Case Study:

Mary and Tony have owned a bookshop in Ryde for many years and their business has been very successful. In January 2020, they were approached by a major competitor to buy the business. Mary and Tony carry on the bookshop business as partners and also own adjacent premises that are used mainly as a warehouse for their trading stock. The potential purchaser is only willing to buy the bookshop, and not the adjacent premises because it already has adequate storage space. Mary and Tony are quite excited about the offer as this will allow them to have a bit of a break after working long hours running the business. They are unsure whether there will be any GST consequences from selling the business.

QUESTION:

(1) Explain the GST consequences arising from the sale of the business.

(2) What steps could be taken by the parties to reduce the GST consequences?

USE AUSTRALIAN LAW AND SECTION TO EXPLAIN THE ANSWER