When you’re selling a business as a going concern, it means you are selling everything that’s necessary for the continued operation of that business.
It also means that you will continue running the business until the day of the settlement.
According to the Australian Taxation Office, property that is part of a going concern sale can include the following:
- the business property, when sold together with the assets and operating structure of the business.
- a fully tenanted building, where the property and all leases, agreements and covenants are included in the sale.
- a partially tenanted building, where the vacant part of the building is either actively marketed for lease or undergoing repairs or refurbishment.
- all leases, agreements and covenants are included in the sale.
The sale of a property by itself isn’t regarded as a going concern.
And if you have employees, it’s important to remember that they too will be part of any going concern sale.
So, make sure you keep your employees up to date with whatever changes are happening, as that will give them the chance to decide whether to stay with the business, or look elsewhere for new opportunities.
The sale of a business as a going concern can be GST-free, if it meets the following requirements:
- The sale is for payment.
- The purchaser is registered or required to be registered for GST.
- The purchaser and seller have agreed in writing that the sale is of a going concern.
If property is part of a GST-free sale of a going concern, it’s also important to remember:
- you’re not liable for GST on the sale.
- you and the purchaser may be able to claim GST credits on expenses relating to your sale or purchase of the property.
Buying or selling any business, either as a going concern or otherwise, comes with several rules and risks. It’s vital that you receive the best legal advice to help you navigate the sale.