Leasing commercial premises is a taxable supply. A landlord who is registered, or required to be registered, for GST charges 10% GST on the rent, and on the outgoings the lease passes to the tenant, because under the ATO's determination GSTD 2000/10 the premises and the outgoings are one supply: council rates, water and land tax attract GST when recovered from the tenant even though they carried no GST when the landlord paid them. A GST-registered tenant claims it all back as credits with a tax invoice. Commercial rent counts in full toward the $75,000 registration threshold: unlike input-taxed residential rent, and a lease bond carries no GST unless it's forfeited or applied to amounts owing. An unregistered landlord charges no GST at all, and leaves the tenant nothing to claim.
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Commercial rent: taxable once the landlord is registered.
The GST treatment of rent follows the premises, not the paperwork. Rent residential premises out as a home and the supply is input-taxed: no GST on the rent, no credits on the costs: the position Airbnb hosts live with. Lease the same money's worth of commercial premises: a shop, office, warehouse, surgery or industrial unit, and the supply is taxable: a landlord who is registered for GST, or required to be, is liable for GST on the rent and reports it on their BAS.
In practice most commercial leases are drawn "rent plus GST", so a $4,000-a-month office is invoiced at $4,400. Whether the landlord can add the 10% on top depends on the lease: absent a GST clause, the rent stated is treated as GST-inclusive and the landlord wears 1/11 of it. Either way the landlord remits 1/11 of everything received for the premises, and a registered landlord claims GST credits on the costs of renting it out: agent's management fees, repairs, insurance, advertising.
Landlords below the threshold have a real choice. An unregistered landlord charges no GST: cheaper for an unregistered tenant, but forfeits every credit on the property's running costs. Registered tenants are indifferent: the GST they pay comes straight back. Tenants can check any landlord's GST registration free by ABN before paying a "plus GST" invoice: GST paid to an unregistered landlord isn't GST at all, and can't be claimed.
Outgoings, one supply, so the rates attract GST too.
The counter-intuitive rule, and the one that generates the most disputes at lease reconciliation time: outgoings recovered from the tenant are part of the consideration for the premises. GSTD 2000/10 treats the lease: premises plus the services the tenant needs to use them, as a single supply of real property. The tenant reimbursing the landlord's council rates isn't paying the council; they're paying for the premises. So the recovery attracts GST even where the underlying cost carried none:
| Outgoing passed on under the lease | GST when the landlord paid it | GST when recovered from the tenant |
|---|---|---|
| Council rates, water and sewerage charges, land tax | None: exempt government charges | Taxable, part of the supply of the premises |
| Building insurance | GST in the premium | Taxable: landlord claims the credit, recovery attracts GST |
| Cleaning, gardening, common-area electricity, management fees | GST in the cost | Taxable: same pattern |
| Electricity or phone in the tenant's own name, billed by the utility to the tenant | , | Not the landlord's supply, a separate supply from the utility to the tenant, GST per the utility's invoice |
Two details matter. First, structure doesn't change substance: it makes no difference whether rent and outgoings sit in separate lease clauses or on separate invoices: the outgoings are still consideration for the premises. Second, the tenant's own accounts are the exception: a cost the tenant incurs independently of the lease, its own metered electricity account, its own phone line, is a supply from the provider to the tenant, and the landlord's GST position never touches it. So a landlord invoicing $600 of monthly outgoings alongside $4,000 rent charges GST on $4,600 and remits $460; a registered tenant claims the same $460 back.
The tenant's side: claiming the GST back.
For a GST-registered tenant using the premises in its business, the GST in rent and outgoings is a credit, claimed at label 1B like any other business purchase. The mechanics:
1. Get a tax invoice. Rent claims are over the $82.50 threshold, so a valid tax invoice from the landlord or agent is required: many leases and agents issue a monthly rental invoice or an annual statement that qualifies.
2. Claim on your timing. On a cash basis you claim each period's rent as you pay it; on accruals, when invoiced.
3. Only what's really there. No registration on the landlord's side means no GST in the price and nothing to claim: whatever the invoice says.
An unregistered tenant simply wears the 10%. That extra cost on every month's rent is one of the practical reasons a growing business under the threshold registers voluntarily once it signs a commercial lease: the rent credit alone can outweigh the compliance load.
Bonds and security deposits, no GST until something goes wrong.
A commercial lease bond looks like a big payment, but for GST it's a non-event. Under Division 99 of the GST Act, a deposit held as security for the tenant's performance isn't consideration for a supply while it's just sitting there: the landlord doesn't account for GST on receiving it, and the tenant claims no credit on paying it: whether it's cash, and however many months' rent it equals.
GST enters only when the bond stops being security: if it's forfeited on the tenant's default, or applied toward rent or other amounts owing under the lease, the landlord accounts for the GST in the tax period that happens: the ATO's ruling GSTR 2006/2 sets out the attribution. A bond held for the term and refunded on a clean exit never attracts GST at all. Bank guarantees, the other common form of lease security, involve no payment to the landlord in the first place: the same no-GST-unless-called-on logic applies.
Buying and selling commercial premises: the three routes.
