I was asked today the very good question “Does the sale price of a business include GST and is GST payable?”
(For the non Australian readers, GST is our Goods and Services Tax (10%) collectable by the vendor or service provider on most things – there are exceptions but not worth going in to here.)
The answers are “No” and “No” – if the business is sold as a “going concern.”
The sale of a business as a going concern is GST free if:
- everything for the business’ continued operation is supplied to the buyer
- the seller carries on the business until the day it is sold
- the buyer is registered or required to be registered for GST
- the sale is for payment
- before the sale, the buyer and seller agree in writing that the sale is of a going concern.
Example: Selling a business
You are registered for GST and you sell your florist business. The sale includes the shop, delivery vehicle, stock, equipment and all the other things necessary to continue operating the business. You continue to operate the business until the buyer takes over, the buyer is registered for GST, and you and the buyer have agreed in writing that the sale is of a going concern. This is a GST-free sale.
Always consult your accountant for a definite ruling on the sale of your specific business!
Learn about this and a lot more at my next half day workshop CLICK HERE for details.
Committed to helping business owners realise their life’s goals through buying and selling businesses