MSAUS Pty Ltd as the Trustee for the Melissa Trust and Commissioner of Taxation (Taxation)

MSAUS Pty Ltd as the Trustee for the Melissa Trust (the taxpayer) and the Commissioner of Taxation (the Commissioner) were parties to a dispute before the Federal Court of Australia. The dispute concerned whether the sale of an apartment, which was subject to an existing lease, constituted a GST-free supply of a going concern. The taxpayer had entered into a written agreement for the sale, which included provisions for the application of the margin scheme in the event the transaction was a taxable supply.

The primary legal issue before the Court was whether the sale of the apartment, encumbered by a lease, qualified as a GST-free supply of a going concern under the *A New Tax System (Goods and Services Tax) Act 1999* (Cth). This involved interpreting the terms of the sale agreement and considering the effect of a subsequent Deed of Rectification on the characterisation of the supply. The Court also had to determine whether the conditions for applying the margin scheme were met, specifically whether the agreement to apply the margin scheme was made on or before the making of the supply.

Deputy President McCabe P found that the sale of the apartment, while subject to a lease, did not meet the requirements for a GST-free supply of a going concern. His Honour reasoned that the essential elements of a going concern, namely the carrying on of an enterprise with a view to profit, were not sufficiently established in relation to the apartment itself at the time of sale. The Court considered the contractual terms and the Deed of Rectification, concluding that the rectification did not alter the fundamental nature of the supply in a way that would render it a going concern. Furthermore, the Court determined that the conditions for the margin scheme were not satisfied as the agreement to apply it was not made on or before the supply was made.

The decision of the Administrative Appeals Tribunal was set aside and substituted with orders that the sale of the apartment was not a GST-free supply of a going concern and that the margin scheme was not applicable.