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Tuesday, 9 June 2015

GST treatment of selling a business as a going concern

Generally, the sale of a business is a taxable supply and subject to GST.
However, if the sale is a supply of a going concern, it is treated as a GST free supply.

As a result, the seller does not have to charge 10% GST on top of the selling price.

The sale of a business as a going concern is GST free if all of the following apply:
  • The sale includes all things necessary for the business to continue operating, such as inventory and equipment; 
  • The business is carried on up until the day of sale;
  • The sale is for a consideration;
  • The purchaser is registered, or required to be registered for GST; 
  • Before the sale, the seller and the purchaser have agreed in writing that the supply is of a going concern
Stamp duty can be minimised on the sale of a business as a going concern because it is calculated based on the gross selling price, inclusive of GST.
For more information, click here.

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