GST Concessions On Small Business Restructure Rollover

Q&A Tax

Question :

When utilising the Small Business restructure rollover to transfer a business from a partnership to a
company

Are there any GST concessions that could be applied to avoid the original entity from charging GST and
the new entity having to claim it back?

 

Answer :

The starting point is to determine whether the company will be providing any consideration for the
transfer of the assets.

If not, then GST should not be triggered as long as the company is registered for GST and would be
able to claim back the GST credits (if GST was triggered). If the company will be providing any
consideration for the transfer of the assets then this would generally trigger a GST liability if the
partnership is registered for GST.

However, in some cases, it will be possible to apply the going concern rules to treat this transaction as
GST-free. In order to apply the going concern rules to the transfer of assets the following conditions
generally need to be met: (a) the vendor must carry on the enterprise until the day of the supply; (b)
the vendor must supply the recipient with all of the things necessary for the continued operation of the
enterprise; (c) the supply is for consideration; (d) the purchaser is registered or required to be
registered for GST; and (e) the vendor and the purchaser agree in writing that the supply is of a ‘going
concern’.

The ATO provides guidance in this area in GSTR 2002/5

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