It’s not uncommon to see ones eyes begin to glaze over at the mere mention of the impact that GST has on commercial real estate transactions.

But … stay with me here…this is NOT another long, jargon filled, hard to read article found on a government website!

Now lets start with a pretty basic piece of information – What is GST?

GST is a Goods and Services Tax .  It is a 10% tax required by law to be added to the sale price of most items that are sold in Australia.

1.  GST on the Sale or Purchase of Commercial Property

When will GST Apply to the Sale of a Commercial Property in Australia?

(other than for commercial residential property such as hotels and caravan parks)
When the seller is registered (or required to be) for GST

When will GST NOT Apply to the Sale of a Commercial Property in Australia?

(other than for commercial residential property such as hotels and caravan parks)

When the seller is NOT registered (or required to be) for GST or
When the property being sold is being sold on a going concern basis (ie there is a lease in place on the property)

For the sake of simplicity just try to remember that GST will nearly always apply to the sale of a Commercial Property in Australia unless either of the 2 main factors above are present.

As a purchaser, if you are buying a commercial property that is being sold with GST, you will only be able to claim back the GST if YOU are REGISTERED for GST. To avoid the tears – ensure you check with your accountant before you make a commercial property purchase and you could save yourself a bucket load of cash!

2.  GST on a Commercial Property Lease

As a LESSOR – of a commercial property you will be required to charge GST on your annual rent where you are registered for GST (or required to be).

As a LESSEE – you will be required to pay GST on your annual rent if the LANDORD is registered for GST – you will need to pay GST regardless of whether you are registered or not.  Just the same as if you walk into your local furniture shop and purchase a coffee table!

This is not to financial advice, you should do your own research into GST and Commercial Property Transactions in Western Australia,  and remember to always seek advice from a qualified Tax Accountant!