The lease is the recurring GST event; the sale is the big one, and it can run three ways:
| Route | GST on the sale | Buyer's credit |
|---|---|---|
| Ordinary taxable sale by a registered seller | 1/11 of the price | Full credit for a registered buyer using it in business |
| GST-free going concern: a tenanted property sold with its lease | None | Nothing to claim: there's no GST in the price |
| Margin scheme sale | 1/11 of the seller's margin | No credit at all |
The going concern route is the standard play for tenanted commercial property: the sale is GST-free when it's for payment, the buyer is registered (or required to be), both parties agree in writing that it's a going concern, and the seller supplies everything needed to keep the leasing enterprise running: carrying it on until the day of supply, lease included. Get it right and nobody finances GST at settlement; get it wrong and the seller owes 1/11 of the price. One boundary note: commercial residential premises: hotels, motels, hostels, caravan parks, are their own GST category. Their sale and lease are subject to GST with special rules for long-term accommodation, so they follow neither the ordinary commercial pattern above nor the residential input-taxed one.
The landlord's registration trap: rent counts toward $75,000.
Residential landlords never register for the rent because input-taxed supplies are excluded from GST turnover. Commercial landlords get the opposite rule: leasing commercial property is an enterprise, and the rent is a taxable supply that counts in full. A landlord collecting more than $75,000 a year across rent, outgoings recoveries and any other business income must register for GST within 21 days of becoming aware they'll cross the line: a single decent commercial tenancy can do it on its own, and the obligation lands on self-managed super funds and family trusts holding one warehouse just as it does on professional landlords.
Registration is not all burden: it unlocks credits on the property's costs, and if the enterprise crossed the line a while back, backdating the registration up to 4 years captures the missed position rather than leaving it to an ATO review. From there it's a BAS each quarter: rent and outgoings GST at 1A, credits at 1B, and corrections if a reconciliation shows outgoings were passed on without GST.
Quick answers.
Is there GST on commercial rent in Australia?
Yes: leasing commercial premises is a taxable supply, so a landlord who is registered, or required to be registered, for GST is liable for GST on the rent. A $4,000-a-month office becomes $4,400 with GST, and the landlord reports the GST on their BAS. If the tenant is also GST registered and uses the premises in their business, they claim the same amount back as a GST credit, so between registered businesses the tax washes through. That's the opposite of residential rent, which is input-taxed: no GST on the rent, but no credits for the landlord either.
Do outgoings like council rates and land tax attract GST when passed on to the tenant?
Yes. Under the ATO's determination GSTD 2000/10, outgoings payable by a tenant under a commercial lease are part of the consideration for the one taxable supply: the premises. It doesn't matter that council rates, water and land tax carried no GST when the landlord paid them: the tenant isn't paying the council, they're paying for the premises, so the recovery attracts GST like the rent does. It also doesn't matter whether the outgoings sit in a separate lease clause or on a separate invoice line. The exception is a cost the tenant incurs in its own name: electricity on the tenant's own metered account with the utility is a separate supply to the tenant and never touches the landlord's GST.
Can I claim back the GST on my commercial rent?
Yes, if you're registered for GST and the premises are used in your business: the GST in the rent and in the outgoings recoveries comes back as a credit on your BAS. You need a tax invoice from the landlord for claims over $82.50, and the timing follows your accounting method: on a cash basis you claim in the period you pay each month's rent, on accruals in the period you're invoiced. If you're not registered for GST, the 10% is simply a cost, which is one reason tenants below the $75,000 threshold sometimes register voluntarily.
What if my landlord isn't registered for GST?
Then there's no GST on the rent at all: an unregistered landlord can't charge GST, and you have nothing to claim. A small commercial landlord whose rent and other business turnover stay under $75,000 doesn't have to register. If your lease says rent is 'plus GST', check the landlord's position before paying it: you can look up any ABN's GST registration status free, and paying 10% to an unregistered landlord gets you no credit: there's no GST in the price, whatever the invoice says.
Is there GST on a commercial lease bond or security deposit?
Not when it's paid. Under Division 99 of the GST Act, a deposit held as security for the tenant's performance isn't treated as consideration for a supply, so no GST is payable and no credit is claimable when the bond changes hands. GST only enters the picture if the bond is forfeited because the tenant defaults, or is applied toward amounts owing under the lease: the landlord accounts for GST in the period that happens, per the ATO's ruling on security deposits, GSTR 2006/2. A bond refunded at the end of the lease never attracts GST at all.
Does commercial rent count toward the $75,000 GST registration threshold?
Yes. Leasing commercial property is an enterprise, and because commercial rent is a taxable supply, not input-taxed like residential rent, it counts in full toward GST turnover. A landlord collecting more than $75,000 a year in commercial rent and outgoings must register within 21 days of becoming aware they'll cross the line, add GST to the rent, and lodge a BAS; registration also unlocks GST credits on agent fees, repairs and other property costs. Our BAS-agent service is $119 + GST if you'd rather have the registration reviewed and lodged for you, with backdating up to 4 years +$25 + GST if the leasing enterprise crossed the threshold earlier.
Do I pay GST when buying commercial premises?
Usually, if the seller is GST registered: the sale of commercial premises is a taxable supply, and a GST-registered buyer generally claims the GST back as a credit, provided the seller didn't use the margin scheme and the sale wasn't a GST-free going concern. Those are the two big exceptions: a tenanted property can sell GST-free as a going concern when the buyer is registered (or required to be), both parties agree in writing, and the seller carries the leasing enterprise on until settlement; and a margin scheme sale carries GST on the seller's margin but gives the buyer no credit at all. Which route wins is a commercial question worth pricing before contracts are signed.
Related guides: The GST margin scheme for property sales · Airbnb and GST · GST-free vs input-taxed supplies · How GST credits work · Tax invoice requirements · Crossing the $75,000 threshold · Cash vs accrual GST
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