GST on rent under $75000

[Miss V]

Hi everyone,

I have a lease signed for my commercial property that states the rent is $15000 p/a.

The security bond and deposit have been partly paid by installments, worked out on rent ($1250 p/m) plus GST. (total $1375)

The first months rent and the 2nd and 3rd installment of bond are now due and I have only just realised that they are paying a GST component, but I am not registered for GST.

Should I register, or is it easier to rework the payments on no GST included and refund the extra that they have already paid.

Hope this makes sense.

Regards

Verouska

 

[Peterw]

Miss V, at a glance, I would get advice from your accountant. Firstly, you at least must have an ABN. In relation to GST, you need to way how much you pay, compared with how much you would then be able to collect from your customers. No doubt you have done a budget for (what sounds liks a new enterprise) that would help you decide.

 

[Miss V]

Hi Peterw,

I do have an ABN, but haven't registered for GST as I am still under the threshold. Also I don't really want to get involved in GST if I don't really need to.

Will be speaking to my accountant ASAP.

Thanks very much,


V

 

[Blitzkrieg]

Miss V, at a glance, I would get advice from your accountant. Firstly, you at least must have an ABN. In relation to GST, you need to way how much you pay, compared with how much you would then be able to collect from your customers. No doubt you have done a budget for (what sounds liks a new enterprise) that would help you decide.

Huh? GST is not a profit thing... There's no weighing up and budgetting needed. GST is money that the government will collect (through you as an unpaid tax collector).

If your turnover (not profit) is over a certain threshold, you MUST register for GST, but if you are under, you can choose whether to or not.

If you register for GST, your rent charged out goes up by the 10% (which the tenant then claims back on their BAS - so costs them no extra in real terms), and you in turn give that extra 10% to the government all neatly done with a completed BAS form that the government doesn't care to pay you to fill out for their benefit (bitter much?). So for both you and the tenant the result is $0 difference.

However, if registered for GST you do have the advantage of claiming back the GST on the costs you incurred in renting out premises (insurances, maintenance, etc) meaning that as a non-registered entity, you are the "end user" but as a registered entity, you pass the buck onto the tenant. And they then produce an income and pass the GST on aswell.

(If your tenant is not registered for GST then he will pay the rent + GST and he would not be able to claim it back. Sucks to be him, but that's fairly unlikely that he wouldn't be if he's running a business requiring a commercially rented premises.)

So you have to keep your records - which you would do anyway and fill in their quarterly BAS form, but you would probably be slightly better off by being able to claim back the GST on some of your costs.


But speak to an accountant. I'm just a blue-collar tradie.

 

[Peterw]

Blitz, if I read the OP correctly, they are the tenant, so are paying the GST.
My feelings on it effecting there profit, is that if they are paying it on expenses, it increases their expenses. If however they have few GST included expenses, then yes, registering for GST, and then having to charge it, and then do their BAS, the effort may not seem worth while, however if they have a reasonably high GST payment, then it may be worth while, even if they are under the threshold. Just suggesting it may be worth getting advice from some one who know more about the income and expenses that they have budgeted.

 

[Blitzkrieg]

Hi everyone,

I have a lease signed for my commercial property that states the rent is $15000 p/a.

The security bond and deposit have been partly paid by installments, worked out on rent ($1250 p/m) plus GST. (total $1375)

The first months rent and the 2nd and 3rd installment of bond are now due and I have only just realised that they are paying a GST component, but I am not registered for GST.

Should I register, or is it easier to rework the payments on no GST included and refund the extra that they have already paid.

Hope this makes sense.

Regards

Verouska

In red was what made it seem like she was the owner....

But either way, accountant all the way for something like this.

 

[Miss V]

Yes, I am the owner. They are paying me rent + GST. But I don't want the GST....

 

[Luv2Travel]

Yes, I am the owner. They are paying me rent + GST. But I don't want the GST....

Re-pay the GST and re-issue statements to them without the GST. If they are registered for GST they will have been claiming this GST, so they'll have to amend their BAS's and re-pay it to the ATO.

 

[Peterw]

I do apologise for mis reading. Yes refund the GST. Issue them with an invoice each month, quoting your ABN, and showing that the Invoice is GST Free, as you are below the threshold.