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Currently auditing a fund that sold a commerical property during the 2023 FY and the contract for sale indicates it is sold as a going concern. The purchaser is another unrelated SMSF. Both parties are registered for GST. The only business that the vendor ran is that of a commercial lease to a third party tenant. What other audit evidence do you suggest is obtained to confirm that the GST treatment is correct?
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Hello David
Thanks for the question.
Where there is a supply under the going concern provisions, that is assumed to be GST-free, the requirements in section 38-325 of A New Tax System (Goods and Service Tax) Act 1999 (GST Act) need to be satisfied.
Broadly speaking, for the supply to be GST-free, it needs to be demonstrated that everything necessary for the continued operation of an enterprise has been supplied. Mindful that enterprise as defined in section 9-20(1)(c) of the GST Act includes a lease in relation to property.
Assuming the contract of sale makes it clear that the lease is to continue once the sale has occurred, it should be sufficient from an audit evidence perspsective to have the contract of sale and the lease documentation between the vendor super fund and the tenant.