Does commercial rent ALL include GST?

I can't seem to find the ruling on the ATO website, but if I remember correctly... If the owner is registered for GST, or is required to be registered, then GST is payable by the owner and is therefore payable by the tenant.

For eg, one of my owners has a property in her personal name and she earns less than the threshold ($75k now?) so she doesn't have to charge GST on the rent for this property. The properties she owns in her various other entities are GST applicable though.

Hope this helps!
 
Rent & GST

No. Commercial rent does not always have to include GST. The GST treatment is dependent upon the GST situation of the "landlord". That said, the tenant may influence that decision "if" there is one.

A landlord is required to be registered for GST if their annual taxable "supplies" (ie rent) exceeds $75,000. If annual rent projected forward is to be $80,000 the landlord needs to register for GST from day 1 and not only once they exceed the $75K threshold. This turnover threshold is a strange beast and the "enterprise" that the landlord operates should be considered and not just an individual lease. Some examples:
1. Landlord personally owns a strip of 3 shops. Each has annual rent of $50K. Threshold is exceeded. The strip of shops likely to be an enterprise even if there are three titles.
2. Landlord owns three distinct and seperate shops in 3 locations. Each has rent of $50K. Threshold is exceeded. Distinct titles is not of concern for GST. The landlord has a single business "enterprise".
3. Landlord owns one shop personally. Also has two trusts each with one shop. Each has annual rent $50K. It is possible GST registration is not required as there are three enterprises.
4. Looking back at 3....Lets say the last trust acquired its property using "Going Concern" basis to avoid paying GST on the property purchased. That trust was obliged to be reg'd for GST. So GST must be charged on rent for that trust. It cannot deregister after purchase.
5. Then there is a possible complication of a mixed supply. For example a flat above a shop. No GST is charged even if the business is registsred as it is residential rent. And no GST on outgoings (eg repairs) can be claimed on that unit either.

I have seen well meaning clients seek advice of friends who suggest that three ABN's for three properties avoid the threshold problem. No. Fail. This is an area where advice on the acquisition, its structure etc that includes GST would be well advised at the time when the contract is being considered. May save you a fortune.

Then there is the issue of voluntary GST registration. This is perhaps the greater issue...The owner of commercial premises will have a tenant who "expects" the price for rent is GST inclusive so they can claim 1/11th for the input tax credit. GST registered businesses dont look at GST as a cost as it is an outlay they recover on a BAS. They see the cost as 10/11th of the rent. If they cant claim any GST they would argue for a rent reduction of....1/11th. They won't pay above market. Its like buying a second hand car - It has a market price regardless of whether the seller is registered (car yard) or not (private seller).


Paul

http://pricefinancial.com.au/taxation
 
Paul, that is a very well described reply. The only thing I will add, most agents quote rents as both GST exclusive, as well as outgoings exclusive. I have not experienced the issue you raised in your last paragraph.

I did laugh when I read that you have had clients register 3 ABN's to avoid GST. I would have thought that some how that could not happen in the one entity name.

With your para 4. I would have thought, that a non GST registered entity could purchase with a "going concern" clause in a contract from a GST registered seller. My understanding is that the "going concern" clause is to assist the seller not having to remit 1/11th of the sale price on their next BAS. It has no real bearing on the buyer and they can remain non GST registered if their enterprise continues to be under the threshold. Just my thoughts.
 
I would have thought that registration for gst would have been a requirement if you were seeking the going concern exemption as this is a condition to meet exemption. A non-registered party would pay the tax on top of the purchase price.
 
Scott, GST is not paid by the buyer of goods. Its the receiver of funds who has to remit from monies that they receive. The buyer only needs to know what part of the purchase price paid is GST, if they are registered, and wish to claim back the GST with their next BAS. If you are not registered, you do not get to claim the GST you pay back. If the purchase does not contain GST, for reason of exemption, then none can be claimed back.
 
GST is paid by the purchaser & required to be remitted by the vendor. If the purchase is for a going concern, the buyer must be registered or required to be registered for gst. law.ato.gov.au/atolaw/view.htm?Docid=GST/GSTR20025/NAT/ATO/00001&PiT=99991231235958
 
I am a tenant on commercial property owned by 4 landlords, who are not GST registered. Even though my business is GST registered I cannot claim any GST on the rent paid. Hope that helps.
As previous threads mention, it depends whether the landlord is GST registered (not the tenant).
 
MIW, I would assume that the rent is under $75,000 per year, and as they are not registered for GST, they would not be charging it, which naturally flows that you cannot claim it back.
 
MIW, I would assume that the rent is under $75,000 per year, and as they are not registered for GST, they would not be charging it, which naturally flows that you cannot claim it back.
Yes, the rent is under and split into 4 owners I presume. However, we never know if they have other holdings so I presume they don't receive above the threshold thus no need for them to be GST registered.
 
MIW, while you are the tenant, I don’t believe that you have any concerns. Based upon the few managements that I have, I understand each are a "concern". It’s this “concern” ie the 4 way partnership, that has to comply with the GST requirements. Whether on individual has another “concern”, that attracts GST, does not matter, I don’t believe there is a connectivity between “concerns”, like there may be say like with land tax. Anyway, just my opinion.
 
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