Transfer of Business as a Going Concern- GST Considerations

This is the second part of the article Business Sale as a Going Concern.

Certain supplies of assets pursuant to a transfer of business or part thereof as a going concern are treated as excluded transactions, i.e. they are treated as neither a supply of goods nor a supply of services, in the GST (Excluded Transactions) Order. Hence, GST is not chargeable on the transfer.


Administratively, the Comptroller is prepared to treat a supply of assets to be an excluded transaction if it satisfies ALL the conditions listed below:

(a) The supply of assets is made in relation to a transfer of the business or part thereof to the transferee.

A mere transfer of the assets will not qualify as a transfer of business unless it has the effect of putting the transferee in possession of a business. In general, a “business” is one that carries on continuous activities and therefore is a going concern.

This condition is still satisfied even if the transfer of assets occurs in stages due to commercial reasons, for which the Comptroller acknowledges as valid and genuine.

(b) The assets to be transferred must be intended for use by the transferee in carrying on the same kind of business as the transferor.

The transferor is required to verify the transferee’s intention with regard to the use of transferred assets. The transferee’s intention may be presented via an undertaking, a business contract or a sale and purchase agreement. Where the intention of the transferee is to use the assets for other businesses different from the one the assets are currently employed, the transferor must charge GST on the supply of assets.

(c) If only part of the business is transferred, that part that is transferred must be capable of being operated independently

(d) The business or any part to be transferred must be a going concern at the time of the transfer.

The remaining part of any business not transferred must not cease operations immediately, except for such temporary closure as may be necessary to put the business in operation under the new ownership.

(e) The transferee must be a GST registered person at the time of the transfer.

The transferee has to be registered voluntarily at the date of transfer in order to satisfy the condition.

(f) Both parties must maintain sufficient records on the transferred assets.

The records should provide information on the description and value of each asset or class of assets transferred. In addition, both parties must be able to reconcile the difference of the values of assets before and immediately after the transfer of business with the value of the transferred assets.

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