GST Going Concern Exemption


Seller has a Commercial Premise for Sale (Current occupied as Restaurant).

One PTY LTD owns the Property and one PTY LTD company runs the restaurant but has never paid rent for the 15 years running, as 2 of the 4 shareholders same persons.

A potential purchaser likes to offer price for the premise but does not want to pay plus GST on the sale price, so looking for way to avoid having to add GST to sale price.

The potential purchaser is not registered for GST (nor wants to register) but the seller is registered.

If they sell as a going concern ie – sell the premises with a contingent contact to purchase the restaurant equipment etc – then as i understand won’t pass the requirement as both need to be registered for GST?

The Seller was wondering, as has read if property leased at time of sale then can be sold as a going concern even if buyer not registered, is this the case? and if so could the potential buyer lease the property & restaurant on a 3 month trial to buy and this meet the requirement of not having to be registered for GST if going concern if such scenario is available?


First up the buyer has to be registered for GST to utilise going concern so let’s cross that off right from the start.  For your seller here is the evidence:

Subsection 38-325(1)

The *supply of a going concern is GST-free if:

(a)  the supply is for *consideration; and

(b)   the *recipient is *registered or *required to be registered; and

(c)    the supplier and the recipient have agreed in writing that the supply is of a going concern.

So now let’s look at ways the seller can avoid charging GST.

Did they claim back GST or use a going concern clause when they purchased it?  If not then consider de-registering that company for GST purposes or utilising the margin scheme.

If the seller did pay GST or previously utilised a going concern clause, it may still be attractive to deregister and pay back the GST on the purchase price than have to charge it on the selling price.

Note when a going concern clause is used the buyer is deemed to have received the GST input credit so would still have to pay it back on deregistering.

I trust you are looking into the possibility utilising the CGT small business concessions to have the profit free of CGT and roll lots into super under the small business cap.

Have a question about tax you need answered?

Ask your own tax question here

In addition to the Ask Ban Tacs service, the BAN TACS Accountants group offer a selection of digital products to help you including Getting Your Affairs in Order, The Property Cashflow Calculator and The Capital Gains Tax Calculator.

Visit the BAN TACs Shop