Many business owners aren’t sure and wonder is there GST on sale of an asset (business asset)?
The GST law states a business must remit 1/11th of any income from a taxable supply. A taxable supply is any item not GST free or input-taxed. Examples of GST free items are exports, medical supplies, basic food, plain milk and water.
Examples of input-taxed items are interest and dividends. So if the business receives income from any item, other than these, GST probably applies even though the sale might not be within the normal trading practices of the business.
For example 1/11th of the price received for the sale of a business vehicle must be remitted to the ATO as GST. This is so even if the vehicle has been depreciated, purchased before 1st July 2000 or purchased brand new in 2000/2001 and no input credit was claimable on the purchase. The above also applies to a business selling off some of its plant.
Please note the above refers to income, not funds received by way of a loan. There are special rules regarding the sale of a business. These special rules apply to Goodwill, Plant, Motor Vehicles and Business Premises sold as part a business that is a going concern. It is important to consult an accountant before signing any contract to sell a business without paying GST as the special rules have a few traps.
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