Understanding GST and BAS Obligations for Commercial Property Owners

Leasing commercial property comes with key GST and BAS responsibilities. Proper accounting and tax planning help ensure compliance and support better business outcomes

By Symmetry Accounting & Tax Pty Ltd

Owning and leasing commercial property can be a rewarding investment, but it also comes with important GST and BAS responsibilities. Unlike residential landlords, commercial property owners are often required to manage GST on rent and related outgoings. Staying compliant not only ensures you meet your taxation obligations but also helps maintain healthy business cash flow and accurate financial records.

When Must You Register for GST?

If your annual turnover from leasing commercial property — including rent and any other associated income — reaches $75,000 or more, you’re required to register for GST with the ATO. Once registered, you’ll need to:

• Add 10% GST to rent and outgoings charged to tenants.

• Lodge Business Activity Statements (BAS) regularly (usually quarterly), to report GST collected and claim input tax credits for GST paid on expenses.
  

If your income is below this threshold, registration is optional. However, voluntarily registering can sometimes benefit your business accounting processes, especially if you incur significant GST expenses.

Applying GST to Commercial Rent and Outgoings

Most commercial lease agreements include GST in rent and recoverable outgoings such as:

• Council rates and water charges

• Building insurance and property maintenance

• Cleaning and management fees
  

Your lease documentation should clearly indicate whether rent and other costs are GST-inclusive, ensuring transparency between you and your tenants.

Claiming GST Credits on Expenses

A key benefit of GST registration is the ability to claim input tax credits on many expenses associated with your property. Eligible costs may include:

• Property management and maintenance services

• Insurance premiums

• Professional services such as accounting, legal, and business advisory fees

• Repairs and improvements paid for by the landlord
  

Keeping accurate tax invoices and receipts is essential for BAS lodgment and compliance.

BAS Compliance Tips for Commercial Landlords

To manage your GST and BAS effectively:

1. Meet Lodgment Deadlines: Late submissions may result in penalties and interest.

2. Separate Income Sources: For mixed-use properties, only commercial income is subject to GST.

3. Allocate Expenses Correctly: Only claim credits for expenses related to your commercial activities.

4. Review Lease Agreements: Any amendments to lease terms could affect your GST or BAS obligations.
   

Proper recordkeeping and regular taxation reviews can make a big difference in avoiding compliance issues.

Selling a Commercial Property

When selling a commercial property, GST treatment depends on the circumstances:

• The sale may be GST-free if it qualifies as a Going Concern, provided certain ATO conditions are met.

• Otherwise, GST generally applies to the sale price and must be reported in your BAS.

• In some cases, using the margin scheme can reduce the GST payable on the transaction.
  

Additionally, GST incurred on selling costs — such as real estate commissions, legal fees, and marketing expenses — can often be claimed back through your BAS.

Final Thoughts

Being a commercial property lessor involves more than just collecting rent — it requires proactive financial management and compliance with accounting and taxation rules. Understanding when to charge GST, how to claim input credits, and how to lodge BAS accurately helps safeguard your business and keep your cash flow consistent.

At Symmetry Accounting & Tax Pty Ltd, we provide tailored business advisory and taxation services to help commercial property owners and investors navigate complex GST and BAS requirements. Whether you’re managing a single property or a diversified portfolio, our experienced team is here to support your compliance and financial growth.