Sales Of Shares In Partnership

A commercial property is owned as tenants in equal shares by two unrelated parties – me and someone else. Neither of us is registered or required to be registered for GST individually. We are registered for GST jointly to this property. If I sell my interest in the property to an unrelated third party (not related to me or the other person), is it a non-taxable supply by me who is neither registered nor required to be registered for GST? 

 

The sale of a partner’s interest in a partnership is not an out-of-scope supply, as this would result in a dissolution of the old partnership and the establishment of a new one. So, the effect is that all the assets of old partnership are sold to the new partnership and would be a taxable supply. It may be treated as a GST- free supply of a going concern under s38-325 of the GST Act. Even if the sale is treated as a taxable supply, it would only result in a short-term cash flow disadvantage as the new partnership would be entitled to an equal and offsetting input tax credit for the GST payable on the sale.