Is a turnkey operation considered a going concern and therefore exempt from GST?
An enterprise will be considered a going concern where it satisfies two major criteria. Firstly, the vendor must supply to the purchaser all of the things that are necessary for the continued operation of an enterprise. This suggests an ongoing operation however most turnkey operations have not commenced. Most turnkey operations would not satisfy this criterion. Secondly, the vendor must carry on the enterprise until the supply is made, whether or not as a part of a larger enterprise carried on by the vendor. This is unlikely to be satisfied by a franchisor. However you should note that you must satisfy all of the criteria at section 38-325 for the transaction to be a supply of a going concern. Further clarification of this issue has been sought from the Australian Taxation Office.
