent properties used for guest accommodation. The business makes $200,000 a year. They want to sell the business and properties for $1.6 million ($1.5 million for the properties and $100,000 for the business). Will this sale be subject to GST? Can they get an exemption for selling the business as a "going concern" because the properties are essential for the business?
A:
Cici's analysis is correct. Since the conditions outlined meet the requirements of the GST Act s 38-325, the sale could proceed as a GST-free supply of a going concern. However, this exemption wouldn't apply if the business was run by a different entity from the one that owns the properties. The conditions for a GST-free supply of a going concern are:
- The sale must involve payment (which seems to be the case here).
- The buyer must be registered for GST or required to be registered.
- Both parties must agree in writing that the sale is a going concern.
- The seller must provide everything necessary for the business to continue operating.
- The seller must run the business until the sale date.
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