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GST Free Going Concerns

Published on 25 Nov 2010 | Took place at RACV Club, Melbourne , VIC

The GST-free going concern concession under section 38-325 of the GST Act is an incredibly popular and apparently straight forward part of the GST Act. However its popularity is often driven by the misguided belief that making a supply GST-free is the best outcome. Furthermore, the continuing number of requests by taxpayers for Private Binding Rulings from the Australian Taxation Office indicate the concession is far from straight forward to apply in practice. The commercial clamour for GST-free going concern treatment is understandable as the concession can provide valuable benefits to the recipient of the supply. These benefits include the elimination of GST cash flow issues and, in certain circumstances, a reduction in the stamp duty payable on the transaction. The former benefit being the intention of the GST-free going concern concession, and the latter being the dominant driver in practice.

The GST-free going concern concession is also very interesting from a practitioner’s perspective. While the legislative test is quite short and deceptively simple, a multitude of 'rules' interpreting this test have been adopted almost as gospel. Many of these rules come from the ATO's Public GST Ruling, GSTR 2002/5. In the absence of any substantial court guidance, many practitioners take a pragmatic approach and treat GSTR 2002/5 almost as an extension of the GST Act. There is little interest in fighting the ATO and its rules unless the benefits at stake justify the time, effort and cost.

This session revisited the legislative rules, and critically analysed the interpretation and extension of those rules in GSTR 2002/5.

Individual sessions

GST-Free going concerns

Author(s):  Bastian Gasser This paper covers:

  • GST-free going concern requirements
  • leasing enterprises
  • various purchasers/suppliers
  • shares
  • risks.
Materials from this session: