GST-proposed changes for going concern and farm land sales
29 April 2014
The Federal Government announced it intends to remove the current GST-free treatment for the sale of going concerns and farm land, and provide a reverse charge arrangement. The only time frame given for this change is ‘during 2014’.
While no further details have been given it is expected the changes will be in line with previous recommendations. Those recommendations included:
GST be payable on the sale of going concerns and farm land but the parties will be able to agree for the purchaser to be responsible for the payment. This is known as a reverse charge mechanism.
In order for the reverse charge mechanism to be available:
o the supply will have to satisfy the test for a going concern or farm land, and
o the purchaser must be registered or required to be registered for GST.
If these criteria are not met the reverse charge mechanism will fail and the vendor will be liable for any GST.