When selling your property, there is a possibility that the sale will be subject to tax implications payable by the Vendor. GST is a tax payable by a Vendor and it is the Vendor who has the liability to pay it.
Of course, not all Vendors are liable to pay GST. A Vendor is only liable to pay GST if the Vendor is registered for or ought properly be registered for GST. A key test in determining if a Vendor ought properly be registered for GST is to ask if the transaction in question is undertaken in the course of or furtherance of an enterprise.
The sale of most items in our economy are subject to GST. However, exemptions include a going concern (meaning an ongoing active business) or real estate sold in conjunction with the sale of a going concern. The sale of a going concern takes place when a Vendor sells the business which includes all items required to continue with the business (plant, equipment, business name, premises etc).
As per the ATO, a sale of a going concern is GST-free is all of the following apply:
payment is made for the supply;
the Purchaser is registered (or required to be registered) for GST;
the Purchaser and Vendor have agreed in writing that the sale is of a going concern;
the Vendor supplies all things necessary for the continued operation of the business; and
the Vendor carries on the business until the day of supply.
Prior to entering any contract with GST implications, we urge clients (especially those with development or commercial aspirations) to obtain advice from their accountant or tax advisor in regard to all matters relating to GST and, of course, taxation and structuring issues.
At ASAP Lawyers we understand that stress and anxiety can sometimes be related to the settlement process in conveyancing transactions. We try to make your journey easy! Our firm endeavours to provide guidance and comprehensive communication with our clients during the entire settlement process.
If you have a conveyancing matter you’d like us to assist you with, please contact us on PH: 9450 9400