GST treatment in the sale of stock
Scenario:
I completed a contract for the sale of the company (which I own all the shares). The contract contains several requirements for the consideration to be paid, including the sale of the goodwill and other adjustment factors. It also contains a clause that stock will be transferred to the purchaser based on a two-monthly report on the usage of the stock. The total for the stock sold cannot exceed $600,000. The amount excluding GST. Is this stock sale subject to GST or is it part of the sale of a going concern and GST- free?
Explanation:
According to s 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), everything that is transferred as part of the enterprise would be GST-free, including the trading stock. Based on the description of the transaction, it seems that the sale could proceed as a GST- free supply of a going concern.