Non-resident property owners

If you are a non-resident property owner who is registered or required to be registered for GST then your sale or lease of commercial or commercial residential property in Australia, along with your sale of new residential property, will generally be taxable.

If you own commercial, or commercial residential, property that you lease or rent in Australia, you can claim GST credits on purchases you make that relate to renting or leasing your property (subject to the normal rules on GST credits).

However, if the property you rent or lease is a residential property, you are making an input-taxed supply. As a result, you:

  • are not liable for GST on the rental income
  • cannot claim GST credits for anything you purchase or import to rent or lease the property.

See also:

  • GSTR 2000/37 Goods and services tax: agency relationships and the application of the law

Providing services to non-resident property owners

The provision of services in Australia to non-resident owners of Australian residential properties is taxable – for example, the management services of a resident real estate agent (if the real estate agent is registered for GST).

Example: Foreign-based owner

Sam, a British citizen, lives in London and owns a residential rental property on the Sunshine Coast in Australia. He is not registered for GST.

Sam’s rental property requires some plumbing repairs, so his real estate property manager in Australia calls Pete’s Plumbing to do the repairs.

Pete’s Plumbing is registered for GST, so the provision of their repair services to Sam is taxable. Pete's Plumbing must include GST on the tax invoice they provide to Sam.

End of example

See also:

Real estate agent services

If you are a real estate agent and you are registered for GST, or required to be registered, you are liable for GST on your service fees, including:

  • letting fees
  • lease preparation fees you charge the landlord
  • lease preparation fees you charge the tenant
  • agency commissions
  • statement and administration fees
  • property inspection fees.

Your provision of services in relation to a non-resident’s property is taxable even if the property owner is not in Australia when the services are performed.

A property owner, who is renting or selling existing residential premises, such as a house, cannot claim the GST included in your fees and charges, because the rent or sale is input taxed.

Example: Non-resident company uses local agent

Bourne Ltd (a non-resident company) is GST registered. Bourne Ltd owns a six-storey building in Sydney. A family rents the first two floors as their residential home, and the remaining floors are rented out as commercial premises.

Bourne Ltd uses an Australian real estate agent to manage the property. The provision of services by the real estate agent for the whole property is taxable.

In this situation, Bourne Ltd:

  • can claim GST credits proportionately for real estate services provided by the agent that relates to the commercial premises
  • cannot claim GST credits for real estate services provided by the agent that relates to the residential part of the building.
End of example

GST-registered property owners may be able to claim the GST included in their agent’s fees as GST credits when they:

  • sell new residential premises
  • sell or lease commercial, or commercial residential, premises.

See also:

  • GSTR 2000/37 Goods and services tax: agency relationships and the application of the law

Completing your activity statement

You may use either the calculation worksheet method or the accounts method to complete your activity statement.

The amounts you report on your activity statement will depend on the accounting basis you have chosen, or are required to use. You can account on a cash basis or a non-cash basis.

Find out about:

Record keeping

You can keep your accounting records in either paper or electronic format. Regardless of the format you choose, you must keep your record for five years.

When dealing in property transactions, it is recommended you keep all relevant documentation to support your reporting obligations, such as:

  • contracts of sale
  • records of any calculations you made (such as those used under the margin scheme)
  • any other documentation that supports the way you have applied the law.

Any calculations you make must give a fair and reasonable result.

Tax invoices

When you purchase property and you intend to claim GST credits for your purchase, you must make sure you obtain a tax invoice for the sale. You cannot claim GST credits without supporting documentation. A tax invoice can only be provided to you if the sale is taxable and the seller has not used the margin scheme.

Contracts for the sale of the property are not normally valid tax invoices. You will also need to check that the contract price includes GST.

See also:

    Last modified: 05 Jul 2016QC 21960