It is also appropriate to keep on the agenda the need for a single purchasing entity and a single sales unit to allow the application of the GST exemption from the continued management of the business. Therefore, if significant parts of the business are owned by different companies and each of them sells its respective parts of the business to a buyer, the sale of the business may not be eligible for an exemption from the continuation of the business, although the businesses are related. The Commissioner stated that the parties had not “agreed in writing” that the sale was the delivery of an ongoing group and that the tax invoice and legal declaration were “unilateral documents”. The Commissioner seemed concerned that the applicant could not refer to a document proving a written agreement signed by the buyer – the Commissioner admits that such an agreement should not be included exclusively in the contract of sale. One of the ways to review the Tribunal`s decision is that the buyer who, after receiving the tax invoice and the legal declaration, accepted by conduct that the sale was made by the management of the company. Such an agreement is likely to remain a “written” agreement, as evidenced by the written terms of the tax invoice and legal declaration. It remains to be seen whether the Commissioner has appealed the decision, given that an agreement will only be reached “in writing” if a document proving the agreement is executed by both parties. Notwithstanding the cash flow benefits a buyer obtains and possible stamp duty savings resulting from the “continuation of the business” exemption, the risk that ATO will not consider the transaction to be the supply of a “continuing business” ultimately rests with the seller, because even if the purchase agreement provides that the buyer is responsible for each GST, it is the seller: who is required to transfer the GST to the ATO. The court issued its decision on Friday in the decision in SDI Group Pty Ltd and Commissioner of Taxation  AATA 763, in which it stated that the plaintiff (seller) and the buyer of commercial real estate had satisfied the requirement that the parties agree that the sale was a delivery of the pending business, although such an agreement is not provided for in the contract of sale. It is important that what the parties consider “necessary” may not always be sufficient to convince the ATO that the sale is considered viable. We recently acted for the buyer of a mortgage brokerage based in the outer suburbs.
The business was almost exclusively run by phone and online, and there was little or no goodwill to locate with the leased premises from which it operated. The buyer had already operated a mortgage brokerage business from the city and felt it was easy to manage the new business from its existing premises. Believing that the leased premises were not essential to the business, the parties were surprised to learn that the sale would not be considered a pursuing business unless the buyer agreed to an assignment of the existing lease. . . .