Statement of facts

A, who is a non-registrant dentist, has agreed to sell all the assets of his dental practice to dentist B who is also not registered for GST purposes. The closing of the sale will take place on March 15, 1995. The assets sold by A are as follows:

– dental supplies including various articles like crowns and caps;

– equipment and furniture;

– goodwill; and

– leasehold improvements

A previously acquired the above assets for use exclusively in the provision of exempt dental services, and in fact did not make any taxable supplies.

Ruling Requested

A is not required to collect and account for GST on the sale of the above business assets.

Ruling Given

Provided that the preceding statement constitutes a complete and accurate disclosure of all the facts, proposed transaction, and provided that the proposed transaction is completed as described above, our ruling is as follows:

The sale of dental supplies as well as equipment and furniture will not be subject to GST pursuant to paragraph 141.1(1)(b) of the Excise Tax Act. Furthermore, under section 167.1 of the Excise Tax Act, the consideration allocated to goodwill will not be included in calculating GST payable. However, A must collect and remit GST on the sale of the leasehold improvements since it is a taxable supply of real property. On the other hand, A will be eligible for a rebate under section 257 of the Excise Tax Act for the GST paid on the acquisition of, and improvements to the real property.

This ruling is given subject to the limitations and qualifications set out in GST Memoranda Series (1.4) issued by Revenue Canada and is binding provided that this proposed transaction (i.e., sale closing on March 15, 1995) is completed prior to June 15, 1995.

This ruling is based on the Excise Tax Act in its present form and do not take into account any proposed amendments to the Act which, if enacted, could have an effect on the ruling provided herein.

Due to the general nature of the bulletin, it should not be relied upon as legal or tax advice.