The concept of the "going concern" exemption for GST
purposes can still cause confusion when businesses are sold,
despite the fact this exemption has been in place for many years. A
"going concern" refers to an enterprise's ability to
continue trading, with the sale of that business generally eligible
to be GST-free if the enterprise is deemed as such.
Broadly speaking, the GST law states that a "supply of a
going concern" occurs when:
- a business is sold, and that sale includes all of the things
that are necessary for the business to continue operating, and
- the business is carried on, "up until the day of
sale".
The GST exemption has its advantages — a purchaser of a
business does not have to find extra funds to cover an additional
amount to cover GST, which would be added to the agreed purchase
price. Further, if they are registered for GST they would typically
be entitled to claim an input tax credit, which in some cases
cannot happen until some time
