SMSF owning commercial property

[scientist]

Say my SMSF owns a commercial office and I rent it to my business which is a company entity ABC pty ltd.

1) does ABC need to pay GST along with rent to the SMSF? annual rent is below 75000 and SMSF owns no other commercial property

2) if ABC does in fact need to pay GST along with rent to SMSF, does SMSF need to pass the GST onto govt?

thanks

 

[DaveM]

GST depends on the lessors GST status. If the lessor entity is not GST registered then it cannot charge GST. In which case the lease would be $x per annum net/gross no GST.

Lessee would pay no GST.

 

[D.T.]

1) depends on gst status
2) hell yes

 

[scientist]

What's stopping me from starting a new trustee company or SMSF trust each time I want to buy another commercial property under SMSF to keep the individual rent under 75k per entity?

 

[DaveM]

Why would you want to? You just pass the GST back to the govt

 

[GaryT]

What's stopping me from starting a new trustee company or SMSF trust each time I want to buy another commercial property under SMSF to keep the individual rent under 75k per entity?

Nothing. May also help with land tax. But also need to consider the extra admin costs.

Why would you want to? You just pass the GST back to the govt

There are a few reasons you may not want to be registered for GST. Eliminating GST on a subsequent sale to a non-registered entity (and related reduced stamp duty), saving on paperwork, etc.

 

[Scott No Mates]

What's stopping me from starting a new trustee company or SMSF trust each time I want to buy another commercial property under SMSF to keep the individual rent under 75k per entity?

Avoiding collecting GST isn't going to affect you or the ability to lease a property. It is a cost of doing business for the tenant, it gets passed on to the purchaser of its goods/services at the end of the day. The business calculates its sales price based on its cost of its inputs (prior to gst) then charges gst on top of those. If it doesn't have gst credits (from its inputs) then it has to remit more of its sales price to the govt.

 

[Paul@PFI]

What's stopping me from starting a new trustee company or SMSF trust each time I want to buy another commercial property under SMSF to keep the individual rent under 75k per entity?

There isn't any reason you cannot do this. Except I would imagine a new fund with no assets may struggle to buy any property. A SMSF can have ONE trustee company...You are talking about having two funds. Two lots of costs etc. I have seen others do this but its really only for VERY large funds to split into two....Typical strategy can be a mum fund and a dad fund. Accesses two land tax thresholds etc

The GST when you acquire the property may be a reason to be registered. Even the going concern method requires both buyer AND seller to be GST Registered. And you cant deregister just after a GST claim....