When selling a business you should carefully consider the income tax and GST issues surrounding the sale so that you are pre-empting things in advance.

  • How the asset list that you are buying is valued in the sale price has a direct bearing on how much taxable income arises from the sale of the business.
  • While most business transactions are likely to be zero-rated for GST if they are the sale and purchase of a going concern, care does need to be taken to ensure that what you are selling in fact equates to a going concern. If not, specific care needs to be taken as to ensure the sale price is noted as GST exclusive, so that any GST liability that may arise can be passed on to the purchaser.
  • If the sale transaction is being zero-rated for GST, then we would suggest that you need to make sure that the sale and purchase agreement includes a clause that requires the purchaser’s solicitors to provide an undertaking prior to settlement that the purchaser (or their nominated entity) is formed and GST-registered before settlement date.