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  • Non-resident property owners

    If you are a property owner who is not an Australian resident, you may still be required to pay GST on your property transactions in Australia.

    Providing services to property owners who are not Australian residents

    A service provided to the owner of an Australian residential property who is not an Australian resident is taxable – for example, the management services of a resident real estate agent, or the preparation of a tax return.

    Example: Provision of repairs

    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. His real estate property manager in Australia arranges for 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. Even if Sam was registered for GST, he could not claim GST credits on the plumbing services. This is because the services are not for a creditable purpose (they relate to making input taxed supplies of residential rent).

    Example: Real estate agent services

    Bourne Ltd (a company not resident in Australia) is GST registered. Bourne Ltd owns a six-storey building in Sydney. The top two floors contain a split-level luxury residential apartment. The remaining floors contain offices, medical suites and fashion outlets. A family rents the luxury apartment 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 is taxable.

    In this situation, Bourne Ltd:

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

    Tax return preparation services supplied to a non-resident owner of a rental property are subject to GST.

    These services are subject to GST regardless of whether:

    • the owner's tax return includes income or deductions from other sources or activities
    • part of the property is commercial premises.

    Tax agents must include GST on tax invoices provided to non-resident property owners and report the GST they are liable to pay on their activity statement.

    Example: Preparation of tax return

    Caroline, a non-resident of Australia, has owned a building in Australia since 1995. The building has two levels with commercial premises on the ground level and residential premises on the upper level.

    Caroline leases both the commercial and residential premises and derives income and incurs deductions in relation to the property. As a result, Caroline is liable to pay income tax in Australia.

    Caroline engages Jim (a GST-registered tax agent) to prepare her Australian income tax return. Jim takes into account Caroline's income from both commercial and residential leasing when he prepares her tax return.

    Jim's supply of tax return preparation services to Caroline is subject to GST. Jim must pay GST on the whole of his services.

    Caroline may be entitled to register for GST and claim a partial GST credit for the GST included in the price of Jim's services that relates to the leasing of the commercial part of the building.

    End of example

    See also:

      Last modified: 17 Jul 2019QC 21960