Hi,
I have a question, I have a commercial tenant that is not registered for gst so he does not pay any gst on his monthly rent
But the problem is I am registered for gst and my accountant is taking gst out of the monthly rent I get
should I be paying gst for this rent seen as I do not receive it.next question
Obviously most residential tenants will not be registered for gst but once again I am registered for gst, so lets say my residential tenant pays me $400 per week No gst should I have to pay gst on this?
There is no GST applicable to residential rentals.
Hi Keiko,
While there is no GST payable on residential rent – there is GST payable on commercial rent if you are registered.
The fact that the tenant is not registered for GST is totally irrelevant.
To put it simply… for a commercial property:
– If you are registered for GST you should be charging GST
– If you charge GST your tenant must pay it to you (irrespective of whether they are registered)
– You must remit the GST portion to the ATO.
The only exception to this rule might be if the commercial tenant agreement was entered into prior to the introduction of GST… but there arent too many of those left.
Totally agree with the above but will add: Does the lease provide for gst? If the lease is post July 2000 or drafted after the announcement of the GST proposal, then it should have a gst clause. Furthermore, if there has been a 'review opportunity' in an unbroken pre-gst lease, then gst would also apply (although it would be 'grossed-up'). A review opportunity being a market rent review.
If the tenant hasn't been paying gst (and it does apply), then you have been short-paid and will need to recoup this. To explain Robert's point about the tenant not being registered is similar to saying that your supermarket will still include gst in its bill to you but you don't have a choice other than to pay it regardless of whether the customer is registered or not.
Your accountant is right in saying that you will have to remit the gst on the rent paid.
cool thanks for that, when i bought the property the guy was not paying gst and this was noted in the contract that there was no gst to be paid, all good ive up the rent anyway
another question, if i rent a house out as a home office, will I have to pay gst?
The property zoning is resi but the property can be used as a home office, so would this be classed as resi and no gst is paid?
It depends on the lease that you put in place. If they sign a residential tenancy agreement then no gst is payable and gst is taken as an input whereas if the lease you sign is a commercial lease agreement, then GST would be able to be charged regardless of the gst status of the tenant (and you being registered for gst).
Scott No Mates wrote:It depends on the lease that you put in place. If they sign a residential tenancy agreement then no gst is payable and gst is taken as an input whereas if the lease you sign is a commercial lease agreement, then GST would be able to be charged regardless of the gst status of the tenant (and you being registered for gst).Thanks Scott, I am about to sign up another tenant and will probably put them on a residential lease and another property i have i think when it comes to finding that new tenant I will work it out on a person to person basis whether or not its resi or commercial lease that will be signed
Also remember that if you put the tenant on a commercial lease then you may be able to get all of your outgoings (even if you do it at a lesser net rent considering the way that water & land tax costs will increase over the next few years).
Scott No Mates wrote:Also remember that if you put the tenant on a commercial lease then you may be able to get all of your outgoings (even if you do it at a lesser net rent considering the way that water & land tax costs will increase over the next few years).Do you mean I can get all the outgoings from the tenant or claim them threw tax accounts
Thanks
Yes, if the tenant is paying a net lease, they either pay or reimburse the outgoings. A semi-gross lease allows partial recovery eg: rates & taxes over a base year etc.
cool thanks
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