Going concern

A going concern is a business, or a commercial property with tenants and leases in place, sold as an operating whole rather than as a bare asset, and the sale of a going concern can be GST-free where specific conditions in the tax law are satisfied, which is a matter to confirm with an accountant on each transaction rather than assumed.⚠ For a purchaser of an income-producing commercial property, buying it as a going concern, with existing leases, tenants and often the property manager's arrangements intact, is common and generally simplifies both the transaction and the immediate income position compared with buying a vacant asset. Lenders financing a going-concern purchase will look at the existing lease terms, tenant covenant and WALE as part of assessing the property's income, much as they would for any tenanted commercial asset. Whether a specific sale genuinely qualifies as a going concern for GST purposes depends on satisfying the relevant conditions at settlement, and this should be confirmed by the parties' respective accountants before the contract is finalised.

Related

Commercial property loans · GST margin scheme · WALE