If you own and lease out commercial property, understanding your GST and BAS obligations is key to staying compliant and managing your finances well. Unlike residential landlords, commercial property lessors often deal with GST on rent and outgoings, which means you may need to register for GST and regularly lodge Business Activity Statements (BAS).
When Do You Need to Register for GST?
You must register for GST if your annual turnover from the property business (including rent and other income) is $75,000 or more. Once registered, you’ll be required to:
- Charge GST (10%) on commercial rent and outgoings billed to tenants.
- Lodge BAS (usually quarterly) to report the GST you’ve collected and claim credits on GST paid for property expenses.
If your rental income falls below this threshold, and you don’t voluntarily register, you won’t need to charge GST or lodge BAS.
Charging GST on Commercial Property
As a commercial lessor, the rent and recoverable expenses you charge tenants generally include GST. This includes:
- Rent payments
- Outgoings such as council rates, insurance, cleaning, and maintenance fees
Make sure your lease agreements clearly state that these amounts are GST-inclusive, so tenants know what to expect.
Claiming GST Credits
One benefit of registering for GST and lodging BAS is that you can claim GST credits on many expenses related to your commercial property, including:
- Property management fees
- Repairs and maintenance paid by you rather than the tenant
- Insurance premiums
- Professional services (accounting, legal)
Keep all tax invoices and receipts as evidence for your BAS lodgment.
Important BAS Compliance Tips for Commercial Lessors
- Stay on top of deadlines. Late BAS lodgments can lead to penalties and interest charges.
- Separate residential and commercial income. If you own mixed-use properties, only the commercial part is subject to GST and BAS reporting.
- Apportion expenses carefully. Ensure you only claim GST credits for expenses related to your commercial property activities.
- Review lease agreements regularly. Changes in lease terms may affect your GST and BAS obligations.
What About Selling Commercial Property?
- GST may be exempt if selling as a Going Concern meeting all eligibility requirements. Otherwise GST may apply to the sale price, meaning you’ll need to report and pay GST via your BAS.
- The margin scheme can sometimes reduce the GST payable. * eligibility tests applies.
- Your selling expenses, such as the real estate agent’s commission and legal fees, can have the GST charged in them claimed back via your BAS.
Final thoughts
Being a commercial property lessor means more than just collecting rent — you also have important GST and BAS responsibilities if your income hits the registration threshold. Charging GST correctly, claiming the right credits, and lodging your BAS on time keeps you compliant and helps you manage cash flow effectively.
We’re here to help
At Chan & Naylor, our experienced accountants guide you through the complexities of BAS and GST compliance—whether you’re new to the process or managing multiple properties or businesses.
About Chan & Naylor
Since 1990, Chan & Naylor has partnered with business owners and property investors in managing their taxes and building a tax-effective wealth. Choosing Chan & Naylor means you’re not just selecting a service provider; you’re gaining a partner aligned with your financial goals. You’ll have access to a dedicated client manager supported by a team of accountants that specialises in business and property tax.
Disclaimer
This article serves as general information only and may not account for the unique circumstances of individual readers. For personalised and strategic solutions tailored to your specific situation, we invite you to seek professional advice from Chan & Naylor. Our highly experienced team is dedicated to helping you navigate the complexities of Australian taxation, ensuring that your financial strategies align with the latest regulations. Contact us today to embark on a path of informed and customised tax planning for your property investments.
