Issue
Is entity A, a company, making a supply that is not a taxable supply pursuant to section 90-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it makes a supply of its assets to another company, entity B, in the course of an amalgamation with entity B?
Decision
Yes, entity A is making a supply that is not a taxable supply pursuant to section 90-5 of the GST Act when it makes a supply of its assets to another company, entity B, in the course of an amalgamation with entity B.
Facts
Entity A is a company. Entity A is amalgamating with another company, entity B. In the course of the amalgamation, entity A supplies all of its assets to entity B.
Entity B will be the single company that results from the amalgamation. Entity B is registered for goods and services tax (GST) and will remain registered for GST after the amalgamation.
Entity A is registered for GST.
Reasons for Decision
Section 90-5 of the GST Act sets out the circumstances when a supply, made in the course of a company amalgamation, is not a taxable supply.
Under subsection 90-5(1) of the GST Act, a supply made by an 'amalgamating company' to an 'amalgamated company', in the course of amalgamation, is not a taxable supply if the amalgamated company is registered or required to be registered for GST immediately after the amalgamation.
In the context of an amalgamation, section 195-1 of the GST Act defines the term 'amalgamating company' to mean any company that amalgamates with one or more other companies under the amalgamation. In this case, both entity A and entity B are amalgamating companies.
Under section 195-1 of the GST Act, the term 'amalgamated company' is also defined in the context of an amalgamation to mean the single company that results from and continues after the amalgamation. This single company may be one of the amalgamating companies or it may be a new company. In this case, the 'amalgamated company' is entity B as it is the single company that will result from this amalgamation.
Therefore, a supply by entity A, an amalgamating company, to entity B, the amalgamated company, in the course of the amalgamation is not a taxable supply if entity B is registered or required to be registered immediately after the amalgamation.
In this case, entity B is registered for GST and will remain registered for GST after the amalgamation. Therefore, entity A is not making a taxable supply pursuant to section 90-5 of the GST Act when it makes a supply of its assets to entity B in the course of an amalgamation with entity B.